Should the NBA Consider A Change In How Contracts Are Structured?

The National Basketball Association is a players league. The league contract is not fit for flexibility and needs an adjustment.

Exceptions, percentages, contracts and caps are keywords in the NBA financial world.

The direction of the NBA financial situation should be worrisome for teams heading into the future. It should be spelling out the word t-r-o-u-b-l-e.

Max salaries fall into three categories. In the simplest scenario, players with 0-6 years of experience are eligible for 25 percent of the salary cap. Players with 7-9 years of experience at 30 percent of the cap. And players with 10 years or more of league experience qualify for up to 35 percent. Players who sign under “Bird rights” are eligible for 8 percent annual raises. Ones without them are eligible for 5 percent annual raises. Bird rights are the difference between being available for a five or four-year deal. It’s also the difference of signing with your own team or another.

The few players who succeeded in NBA contracts this summer

Congratulations are in order for the players. This past summer, the NBA witnessed Stephen Curry, James Harden, and John Wall receive NBA max contracts. Those deals were terrible for the association. It’s not because either one was undeserving. More-so about what challenges lie down the road and the hurdles their respective teams will face.

We saw a few players take less than max deals in Kevin Durant, Blake Griffin, and Paul Millsap. They all accepted less than their capped out amounts but not by a significant amount per year.

Nearly 50 percent of NBA franchises currently employ a near maximum or maximum contracted player. Of the teams without a max or near max player, only two are projected to make the playoffs. Those two are the Spurs and Timberwolves. Of the teams currently with a max or near max player, 11 are projected to make the playoffs. Four of the top six highest paid contracts during the 2016-17 season made it to the NBA Conference Finals. With two of the top six making a trip to the NBA Finals in LeBron James and Kevin Durant. The message is clear throughout the league. Max deal players get you into the playoffs.

It seems money actually does buy you a championship. In a money driven league, it only makes sense to pay for your success.

But the trend needs to end. Unfortunately it won’t until the end of this recent collective bargaining agreement.

A measuring stick of NBA contracts

One issue current NBA contracts present is the level of talent against a similar salary range of talent. What that means is players will always gauge what a player similar to their level of production received in a contract year and use that as leverage for their own bargaining chips. And they are right to do so. But what that equates to is a player like Mathew Dellavadova earning more than a player like Derrick Rose. Even though Rose produced at a much higher rate last season.

A similar situation presented itself with the Orlando Magic and backup center Bismack Biyombo. During the 2015-16 season, Biyombo played off the bench for the Toronto Raptors for the entire year. He had his contract moment during the playoffs when center Jonas Valanciunas went down with an injury. That small sample size earned Biyombo $17 million a year. That amount places him just below all-star center Demarcus Cousins on the NBA pecking order of centers.

And did we mention he makes more than team starter Nikola Vucevic by almost $5 million a season?

In regards to NBA maximum contracts, a couple NBA guards signed max extentions this past off-season. The next superstar guard will likely command something higher if he can produce similar stats.

The contract should correctly depict the players current abilities

The NBA is known to pay players for what they have done in the past. They should reward based on what they will do in the future. And that’s where almost 95 percent of bad contracts fall in line. The Boston Celtics are paying center Al Horford for his Atlanta Hawks glory days a total of $27.7 million a year. A few seasons ago, this move was praised as a win for the Celtics but should’ve been viewed terribly for one reason — Horford’s injury history. After suffering two torn pectoral muscles and sitting out nearly two years, why should a team be allowed to offer a player a deal worth so much annually for so long? At what point did they believe he would continue that level of play at the age of 31, 32, or beyond? Now, they have an unmovable bad contract.

The NBA should move into a system that allows players and teams to renegotiate contracts yearly. A player who plays well should be compensated immediately the next year if a team wants to compensate him. And vice versa. A team needs to have the ability to escape long-term bad deals. Last season we witnessed former MVP and world champion, Stephen Curry, earn less money than 84 other league players as a top six player. He should’ve been able to restructure his deal two years ago to capitalize on his prime years.

Players constantly change in playing ability and team fit from year to year. If a player hits his apex at age 26 and is on a decline at age 28, a team should have the ability to move on from that contract similarly to the amnesty clause of the past. Essentially pay a player up front or over the course of a period of time to walk away from the team and not take a cap hit. The team benefits as well as the player. This provision could still fall in line with the Derrick Rose, Kevin Durant, and Chris Paul rules.

This year Chris Paul is 32 years old. Surely he will command a near max or max deal for the max length from whatever team he decides to sign with. Chris Paul will not be a superstar in four to five years but someone is going to pay him like he will be. If Paul, played well for two more years and had a drop in production the third year and fell into amnesty, he would still receive his money but would be free to move on to sign with another team that potentially suited him better.

Again, good for players but now it becomes great for basketball. Teams now would have the ability to continue to improve rosters on a yearly basis.

Longevity is the main concern

The elite talent of the NBA such as Kevin Durant, Stephen Curry, Kawhi Leonard, LeBron James, James Harden, and Russell Westbrook are surely worth more than their current contractual values — this year. But what should a team do if one of those players suffered a major injury? An injury in which they were unable to reach their elite level production again. The team should have an option to cut ties with that player and be able to remove themselves from that contract. And that works both ways.

A player who has proved himself needs to be allowed to capitalize on short-term success immediately the next year. Guard Isaiah Thomas of the Boston Celtics is a prime candidate for such a rule. The Celtics will now find themselves potentially overpaying Thomas with “Brinks Trucks” after this upcoming season on what will become his decline years or risk allowing him to leave with no compensation.

As with any sport, longevity is the priority. How long can a team remain competitive and of championship caliber? Imagine every year, all 30 NBA teams having the ability to sign a top-level free agent. That creates opportunity to prevent bottom level teams from tanking on a yearly basis to improve draft selections. Their would be another route to improve rosters sooner than later.

The current NBA contract limits the ability to field competitive teams without the ability to escape from under those deals — and that needs to change.


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