In a time of hushed meetings and amorphous potential offers, the Rockets have transformed a thought exercise into a real thing by presenting Chris Bosh a concrete choice: take a pay cut to stay in Miami, or earn your full maximum salary over a four-year deal in Houston.
It’s not quite the ideal test case for a new collective bargaining agreement designed with perhaps one eye on engineering “competitive balance” by making it harder for teams to retain superstar clusters. Adam Silver trumpeted that catchphrase every chance he got during the 2011 lockout, but the league’s primary goal during that torturous offseason was to transfer cash from players to owners.
Silver is sincere in his desire for greater parity, and the easiest path to achieving it is to prevent in-their-prime superstars from teaming up. The new CBA attempted to do that by installing a super-harsh luxury tax. Spend a lot on players, and you’re going to face a crippling tax penalty that gets more severe as you add payroll. Superstars are expensive to sign and even more expensive to keep; the tax was crafted to make the “keeping” part prohibitive.
But that’s only part of the story. The league also beefed up that tax so more money would flow from big-spending teams to their (mostly) smaller-market brothers, who need those tax proceeds to pad their bottom lines. It is a revenue-sharing mechanism. Any impact on competitive balance would be a happy ripple effect.
If the NBA really wanted to blow apart superteams, it would pitch extreme solutions — a hard salary cap and the elimination of the ceiling on individual player salaries. But pushing for those changes might lead to another lockout and could produce unknown consequences that might sabotage the league’s goal of competitive balance.
The punitive tax hasn’t led to Silver’s “competitive balance,” but it has changed spending habits on the high end. Profitable juggernauts like the Lakers and Heat have made painful cost-cutting moves since the lockout. Even the Nets, who have spent as if their owner has no idea there are rules about spending, want to get under the tax for the 2015-16 season.
The penny-pinching isn’t all about saving owners’ precious scratch. There are basketball reasons for the frugality. As long as there is a salary cap limiting what teams can spend, there will be a real tension between players grabbing as much money as they can and their teams’ ability to sign as many quality players as possible.
This puts star players in an impossible position: accept a pay cut “for the good of the team” or look like a glutton. When stars take pay cuts to stay together, fans rail against their collusion and call the NBA product a rigged game. When stars chase the money, fans rip them as pigs.
Meanwhile, minimum-salary players and young guys on rookie contracts literally cannot take pay cuts, and the glut of cap room that comes with shorter contracts has created bidding wars for mid-tier veterans. Stars make the most, and they are the most obvious target for savings.
The stars can’t win, in part because the NBA has created a system in which a player maximizing his individual income makes it harder for his team to build a competitive roster around him. But are people — media, fans, GMs — overstating the difficulty of that challenge? Maybe the onus should be on teams to spend wisely enough so they can accommodate multiple star players without prodding those stars to “sacrifice” in pointed public comments.
Take what Miami has done so far in free agency. It had dreams of opening up enough cap space to make a run at a $10 million–plus player — Kyle Lowry, Marcin Gortat, or someone else. It’s unclear how real that dream ever was, but its mere existence represents a puzzling communication breakdown between the Heat and the Big Three.
It was just math. LeBron James wants the maximum salary, the Heat have to make Udonis Haslem whole, and Shabazz Napier and Norris Cole are due what they are due. If the Heat wanted to get $10 million under the salary cap — the only realistic way for them to sign an outside free agent at that amount — Bosh and Dwyane Wade could only earn something like $24 million combined next season. They were each due $20 million before they opted out.
A two-man pay cut of that scale just didn’t compute, and if Miami thought it was possible, it hadn’t done enough digging with the players and their agents.
So they appear to have moved on to Plan B, which might have been Plan A all along: stay over the cap and use the available exceptions for over-the-cap teams to sign useful role players.1 The Heat used the full midlevel exception, starting at $5.3 million next season, to nab Josh McRoberts. They used the biannual exception of about $2 million to bring in what remains of Danny Granger’s lower extremities.2
There is endless confusion about this, so let’s be clear: A team cannot get under the cap, use cap space to sign outside free agents, and then use the full midlevel exception. The full midlevel is only for teams that start and stay over the cap.
Plan B could change if the stars bolt, leaving the Heat with cap space, and several credible scenarios paint the Cavaliers as a much stronger contender for LeBron than anticipated.
These are not exactly glamour signings, but they fit the Heat’s vision as a small-ish shooting and passing machine. Both players can fill the old Shane Battier/Rashard Lewis role as nominal “power forwards” who supplement LeBron by spacing the floor and banging with opposing bigs on defense. Sparing LeBron those bruises is part of the job description.
McRoberts is coming off a career-best year from 3-point range, and the Heat are betting it wasn’t an outlier, especially since outside shots tend to be open when you play with LeBron. McRoberts is an ace passer who can put the ball on the floor and keep the machine moving — Boris Diaw, but with better hair and no post game. He’s a natural power forward with experience in various defensive systems before Charlotte in which he blitzed pick-and-rolls far from the hoop — a key tenet of Miami’s defense.
He won’t protect the rim or improve Miami’s rebounding problems, but he can fit Erik Spoelstra’s system on both ends. The full midlevel seems a bit much — unless you’re convinced that McRoberts’s long-range shooting last season wasn’t a fluke — but the market for bigs suggests he was going to get this money from someone. Chris Kaman was out of shape and shot the ball damn near every time he touched it last season, and Portland is paying him nearly $5 million for next season.
Granger might be washed up. He perked up in Los Angeles, but he still logged only 10 minutes per game in the playoffs, and he’s coming off endless knee and leg issues. He’s been a stout defender, and he played a lot of small-ball power forward before Frank Vogel erased that alignment from Indy’s playbook. In a best-case scenario, Granger would start against power forwards who don’t post up, he’d hit open 3s, and he’d spend stretches defending some star wings to help LeBron and Wade save energy. In a worst-case scenario, he’s done — another uncreative Heat acquisition of a big name with aging legs.
Even these non-glam signings will require sacrifice from the Heat stars. If Miami was going this over-the-cap route all along, it could have asked LeBron, Wade, and Bosh to simply opt into their contracts, saving us the drama of tracking Dan Gilbert’s private plane and Savannah Brinson’s Instagram account.
But it asked for the opt-outs anyway, and it did so to save money. Here’s why: The new CBA includes an “apron” that is slotted $4 million above the tax line, which is projected at about $77 million for next season.3 That would put the “apron” at $81 million. Teams are banned from exceeding the apron, even by a single penny, if they engage in certain transactions after July 1. On that list: using the full midlevel, which the Heat have apparently just done with McRoberts.
The exact figures will come out this week, but sources involved in the process say earlier projections for a salary cap at $63 million and a tax line near $77 million will prove close to the mark.
If that proves to be the case, the Heat cannot go over that projected $81 million mark. Their three stars were slated to make about $61.5 million next season before they opted out. Tack on McRoberts, Granger, Napier, and Cole, and the Heat could see the apron fluttering just ahead of them before even thinking about what it might cost to bring back Ray Allen and Chris Andersen — incumbent players who, you know, actually helped last season.
In other words, the Heat asked for the opt-outs so Pat Riley could deliver this message to his stars: “You have to take pay cuts, otherwise we’re not going to be able to bring in Josh freaking McRoberts with the full midlevel.”
The apron becomes a hammer. It’s a multifaceted hammer too. Cross the line, and you can’t acquire a player in a sign-and-trade until the following July. Merely approach it, and it becomes harder to make trades that bring in more salary than they send out, or even sign minimum-salary players when injuries strike. It is a menace floating in the distance, the NBA’s version of that veil in the Department of Mysteries.
Putting the apron in play also conveniently hard-caps the Heat just above the tax line, reducing Micky Arison’s exposure to huge tax payments. Miami can spend only so much now.
The players’ union fears that teams are using the apron to force sacrifices from players who have already turned over so much to owners swimming in NBA cash — when other available tools might allow teams to spend more. “Teams are being exposed for what they are doing,” says Ron Klempner, the interim executive director of the players’ association. “It has been laid bare. They are hiding behind the rules. Teams like the Heat have the ability to bring back all their players, and give them raises, but they are choosing to go in another direction.”
He continued: “There is a misperception that players are being asked to cover for their teams. But I am concerned that the sacrifice they are making is not as much for the good of their teams as it is for the good of the owners.”
Players sacrificing money for wins and personal comfort is not new, though stars including Tim Duncan and Dirk Nowitzki have typically waited until a bit later in their careers to do it.
And every dollar counts. Kobe Bryant refused to take a meaningful late-career pay cut, and that decision will have consequences as the Lakers seek to construct a workable roster around him. The capped-out Nets wanted Kyle Korver last season — Billy King, the Nets GM, says Korver is like a son to him — but they had only a $3 million salary slot to offer, and Korver opted for about twice that in Atlanta.
But the Nets example shows that teams can spend more if they are willing to ignore the apron and get creative, Klempner says. Brooklyn’s payroll rocketed above $100 million last season. They ran through the apron like a high school football team tearing up one of those banners the poor cheerleaders have to hold. They punted the full midlevel exception in doing so, but they managed to find workable talents with the smaller midlevel slot that tax teams get (Mirza Teletovic, Andrei Kirilenko) and via minimum contracts (Shaun Livingston, Alan Anderson).
The Nets are anything but a model of prudent spending. They are a spook story about what can happen when a team loses all of its flexibility and patience, leaving it to desperately flip one expensive contract for an even more expensive one that runs longer.
But the Heat could have proceeded down a less frugal path, giving raises to their own free agents (via Bird rights) and digging deeper to find quality players without using the full midlevel and triggering the apron. Hell, the Heat got Allen and Battier using the smaller midlevel exception for tax teams — the one they deemed not good enough to snag McRoberts this time around. Fill out the roster with that toolbox, and there’s no need for the guys producing the wins to take haircuts.
Granger is going to make only about $700,000 more than his minimum salary, and he didn’t produce at a rate that merits much more than that last season. McRoberts had a nice season, and the market for bigs who can shoot, walk upright, and hold a basketball is climbing fast.
But Klempner’s point is this: The Heat are asking their stars to forfeit millions so the team can pay McRoberts and Granger an extra $2.7 million per year combined and Arison’s Carnival Cruise Lines can continue to offer the very best in overstuffed buffets and kitsch. And the Heat have opted against just re-signing their own guys because the roster they built was no longer good enough. Whose fault is that?
Are Miami’s stars subsidizing so-so team management? Perhaps. Wade is at the center of this. In 2010 he was the linchpin of the entire Heatles plan, one of the three or four greatest shooting guards ever, a legend the Heat decided still merited the compensation due a legend in his prime.
Wade is still a tremendous player when healthy, but he wears down every season and his market value is nowhere near $20 million. Still, the Heat and Wade are stuck with each other, and Miami has long believed that this kind of loyalty counts for something when the next crop of star free agents comes around.
All of this brings us back to Bosh. Houston, through skillful management and plain old luck, has assembled a roster that has allowed it to offer Bosh his full max salary. It’s fitting that the roster includes a feisty young point guard, Patrick Beverley, whom the Heat waived. On the flippity flip, that roster also includes Jeremy Lin, whom the Rockets chose over Goran Dragic4 and now must salary-dump (along with a draft pick) to clear space for Bosh.
You can add Lowry, but the Rockets flipped him for a first-round pick that was probably the swing piece in the James Harden trade.
Bosh would fit beautifully in Houston. A big who can shoot 3s while doing enough big-guy stuff — rebounding, defense, etc. — is massively valuable. Bosh is used to spotting up, working without the ball, and yielding the lane to another post-up player — key skills for anyone joining Dwight Howard and James Harden.
The Rockets’ pitch to Bosh centered on his defense and how he would mesh with Howard on that end, per a source familiar with the matter. Houston reassured Bosh that he is an underrated defender — that all the loudmouths who deride him as “soft” conveniently miss him chasing pick-and-rolls 30 feet from the hoop, creating turnovers with his long arms, and fighting hard in the post.
Flash back to Houston’s first-round loss against Portland, when the Rockets had to assign Howard and Omer Asik to defend LaMarcus Aldridge on the perimeter. Doing that compromised their spacing and shifted a rim protector away from the basket. Imagine how devastating they might be if they could shift those assignments to Bosh, who is taller and rangier than Terrence Jones, while leaving Howard to whack away shots near the hoop.
Again: This isn’t the ideal test of whether the ultra-punitive luxury tax has really made it more difficult to keep superteams together. Bosh would be joining a similar collection of stars in Houston, a large market that doesn’t appear to need much help attracting players. Bosh isn’t choosing between wildly divergent salaries as he would be in a system with no ceiling on individual player compensation.
The NBA has tried to gin up free agency and player movement. Contracts are shorter, half the league has major cap room, and the tax makes it pricey to keep starry cores together. But that wasn’t necessarily an altruistic gesture, a rejiggering designed to help Milwaukee and Minnesota compete with the big boys. Shorter contracts and unlimited individual player salaries could actually make it harder for small-market teams to re-sign their own stars, unless those changes came along with some added protection — an NFL-style “franchise tag,” or some other cap mechanism.
It was a business decision to stoke interest in the summer and turn the NBA into a year-round league. It enabled more revenue sharing and something close to leaguewide profitability. An NBA team is already a damn near foolproof investment, and the national TV deal won’t kick in until the 2016-17 season. We’ll soon reach the point when owners will make money every season and bank insane profits when they decide to sell their franchises.
Meanwhile, some fans demand that stars who currently earn artificially deflated salaries make further sacrifices for the greater good. Such sacrifices do help, especially when a star player is signing a massive deal as he enters the latter stages of his career. Carmelo Anthony is not going to be worth $30 million when he’s 35, and if he signs a max deal with New York, it will be harder for Phil Jackson to construct a long-term contender around him.
Harder, but not impossible. The CBA provides team-building mechanisms for everyone, even the mega-spenders, and deep-pocketed owners could always green-light tax payments when a championship window emerges. The salary rules in the NBA are so complicated that players are losing the public relations battle because it’s just simpler to point to Duncan and say, “Be like him.”
But sacrifice is a two-way street, and every situation is a beehive of complex variables. No choice is easy, and the hero/villain lines are never as clear as we’d like. If it’s so virtuous for a great player to give up salary, why shouldn’t an owner also be called upon to lose money if it will help his team win?