A More Ideal NBA CBA, Part IX - Adjusting contracts to the hard cap

Well, here comes the painful part. And it's about what to do when a soft cap becomes hard.

1. All contracts were dropped in value 24% across the board when the NHL changed to the current cap, and if players were making more than 20% of the new cap, they were dropped to the new max salary level.

2. In the NBA with current CBA, teams were allowed to waive a player without counting his salary toward the salary cap though they still had to pay him.

MY PROPOSAL assuming there is a 2011-2012 NBA season
1. All current contracts where the annual salary for 2011-2012 is below $5 million will remain the same, and all players on rookie scale contracts making above $5 million will keep their current salaries.
2. If a player is currently on a rookie scale contract or was on such a contract in the last three seasons (back to 2007-2008) has a long term contract extension where there is scheduled to be a major increase and has his contract structured that the 2011-2012 salary is at a rookie scale, but the 2012-2013 or later year has a considerable increase after the qualifying offer year or the last year of the rookie option (whichever is later), the rookie scale years will remain as is, but the extension years will be treated accordingly as stated below with larger contracts. This generally hits on players who are 1st - 4th year players who are performing at a very high level.
3. All contracts where the annual salary for 2011-2012 is above $5 million, but below $12 million will drop by 20% across the board for that season. Future seasons will also be docked by 20% a year of the current value before the new CBA.
4. All contracts where the annual salary for 2011-2012 is currently above $12 million will either drop by 20% or down to the applicable maximum salary cap hit for that player based on what year his current contract is in, whichever is less. Annual increases in future years will be at 8% of the new 2011-2012 salary.
5. If a player whose remaining contract value starting with the 2011-2012 season is expected to drop by 50% or more between the old and new CBA's is entitled to a one time payment of half of the difference of these values.
6. If a player whose remaining contract value starting with the 2011-2012 season is expected to drop by over one third (33.33333...%) and up to 50% between the old and new CBA's is entitled to a one time payment of one quarter (or 25%) of the
difference of these values.

This special payment will not count against the new hard cap. In addition, this payment must be made to the player by the time his contract expires. All teams must pay at least 25% of this payment immediately if the contract has more than one year remaining starting in the 2011-2012 season, and the rest must be paid by the time the contract expires.

• If there is any unpaid balance of this special one time payment and the player is traded to a new team, the new team must pay this balance.
  

I will post two teams later to show how this plays out. One to show a team that isn't spending too much in 2011-2012 and another team that is currently tied up.

Again all numbers are done with the assumption that a hard cap of $60 million is set next year.

TEST CASE 1: WASHINGTON WIZARDS

SALARIES TO BE PAID FROM 2011-2012 through 2014-2015 if No New CBA IS MADE:

	2011-2012	2012-2013	2013-2014	2014-2015	TOTAL
Rashard Lewis	$22,152,000.00	$23,790,000.00			$45,942,000.00
Andray Blatche	$6,442,083.00	$7,118,502.00	$7,794,921.00	$8,471,339.00	$29,826,845.00
John Wall	$5,530,080.00	$5,915,880.00	$7,459,924.00		$18,905,884.00
JaVale McGee	$2,462,399.00				$2,462,399.00
Kevin Seraphin	$1,680,360.00	$1,797,600.00	$2,761,113.00		$6,239,073.00
Trevor Booker	$1,294,920.00	$1,385,280.00	$2,350,820.00		$5,031,020.00
Jordan Crawford	$1,120,440.00	$1,198,680.00	$2,162,418.00		$4,481,538.00
	$40,682,282.00	$41,205,942.00	$22,529,196.00	$8,471,339.00	$112,888,759.00

AFTER THE NEW HARD CAP:

	2011-2012	2012-2013	2013-2014	2014-2015	TOTAL
Rashard Lewis	$15,840,000.00	$16,800,000.00			$32,640,000.00
Andray Blatche	$5,153,666.40	$5,694,801.60	$6,235,936.80	$6,777,071.20	$23,861,476.00
John Wall	$5,530,080.00	$5,915,880.00	$7,459,924.00		$18,905,884.00
JaVale McGee	$2,462,399.00				$2,462,399.00
Kevin Seraphin	$1,680,360.00	$1,797,600.00	$2,761,113.00		$6,239,073.00
Trevor Booker	$1,294,920.00	$1,385,280.00	$2,350,820.00		$5,031,020.00
Jordan Crawford	$1,120,440.00	$1,198,680.00	$2,162,418.00		$4,481,538.00
	$33,081,865.40	$32,792,241.60	$20,970,211.80	$6,777,071.20	$93,621,390.00

Player by Player Breakdown:

1. Rashard Lewis is the salary cap eater of the Washington Wizards. He currently has over $45 million of a cap hit over the next two seasons, and his salary is over $12 million in the 2011-12 season. Therefore, his salary is lowered to the applicable maximum salary based on the current contract he has when it was signed. Rashard signed his current contract with the now OKC Thunder in 2007-2008 which was his 10th NBA season. He is now in the 5th year of his deal, and the max salary amts for a guy with that amount of experience are used.

As his new salary cap hit over two years is a little above $32.6 million, the contract didn't lose over a third of its value so he doesn't get a special payment to cover some of the difference.

2. Andray Blatche's salary drops by 20% for each season between 2011-2012 and 2014-2015 as he's scheduled to make over $5 million in the 2011-2012 season.

3. All the other players are on their rookie contracts and their cap hits remain the same. John Wall is scheduled to make over $5 million in 2011-2012, but his cap hit isn't affected because all rookie contracts and the two year options will remain the same.

4. The Wizards now have $33,081,865.40 in salary for 2011-2012, which is nearly $27 million below the hard cap. They now will have the cap room to comfortably sign additional rookies, plus a max player with less than 10 years in the league, and with this system, at least financially, the Wizards are in pretty good shape.

5. Note that Nick Young and Yi Jianlian's 2011-2012 Qualifying offers aren't on the list. It's likely that Nick Young will seek a max contract or a near max contract next year. Yi will probably not be able to sign a deal at the Qualifying offer level with the Wizards at least.

TEST CASE #2: LOS ANGELES LAKERS

Salaries with no new CBA

	2011-2012	2012-2013	2013-2014	TOTAL
Kobe Bryant	$25,244,000.00	$27,849,000.00	$30,453,000.00	$83,546,000.00
Pau Gasol	$17,822,187.00	$18,714,150.00	$19,285,850.00	$55,822,187.00
Andrew Bynum	$15,157,667.00	$16,473,002.00		$31,630,669.00
Lamar Odom	$8,900,000.00	$8,200,000.00		$17,100,000.00
Ron Artest	$6,790,640.00	$7,258,960.00	$7,727,280.00	$21,776,880.00
Luke Walton	$5,680,000.00	$6,100,000.00		$11,780,000.00
Steve Blake	$4,000,000.00	$4,000,000.00	$4,000,000.00	$12,000,000.00
Derek Fisher	$3,400,000.00	$3,400,000.00		$6,800,000.00
Shannon Brown	$2,400,000.00			$2,400,000.00
Matt Barnes	$1,900,000.00			$1,900,000.00
Devin Ebanks	$736,420.00			$736,420.00
Derrick Caracter	$788,872.00			$788,872.00
	$92,819,786.00	$91,995,112.00	$61,466,130.00	$246,281,028.00

Salaries with new hard cap of $60 million

	2011-2012	2012-2013	2013-2014	TOTAL
Kobe Bryant	$12,000,000.00	$12,960,000.00	$13,920,000.00	$38,880,000.00
Pau Gasol	$12,000,000.00	$12,960,000.00	$13,920,000.00	$38,880,000.00
Andrew Bynum	$8,700,000.00	$9,300,000.00		$18,000,000.00
Lamar Odom	$7,120,000.00	$6,560,000.00		$13,680,000.00
Ron Artest	$5,432,512.00	$5,807,168.00	$6,181,824.00	$17,421,504.00
Luke Walton	$4,544,000.00	$4,880,000.00		$9,424,000.00
Steve Blake	$4,000,000.00	$4,000,000.00	$4,000,000.00	$12,000,000.00
Derek Fisher	$3,400,000.00	$3,400,000.00		$6,800,000.00
Shannon Brown	$2,400,000.00			$2,400,000.00
Matt Barnes	$1,900,000.00			$1,900,000.00
Devin Ebanks	$736,420.00			$736,420.00
Derrick Caracter	$788,872.00			$788,872.00
	$63,021,804.00	$59,867,168.00	$38,021,824.00	$160,910,796.00

Notes on players scheduled to make over $12 million in 2011-2012
1. Kobe Bryant signed a three year extension starting in the 2011-2012 season, which is his 16th year in the NBA. His salary dropped to the maximum salary for a player with bird rights which he has. His cap hit for three years drops from 83.5 to 38.8 million which is over a 50% drop. The exact difference of the old and new cap hit is $44,666,000.00, and he is entitled to special payments totaling $22,333,000.00. He must be paid at least $5,583,250.00 (25% of the difference) immediately, but the remainder may be deferred for later dates, but still must be paid by the end of the 2013-2014 season.
2. Pau Gasol signed a three year extension starting in the 2011-2012 season which is his 11th in the NBA, and his salary drops to the applicable max contract with bird rights which he has. His cap hit is the same as Kobe's which is $38.8 million over 3 years, down from $55.8 million. The percentage drop is 30.35% so he does not qualify for the special payments.
3. Andrew Bynum signed a four year extension with the Lakers starting in the 2009-2010 season, which was his 5th NBA season. His contract drops to the applicable max contract values for the 3rd and 4th years, including bird rights which he has. His cap hit drops from $31.6 million to $18 million over two years. This is a 43% drop, so Bynum gets special payments for 25% of the difference of the $13,630,669.00 hit, which is $3,407,667.25. He must be paid at least 25% of this immediately, but the rest must must be paid by the end of the 2012-2013 season
4. Lamar Odom, Ron Artest, and Luke Walton all are scheduled to make salaries of more than $5 million each before the new CBA. Their salaries drop by 20%.
5. Steve Blake, Derek Fisher, Shannon Brown, Matt Barnes, Devin Ebanks, and Derrick Caracter's salaries are not affected.
6. The good news is that three max contracts of Kobe, Pau, and Andy all drop considerably, and it will guarantee that Kobe will stay a Laker and it also gives them a 90% guarantee that Pau also stays a Laker. Bynum who has been underperforming for his contract has his cap hit dropped to a much more reasonable level. Also Luke Walton's salary is dropped and it's clear that he doesn't deserve that kind of money. The Lakers also are able to afford the special payments so they could pay it all up front to Kobe and Andrew.
7. The bad news is that the Lakers still are above the salary cap with the salaries they have. They will have to trade players away to get under than cap in order to add new free agents and sign draft picks. Most likely they'd have to trade away a combination of Bynum, Artest, and Odom, though they still have the contracts of Blake and Fisher to play with as well to get under the cap.

Either way, the Lakers will have to make considerable changes to their core, but it could have been much worse.

I like this idea... the Lakers are gonna be in a tough spot

bullis crappimess

I rep 301 wrote:

bullis crappimess

What does that mean?

Zaraki Kenpachi wrote:

I like this idea... the Lakers are gonna be in a tough spot

I don't like the Lakers, because they're the Yankees and they're not my
team. As much as I'd like to force them to trade Pau away just because
of a new hard cap, it is potentially disastrous to their franchise and an implementation of a hard cap shouldn't force teams to trade away max players to teams with more cap room. Yeah, there's a lot of money lost to certain players, look at Kobe in this scenario.

This move is made from the viewpoint of the league of course, and with the NBA problems, I side with the owners here, in particular owners of teams that are bleeding money and/or perennially not in a position to compete.