Kevin Durant is a Golden State Warrior.  He is there on a $26.5 million salary in 2016-2017.  Think about this: with all due respect to their fantastic play, that is the same number at which the Celtics and Grizzlies inked Al Horford and Mike Conley.

The NBA has a max contract problem.

Regarding salaries themselves, one common theme has emerged early in free agency.  Player salaries, due to the substantial rise in the salary cap, are correspondingly larger than ever before.  Many casual NBA fans, unaware of the reason for these salary increases, have been outraged at the amount of money players have gotten.  Members of the media have taken to respond to fans on the subject, clarifying the reason for the increases and explaining why salaries should not cause fan frustration with players.

On the subject, it must be said: unlike many businesses, where the bosses are the brains behind the operation producing revenue, the NBA is unique in that its employees, or players, are its supreme revenue generators . . . and there is an abundance of revenue right now.  With that revenue existing, nobody should have a problem with NBA players being rewarded for that which they generate, through their salaries.

Another point justifying what players make is obvious.  If we assumed, hypothetically, that at this moment, NBA owners could cut all player salaries in half, they would.  They would then place the recovered money in their pockets.  The money would not go back to fans, to charities, the homeless, or any other noble cause.  Should more money be skimmed from basketball related revenue, away from owners and players alike, to go to such noble causes?  Perhaps, but that is another story for another day.

The story today is this: the problem with NBA contracts is not the amount of money that goes to players, as a general proposition.  The problem is the artificial cap on max salaries – the cap that leads to a Durant and a Conley signing for identical figures – and how that cap is damaging to team building for teams that strike out on superstars during the free agency process.

What are max salaries?

            Preliminarily, this is a good place to start.  In short, a max salary is defined as a percentage of the salary cap: every individual salary in the league is capped at a percentage.  The particular percentage varies depending on the player’s experience: 25% of the cap for players with six years or less of experience, 30% for 7-9 years of experience, and 35% for 10+ years of experience.

The max contract rules affect team building significantly, because they artificially compress all player salaries into a fixed range.  The minimum salary in 2016-2017 will be $543,471, while no salary can exceed a $33 million maximum.  That compression of salaries ultimately damages the prospects of teams that do not land superstars, thereby reducing competitive balance.

How is this problem?

Consider this: LeBron James, due to the Cavs lacking full Bird Rights, will make $27.5 million next season (with raises throughout a deal).  Kevin Durant will make $26.5 million next season as a Warrior.  If the cap is $111 million next year, Steph Curry and Russell Westbrook can ink a max deal with their incumbent teams (in Westbrook’s case, whoever that is if he is traded) starting at $33.3 million.  Those salaries will be fully deserved – and some.

The problem?  A $33 million range of player salaries cannot encompass every level of player, and inevitably leads to sub superstar talent getting paid just like superstars do, if not so close as to amount to a negligible difference.

Look no further than this summer.  DeMar DeRozan is taking home $24.2 million next year.  Horford and Conley are taking home the same $26.5 million paycheck as Kevin Durant, which is just $1 million less than LeBron James.  Let me make this clear, since I am not trying to take a jab at any player in this piece: Horford, Conley, and DeRozan are fantastic players that deserve their contracts; players any team would be lucky to have.  They have been major components of very good teams over the past several years (less years for DeRozan).

Still, with all due respect, they are obviously not close to the caliber of player that LeBron, Durant, Steph, or other select superstars in the league are.

The problems this creates?  Despite differences in player quality, the construct of an artificial max precludes an appropriate, proportional difference in salary between superstars, and the league’s very good non superstars. Horford and Conley make what Durant make. DeRozan makes $2.3 million less than Durant, $3.3 million less than LeBron.  No offense to, say, Justin Hamilton of the Nets, who I am using as an example because he signed for $3 million this summer, but would anyone deal LeBron or Durant for DeRozan, merely because Hamilton sweetened the package?  Not a chance.  The artificial max simply puts teams that miss out on the league’s so very few superstars at a distinct competitive disadvantage.  If team A has a superstar, and team B has a Conley (or comparable player), but they then have equal money under the cap to build around them, team B is in a world of trouble.

Go further down in free agency, and the same issues arise.  Evan Fournier and Kent Bazemore, as two excellent, properly paid players, form another example.  They will combine to make $30.5 million next year – or more than either LeBron or Durant individually, and close to what players like Curry and Westbrook will make next year.  With all due respect to Fournier and Bazemore, if they were on the same team, and that general manager called a general manager with a superstar to trade them as a package for that superstar, the superstar’s GM would hit the clicker.

Similar examples can be made at any level of the free agency process.

Again, the hysteria over player contracts in the NBA, as a general proposition, is totally unwarranted.  But there IS a problem – the artificial cap on max salaries (which is a problem that would exist whether the salary cap were set at 200 million or 40 million).

With the league having so few superstars, their artificial max deals significantly complicate team building in another damaging way – it enables true superstars to play with as good of – if not better — supporting casts as the league’s very good non superstars (like the Horford’s and Conley’s).

It is a large reason, if not the reason, why Durant was able to join the 73 win Warriors (aside from the lack of cap smoothing).

Consider the issue of max contracts practically.  If LeBron and Durant did not have individual caps on their contracts, they could be making $50 million per year, and some.  In that case, with a salary cap in place, they simply would not be playing with Kyrie Irving, Kevin Love, Steph Curry, Klay Thompson, and Draymond Green right now.  They would be playing with less talent, and talent would be more evenly spread.  Think of this, for simplicity, like a fantasy basketball auction draft: you’re allowed to go hog wild to add LeBron to your fantasy team.  But that then requires you to have less talent and depth than me, when I start my team with Al Horford.  Why should the NBA be any different?

Put more simply, the elimination of max contracts would truly breed the “competitive balance” and “player sharing” that the 2011 lockout promised, but failed, to bring.

Now, consider this max contract issue from the side of teams in roster construction: max contract limits help breed the type of tanking projects that damage the league.  If you are a team like, say, the Suns at 23 wins last year, the free agent market, heading into July 1, could not make you an instant contender, unless you signed Durant.  Even if you added Horford – arguably the next best player on the market – you would be placing a huge contract on your present and future books equivalent to that of Durant’s, yet you would not improve enough to justify the addition.  Were max salaries eliminated, perhaps you could add 2-3 non superstar, very good players, and look to win right now.  Instead, the rules, as is truly require you to find a superstar, and you are faced with a dramatic free agency move for one (when they are rarely free), or trade for one (when they are rarely on the market).  That leads to many, like the Sam Hinkie Sixers, simply throwing up their hands, and relying on ping pong balls to do the near impossible for them. Team building would be considerably easier without the artificial max.

To clarify one point: yes, the league, even without an artificial max, will always be slanted toward its best players, given the nature of how basketball is played, with only five men on the court and less dominating the basketball.  However, the artificial max only exacerbates that slant. Why should 25 teams try to compete when the league’s top 5 players are able to surround themselves with top 15-20 players?

Is Durant signing with the Warriors a motivation for change?

Prior to Durant signing with the Warriors, there has never been an impetus for the league to get rid of the max contract.

On the ownership side, no businessperson wants to agree to pay any individual employee more money, if they can avoid it.  Max salaries have provided perceived cost control for owners, who do not feel as though individual player salaries can balloon to near any level.

On the player side, the elimination of the max salary would inevitably lead to the cream of the crop making more money, and middle class and lesser players losing money in the process.  As the NBA’s middle class is much larger than its cream of the crop class, the few would benefit at the expense of the many.  That has caused the players association, in the interests of the many, to balk at uncapped max salaries.

However, it must be said: whenever a reverberating, balance of changing event happens, emotions run high and that brings change.  Durant to Golden State is just that type of reverberation. Is Durant leaving Oklahoma City – a team that dealt two of his best three teammates since 2012 in cost cutting deals, for a 73 win team, rather than the Lakers or Knicks, a reflection that star players will neglect small markets for big markets?  Of course not.  This has nothing to do with the inability of small market teams to win or the desire for players to play in small markets – the defending champion is a small market team that players love to play on!  Rather, Durant’s choice reflects the simple fact that stars want to play with other stars.  And, thanks to uncapped max salaries, they can do just that.  If the league wanted to avoid a repeat of the 2010 Miami Heat by locking out, it did not do a great job.

Don’t tell the above to NBA owners, however.  In their bitterness over Durant choosing the Warriors, and with the backing of a public that tends to dislike these types of “super teams,” there is momentum for a lockout and for change.  NBA owners and players, above all else, want to win, and the current rules make that distinctly difficult for most, because they permitted a 73 win team to add the league’s second or third best player.

Artificial max contracts exist — right now.  Maybe they won’t exist after the owners or union opt out of the collective bargaining agreement in 2017.

2 comments

  1. Interesting article and agree that this CBA component adds to a problem. The solution, however, seems overstated as increasing the max (or removing it) would not solve the problem..

    Superstars don’t need an NBA salary to be $50m instead of $27m – they will all make 200-400m in salary + endorsements in their careers, if not more. If the max was increased, some stars would take less than max to play with other good players (Lebron, Bosh, Wade all left money on the table) OR to allow for cap flexibility (Brady re-negotiated his contract for the Pats).

    Golden State is not a “small market” team. They are in the top third.

    The Association will have problems with the haves and the have nots unless they retract.

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