NBA Saturday: New T.V. Deal Raises New Issues

The NBA is thriving. That much is clear after commissioner Adam Silver announced on Monday that the NBA has agreed to a nine-year, $24.4 billion television contract with ESPN and Turner Sports (a jump from $930 million per year to $2.66 billion). But instead of collectively celebrating the increasing revenue and popularity of the sport, NBA stars and owners (at least one) are making comments suggesting that another significant labor fight could be an inevitability.

LeBron James was one of the players who had a clear message for NBA owners in wake of the new deal.

“The whole thing that went on with the last negotiation process was the owners [were] telling us that they were losing money.” James said on Monday. “There’s no way they can sit in front of us and tell us that right now after we continue to see teams selling for billions of dollars, being purchased for $200 million, [selling] for $550 [million], $750 [million], $2 billion. And now [Mikhail] Prokhorov is possibly selling his majority stake in the Nets for over a billion. So, that will not fly with us this time.”

Kevin Durant echoed James’ statements on Tuesday.

“That’s a lot of money,” Durant said. “That’s a lot of money. I don’t see how owners can say they losing money now.”

Durant went further, stating that that NBA’s star players are worth more than their max contracts, and that it may be time to do away with max deals in the next Collective Bargaining Agreement.

“Look at it like this,” Durant said. “Kobe Bryant brings in a lot of money to Los Angeles, that downtown area. People go to watch the Lakers. Clippers are getting up there, Chris Paul, Blake Griffin and those guys are bringing in a lot of money as well. Look at Cleveland, look at Miami when LeBron was there. These guys are worth more than what they are making because of the amount of money they bring to that area. That’s a conversation you can always have, but until it’s changed you never know what will happen to it.”

Dallas Mavericks owner Mark Cuban offered his take on Durant’s comments and the overall situation.

“If you give up guarantees, it’s a trade-off,” Cuban said on Tuesday.

“It was discussed during the lockout time among owners but never got anywhere,” Cuban said. “So it was just one of those trial balloons. I’m not offering this as a negotiation, I’m not suggesting it. All I’m saying is that was something we discussed before, and max contracts are always big question, guarantees are always a big question. But we have two years before that’s even an issue, so no point discussing it now.”

First, it must be noted that max contracts and guaranteed money are not directly tied to one another, despite Cuban framing the discussion as though they are. So while Cuban states that he is “not offering this as a suggestion,” the fact that he raises it as a potential “trade-off” inherently makes it a negotiation. But even if Cuban is trying to align two separate issues that are not directly related, there are valid points to be made on both sides of the discussion.

James and Durant, the NBA’s two biggest stars, are correct; NBA superstars are worth more than their max contracts. In an open market, James, Durant, Bryant, Paul, and the other stars in the league would be able to sign for much larger contracts than they currently are allowed to. That seems inherently unfair, and for the few superstars in the NBA that are worth more than they can contractually make, it is unfair. But would the NBA Player’s Association even be on board with removal of max contracts? The Player’s Association represents every player, not just the cream of the crop.

Consider that the players receive a fixed amount of all basketball related income (BRI), meaning that getting rid of max contracts won’t change how much money the players will collectively receive, it just changes how the same amount of money is distributed. If James makes $50 million a year, it doesn’t mean that the owners are paying more money to the players collectively. It just means there is less available money for mid-tier players. And what figures to be a rising salary cap doesn’t do anything to change this dynamic as it is adjusted in relation to BRI as well. To illustrate this, in an NBA without max contracts, Chris Paul and Blake Griffin certainly would have signed bigger deals to stay with the Los Angeles Clippers, which would have left less money for other players. If Paul and Griffin took up a bigger percentage than they currently do, would Spencer Hawes have received a four-year, $22,652,350 contract? Probably not, especially considering that the Clippers had to make creative moves this offseason just so they could sign minimum salary players. The result could be something like the 1997-98 season (the last season before the league implemented max contracts) where Michael Jordan was making roughly $33 million a season, and his teammates were all making less than $5 million.

Also, max deals inherently protect NBA general managers from themselves. If general managers could bid for star players without limitation (except for the salary cap), we could see situations where teams are paying absurd amounts of money just to land one star, especially if a general manager is on the hot seat and looking to make a splashy acquisition. General managers already do this to a certain extent, and removing max contracts would almost certainly result in deals that could make today’s bad contracts look like bargains. And with owners as wealthy as Steve Ballmer and Paul Allen in the NBA, there could be a power dynamic like in Major League Baseball where a few teams are willing to spend limitless amounts of money (e.g., the Los Angeles Dodgers and New York Yankees), while other teams are left to finding creative ways to compete (e.g., the Oakland Athletics).

So maybe getting rid of max deals is not such a great idea. At least not for the vast majority of NBA players. But how does that dynamic relate to players giving up guaranteed contracts? That’s not really clear. Players have already given up guaranteed contracts, to a certain extent, as teams are currently able to negotiate with players for as much, or as little guaranteed money as they want (within certain limitations). The thing is, if a team is not willing to guarantee a reasonable amount of money for a good player, another team will.

So what is Cuban asking for? That also is not clear considering players as talented as Lance Stephenson are currently playing on partially guaranteed contracts. Perhaps Cuban is asking to remove all guaranteed money for players. But that is an extreme request, especially when the “trade-off” is getting rid of max contracts (which again is simply restructuring the way the same amount of BRI is distributed among the players). There are situations where large amounts of guaranteed money instantly become a burden on teams. An example being when a player suffers a catastrophic injury in the early stages of a large, multi-year contract. But that is an inherent risk that every team takes, and there is no easy, practical safeguard against these unfortunate situations.

Ultimately what the players should really negotiate for is a bigger slice of the pie (BRI). The owners cannot plead poverty the next time around, but will try and negotiate for any and all safeguards that ensure their teams remain profitable. Max contracts and guaranteed salaries are just two parts of what is a much bigger equation. For now we can view these comments as quick responses to what is a massive influx of money coming to the NBA. The owners and players will certainly have to dig in and fight for their share of that money in July of 2017. Hopefully both sides can figure these issues out without losing any games. But that is an issue that is still some time away and should not overshadow what is gearing up to be an exciting 2014-15 NBA season.