New CBA Looms Over NBA Trade Discussions
Trade deadline week used to be the busiest of the NBA season, with team executives making deals at a frenzied pace as buyers tried to load up for a playoff run and sellers tried to unload onerous contracts to give them some flexibility for the next season.
Something different appears to be taking place this time around. There’s been plenty of talk, but very little action so far with the deadline looming at 3 p.m. Eastern time on Thursday.
The big moves that were the hallmarks of trade deadlines past could still be coming. But if they don’t, it could be because teams across the league are bracing for a much harsher economic reality starting next season. The “Super Team” era could be over.
The new collective bargaining agreement that was born out of last year’s lockout will impose much stiffer penalties for teams that exceed the salary cap. Teams started bracing for it ever since play resumed on Christmas Day in 2011, and the reckoning is just around the corner. Owners are keeping one eye on the court and the other on their wallets.
“Every team is watching what it can do and how it can improve its team in connection with the much higher luxury tax,” Commissioner David Stern said just before the All-Star break.
The new CBA may not be responsible just for slowing down the amount of activity around the trade deadline. The total number of players traded in the week leading up to the deadline was 45 in 2010 and 49 in 2011, according to STATS LLC. Last year, that number dipped to 27. As of Wednesday night, just two deals made by the Rockets involving six players filled out the total for this year.
When owners and players agreed to a new deal that ended the most recent lockout, the players insisted on not having a hard salary cap – like in the NFL – that teams could not exceed under any circumstance. In the name of leveling the playing field for big and small-market teams, the owners responded by getting new restrictions put in place to make it as painful as possible for teams who go over the cap to continue doing business that way for any length of time.
Under the previous agreement, if a team exceeded the luxury tax level by $4 million, it paid an additional $4 million in tax penalties. If it went over by $14 million, it paid $14 million in penalties.
Next season, because of various increases in penalties, that $4 million will cost a team $6 million. And the team that goes over by $14 million will be hit with a $26.25 million bill.
To make matters worse, any team that exceeds the cap “apron” – which is $4 million over the existing luxury tax level – is not allowed to bring in a player in a sign-and-trade deal. That team also will only be able to offer a three-year mid-level exception deal to a free agent rather than the four-year exception that teams under the apron can offer, putting them at a bargaining disadvantage on the open market.
And to top it all off, any team that has exceeded the cap in three of the previous four seasons starting in 2014-15 will be subject to “repeater rates,” which increase the penalties even further.
“Any well-managed team is going to think about the future consequences of their roster management,” Stern said.
Many already have been, in markets big and small. The Oklahoma City Thunder traded star guard James Harden to Houston rather than make him the third max-money player on the team and the Memphis Grizzlies dumped leading scorer Rudy Gay and valuable reserve Marreese Speights in separate deals earlier this season to start getting their financial house in order.
New Grizzlies owner Robert Pera disputed the notion that sending Gay to Toronto was a salary dump, but also pointed out that teams have to spend their money wisely.
“Whether I’m worth a billion dollars or 10 billion dollars, I don’t think throwing money is the way to get a best result,” he said. “You look at the Lakers. They threw together all these stars and a huge payroll, and it’s not working out so far. You can’t be cheap, and I don’t think we are cheap.”
Before fans in small markets start complaining that the game is still rigged against them, don’t forget that Dallas let Tyson Chandler, the lynchpin of their title team from 2010-11, leave to team up with Carmelo Anthony and Amare Stoudemire in New York. Chicago did not match Houston’s offer for up-and-coming center Omer Asik and the Knicks let Jeremy Lin leave for Houston.
The Associated Press spoke with three team officials and two agents about the effect the new agreement will have on trades this week, and on roster construction going forward. Several said it could be the end of the teams like the current Miami Heat, where three marquee free agents teamed up to chase titles.
Next season, LeBron James, Dwyane Wade and Chris Bosh are scheduled to earn about $62 million, an enormous percentage of a luxury tax level that figures to be in the $72 million range.
“I just don’t see how teams are going to be able to afford to do that anymore,” one league executive said. “Not only are there financial penalties to think about, but operational penalties as well that will make it very difficult.”
Still, some teams might take the tax hit.
Lakers GM Mitch Kupchak has said repeatedly they intend to keep center Dwight Howard, and re-sign him to an extension this summer that will pay him more than $20 million annually. With Kobe Bryant due more than $30 million and Pau Gasol another $19 million-plus next season, that would likely put the Lakers at the luxury tax level with just those three players. And Brooklyn’s mega-billionaire owner Mikhail Prokhorov has said repeatedly that money is no object for him in chasing a title.
And if superstars want to continue teaming up in trios to tackle the rest of the league, they may have to take bigger discounts to do it.
“It’s not all about money,” James, who could be a free agent after next season, said earlier this year. “It’s about winning. I know that and I don’t mind.”
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