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The Land of 10,000 Takes

The Mystery of Max Money

What would happen if the NBA removed limits on individual player salaries?

The coming NBA summer may not bring as much upheaval as the famous summer of 2010, when Dwyane Wade recruited LeBron James and Chris Bosh to a Miami team that has made every Finals since. There may not be any single move that engulfs the league like The Decision, the voided Chris Paul trade, Melo’s drama, and the extended low-rumble fart that was the Dwightmare.

But every summer reshapes rosters and discussions about how the league should work. The next few weeks could mark a flashbulb moment in the latter regard, reigniting old debates, taking them in new directions, and sparking new discussions.

The questions will start in Miami, where three of the league’s starriest names, including the world’s best player, have choices to make. The early signals point to a triple return, and Bosh has been open to taking a discount to keep the gang together. Wade has swatted away talk that he might do the same, at least opening the door for some team hell-bent on instant improvement to toss a monster offer at him. LeBron has kept mum, and ESPN.com’s Brian Windhorst has hinted at the possibility of James taking considerably less money to construct a title contender somewhere.

That has raised the specter of Carmelo Anthony taking a pay cut to leave New York and make it a Big Four in Miami. The mere mention of that possibility, coupled with Kevin Love’s inevitable (and fairly ugly) departure from small-market Minnesota, have already reinvigorated long-held concerns about the NBA’s brass ring of competitive balance. At the center of it all lies a question: Can the NBA chase the dream of an even more robust free-agency market — more “player sharing,” as the league likes to say — while still helping teams, and especially small-market teams, keep their own stars?

Let’s set aside for now the question of whether the James-Wade-Bosh-Melo Big Four in Miami would be a smart basketball idea,1 and the fact that this NBA Voltron would require the unprecedented step of four superstars in or near their primes taking giant pay cuts — including James and Anthony sacrificing perhaps as much as $10 million per year in salary.2

The formation of a new Miami super-team would be another signal that players are making the league their own. They are hatching plans, conceiving rosters, and kicking around salary structures outside of formal contract talks. And in joining rival cliques, they would be tilting the balance of power toward a few juggernauts at the expense of everyone else.

Fans have an ambiguous relationship with players controlling the situation. The summer of 2010 prompted an outcry in some corners that the players had rigged the game. Fans had no problem when tinkerers atop the Lakers and Celtics “built” the super-teams of the 1980s, but they raised hell when players did the same thing themselves. That is a weird incongruity.

On the flip side, fans appear to hate super-teams until the moment there are none. We recall the late 1970s, when the championship toggled among unremarkable clubs, as the league’s coke-infested nadir. There is an almost pathological determination to point out that today’s teams couldn’t possibly compete with Bird’s Celtics and Magic’s Lakers. There is overlap in the Venn diagrams displaying fans who deride today’s super-teams and fans who think the NBA reached its glorious height with the powerhouses of the 1980s.

At the intersection of all this chatter lies the magic-bullet solution to competitive balance, tanking, and the conspiratorial construction of the All-Star colossus: scrapping the ceiling on individual player salaries. Lots of smart thinkers both inside and outside the league have pitched this as a catch-all fix.

The theoretical Big Four, and perhaps the Big Three before them, wouldn’t be able to team up if rival suitors could toss $40 million per season at LeBron. That is closer to LeBron’s true value, and what he would “deserve” if the NBA functioned as a free-market economy. In that perspective, the league’s dozen best players are effectively subsidizing the much larger middle class. The salary ceiling keeps the majority of the players’ union members happy, and it might help general managers build deeper rosters. But it also places an artificial restraint on a player’s earning capacity and leads general managers to inevitably overpay mid-tier veterans.

Teams angling to sign a superstar at an unlimited salary wouldn’t tank, because no superstar in his prime is going to a roster designed to lose games. If there are a dozen players truly worth the max, it seems obvious the league would generate more parity by placing those players on a dozen different teams.

Removing salary limits is an appealing idea, and it would probably inject a bit more balance into the league. Players would have to make a real choice based on wildly divergent salary amounts, roster strength, and other variables. Capping max salaries today works to (almost) equalize what everyone can offer, and that allows players to choose teams based on other variables: market size, the appeal of a team’s city, tax laws, and the presence of another superstar. A certain subset of teams will always lose out in that choice.

But uncapping individual salaries is a complicated concept with ripple effects and unintended consequences, and it touches on every other part of the NBA system. You can’t move one branch of the tree — the player salary structure — without anticipating how it will shift every other branch.

For starters, just about everyone agrees that the league would have to introduce either a hard team salary cap or an ultra-punitive luxury tax at the same time it lifts the limit on individual player salaries. A hard team cap means a lockout. Ready to go through that again?

The goal is to push player sharing by splitting up the superstars among the largest possible number of teams. A soft cap like the one we have now defeats that purpose. If a team somehow builds a roster of stars and can go over the cap to re-sign them when they hit free agency, there is no enhanced player sharing. If a big-city team willing to pay the luxury tax just keeps trading for expensive borderline All-Stars, staying over the soft cap the whole time, there is no enhanced player sharing.3

And that’s another ripple effect, one that worries a lot of executives around the league: An unlimited maximum salary wouldn’t just lift up the league’s dozen best players. It would have a similar gravitational effect on the second tier, players 20 through 40. A lot of those guys already get their current version of the max, and smaller-market teams have to overpay in free agency to sign them — the little-guy tax. How much would Charlotte have offered Al Jefferson if there were no individual salary limits and the league’s very best guys were earning $30 million? How crippling would Eric Gordon’s contract be?

Everyone assumes the union would oppose a move to an unlimited player max, since it would pummel the middle-class veterans who swell its ranks. But an unlimited max could be a boon for other segments of its membership below the very top guys, and the union has yet to take a position on the matter. “The concept has not been considered in detail by the players at this point,” says Ron Klempner, the union’s acting executive director.

Still, one mistake at this level could destroy a team for years. A Brandon Roy injury situation would be a death knell. Maybe that is how it should be. Introducing more risk in the form of salary variance puts even more of a premium on smart management. The max salary protects teams from themselves — you can only do so much self-inflicted damage in overspending on a blah talent. Maybe the league should reward teams who time their moves just right and pick the appropriate players, and punish those who choose poorly.

Some thinkers argue that the current system doesn’t really protect teams from themselves anyway. In a world with a limited max salary, every guy working as the best player on his team thinks he deserves it. “The max salary has hurt owners more than players,” says David Falk, once the power agent to Michael Jordan and Patrick Ewing, and an adviser who has the ear of some in the players’ union during every CBA negotiation. “Once you limit the max, everybody wants it.”

Blowing up the max salary would bring some uncomfortable changes in team-building. Take the Thunder. They were smart enough to draft four star players over a three-year span. They already traded one of them, James Harden, to duck the luxury tax. Imagine how they’d have to prep for Kevin Durant’s free agency in a world with no limit on maximum salaries and a hard team cap.

Other teams would clear the decks for Durant, and the Thunder might have to hoard as much as $40 million in space to keep him. Remember, they’d have no Bird rights in this scenario, since there is no going over the cap.

Maybe they’d just lose him outright to the highest bidder. Maybe they’d have to trade one of Serge Ibaka and Russell Westbrook to have the cash reserves for Durant. That’s the point, of course — to split up the stars. But not every team acquires its stars the same way. An unlimited max salary might derail a team like the Thunder before it gets rolling.4

The Heat are the bogeymen in all of this, but think about the team that just whitewashed them in the Finals. All three of Tony Parker, Tim Duncan, and Manu Ginobili, all Hall of Famers, took less money than they might have received over multiple contracts to hang together and chase rings. Would the league really be better off had Parker bolted for, say, the Knicks at $25 million per season had he hit free agency in 2011?

Again: Fans despise super-teams until they vanish. This theoretical world might be one in which teams surround one star player with minimum-salaried flotsam. I’m not sure that’s a world fans want.

It would also shift more control of the league to players and agents, or at least create that perception. Choice is power, and in this scenario, superstars could choose among a much wider range of salaries. Players who leave a good situation to chase the maximum possible payday could face a level of backlash that just doesn’t exist today, since the maximum payday can only be so much. Adam Silver cares deeply about the perception of the league and its players. In this scenario, that could take a hit.

Then again, maybe unlimited player salaries wouldn’t change the playing field as much as we might expect. It is not unusual for star players, especially ones 30 and older, to take less money in pursuit of a championship. Maybe at a certain stage of a player’s career, earning $10 million to play for a good team feels more satisfying than piling up $30 million on a mediocre one. Dirk Nowitzki is still one of the league’s 15 best players, but he’ll probably earn less than Gordon and Joe Johnson next season.

Taking less money in a system with no artificial max would be an even more dramatic plot twist than it is today. There is a blurry line — and perhaps no line at all — between heroic sacrifice for the greater good and a cut so deep it looks like an unfair manipulation of the rules. Delimiting the max would make the line even blurrier.

That is what makes LeBron and the Heat situation so fascinating. They might be a test case of just how much in-their-prime stars might forfeit to win. If that number is higher than we think, perhaps there’s no easy fix for star clustering.

The “in their prime” part is important. The Heat situation involves guys who can ink their fourth NBA contracts. The more interesting implications of eliminating the max might emerge when players come off their rookie contracts and enter free agency for the first time. Those guys are restricted free agents today. They can earn only about $15 million in the first year of their new deals, and their incumbent team can match any rival offer for them. It’s a system that basically guarantees that any team that drafts a star will have him for at least seven or eight seasons.

Is that too long? Too short? Anthony Davis will be a free agent in July 2016, though the Pelicans will surely lock him up to a max-level extension before then. Imagine his free agency in this fake world with no max player salary and a hard team cap. What would the Knicks or Lakers offer 23-year-old Davis after his fourth year in the league?

Depending on the Pelicans’ cap situation, a team might be able to toss out a Godfather offer New Orleans could not match. Even if New Orleans might retain some home-court advantage — some remnant of Bird rights — it would be nearly meaningless if rival teams could tempt Davis with a salary approaching the full team cap.

Think about the implications of that. Maybe the Pelicans, anticipating Davis’s free agency, rush to surround him with quality veterans too early in his career, an unnatural acceleration of the franchise’s timetable. Perhaps they go the opposite way, avoiding expensive veterans to keep the cap sheet as clean as possible for that Godfather offer.

You could argue again that this simply motivates smart management. The Pelicans would have to prove to Davis that they are worthy of his continued presence. Under the current salary structure, Kyrie Irving has almost no choice but to stay in Cleveland at least three or four more seasons, regardless of the Cavs’ record in the draft and free agency during Irving’s time there.

Maybe there’s some in-between solution that would give teams leeway in keeping their own free agents coming off rookie contracts in a no-max world. Maybe players have access to unlimited salaries only after a certain number of years in the league. The league could create some designated salary slot outside the overall team cap that each franchise could use on one star player every decade. During the last CBA talks, Falk pitched a system in which teams would have two separate caps — one for their top two or three players, and one for everyone else.

The idea of an NFL-style “franchise tag” gained popular traction among the owners during the 2011 lockout, but the two sides never discussed a concept that would tether a player to a team so tightly. The two sides accidentally loosened the bond between player and team by changing the rules so that a star has no incentive to sign an extension with his own team.5

The goal was noble: The NBA wanted to end the Melo-style prolonged drama in which a star agitates for a simultaneous max-level extension and trade to his new preferred team. The league did eradicate that option, but in the process it removed the extension as a viable tool for max-level players. There was probably a middle ground, but the two sides trampled over it in the frantic finish over Thanksgiving weekend.

That’s why Love is almost certainly leaving Minnesota. If the Wolves could offer him a meaningful extension, guaranteeing him immediate long-term security, they’d be having real conversations with Love instead of watching him yuk it up at Fenway Park.

In a world with unlimited maximum salaries, the league might have to give incumbent teams even more creative ways to protect against the departure of their own free agents — if the league really cares about teams having a fair shot to keep their own guys. There is some skepticism about whether the league actually values that sort of continuity, especially among executives at small-market teams, but to its credit, the NBA has built a system in which clubs get nearly a decade before stars they draft hit unrestricted free agency.

Extensions should be a more realistic option. In a no-max world, perhaps Davis and the Pelicans should even be able to tear up Brow’s rookie contract midway and ink a long-term extension on the spot. That would end Davis’s forced early-career underpayment and reward the Pelicans for convincing Davis that they are the franchise for him. That kind of reward would be more important in a world where the other 29 teams could offer Davis anything.

An unlimited max salary seems like a great idea. It probably is. But these are the consequences you have to consider. And for better or worse, it might grant an advantage to teams that ignore the dozen super-max guys and construct a group of very good players who fit together well. You know, kinda like the Spurs. 

Filed Under: NBA, Miami Heat, Lebron James, Dwyane Wade, Chris Bosh, Carmelo Anthony, New York Knicks

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Zach Lowe is a staff writer for Grantland.

Archive @ ZachLowe_NBA

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