The funky new contract K.J. McDaniels signed with the Sixers this week makes it official: We just finished the summer of weird NBA contract doings, with minutiae like trigger dates, guaranteed amounts, and wink-wink draft deals getting some limelight.
Let’s recap: Josh Huestis, a borderline prospect in danger of going undrafted, arranged for the Thunder to pluck him at no. 29 by explicitly declining $1.5 million of guaranteed money in order to sign in the D-League for about $25,000.
Alonzo Gee has been on five teams since early July. He became a punch line among NBA trade cognoscenti as his nonguaranteed $3 million contract for 2014-15 morphed into a trade chip teams used to clear cap space and facilitate complex transactions.
And on Wednesday, Adrian Wojnarowski of Yahoo broke the news that McDaniels, the 32nd pick of the 2014 draft, had taken the unusual step of declining a four-year contract in favor of a one-year deal carrying exactly $0 in guaranteed money.
This stuff might seem boring. It’s not as fun as actual basketball, which, I’m told, is a sport in which five players on one team attempt to throw an orange ball into an elevated basket while five players on another squadron attempt to stop them. But it has become an increasingly important part of a league in which cap wonks are bending the rules faster than the NBA and players’ union can set them.
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The NBA has a friendly player contract regime compared to the NFL, where future money is generally nonguaranteed. Solid NBA veterans and first-round picks work mostly on fully guaranteed deals, but since the teams work under a salary cap, they scrimp for savings on back-of-the-rotation guys. The nonguaranteed deal is a key tactic.
But all money magic also creates a world in which players are more accounting chips than people. That in turn influences the language with which we discuss players. They are “assets” and “trade chips” and “movable pieces.” I’m as guilty as anyone. It’s uncomfortable to describe labor this way, especially when “labor” in this case is a class of people whose spectacular talent makes the very thing called “basketball” possible as entertainment.
The Sixers offered McDaniels a four-year contract — the longest possible for a second-round rookie. The first two years were guaranteed at an amount above the minimum salary for which McDaniels is eligible. The last two seasons were fully nonguaranteed at the minimum.
As I’ve written before, this has become an in vogue tactic with second-round picks, who enter the league with no leverage. The Rockets are among a small group of teams who pioneered it a half-decade or so ago; Chandler Parsons is probably the most famous example, though that specific contract structure backfired on Houston.
Sam Hinkie, the Sixers’ GM and the former no. 2 guy in Houston, has taken this practice with him to Philly with second-rounders and minimum players — and rather aggressively so. Hollis Thompson, Elliot Williams, Jarvis Varnado, Brandon Davies, and Casper Ware are under various version of this contract type.
It’s a rational strategy. The Sixers don’t care about winning now; they care about winning big later. They care about drafting well and finding good players at cheap prices. They’ll eventually waive most of those players, but if just one turns into Parsons Lite, Philly will have found itself a valuable trade chip. Much of that value would lie in the four-year length of the contract. A league-average player earning $5 million less than the league-average salary is a boon across the board — a cheap line item that allows for more spending elsewhere.
McDaniels wasn’t interested in being a cheap line item for four seasons, says his agent, Mark Bartelstein. The Sixers weren’t interested in coming off their four-year proposal. One problem for Philly: League rules require that teams tender every second-round pick a one-year offer sheet carrying the league’s minimum salary in early September. If a team doesn’t do that, it loses that player’s draft rights.
The rookie minimum salary for this season is $507,336. Every second-round pick has a one-year contract offer worth that amount sitting in front of them. Most don’t sign it, because teams don’t have to guarantee a cent of that contract. Most second-round picks know they are tenuous NBA prospects, and so they justifiably grasp at any guaranteed NBA cash they can secure right away.
McDaniels said, basically, “Screw that.” He signed that one-year offer, even though it is fully nonguaranteed. The Sixers could cut him tomorrow. McDaniels wanted to be a free agent next season, not four years from now, and so he took a short-term risk in hopes of snagging a long-term reward. It might sound hokey, but McDaniels wanted control of his destiny.
“For a gigantic percentage of the league’s players, making it is about finding the right place at the right time,” Bartelstein says. McDaniels wanted more flexibility in finding that place early in his career.1
Interestingly, Joe Harris, another Bartelstein client, signed with Cleveland on a three-year version of the deal Philly offered McDaniels — with two seasons fully guaranteed above the minimum, and a third nonguaranteed season tacked on the end.
He’s a confident kid, and the Sixers are so bad that he’s almost guaranteed huge minutes — even if Philly in theory has an incentive to sit him so McDaniels doesn’t create a robust free-agency market for himself next summer. Bartelstein expects McDaniels to play, regardless.
“Philadelphia is in the business of developing young players,” he says. “I have a difference of opinion over what I think is a good contract structure versus what they think is a good structure, but I don’t question their integrity.”
As an aside, a healthy portion of the league broke out the snark applause when the McDaniels story broke. The Sixers are going to extremes in rebuilding, and as happens with most radicals, their tactics have engendered distaste. Philly has signed only one free-agency contract above the minimum in two summers since Hinkie arrived, and even that deal, a four-year, $4.2 million contract with Darius Morris, carried only $200,000 guaranteed and was barely above the minimum.
They have the most cap room in the league, and they’re not using it. How do you think agents feel when a team that could provide negotiating leverage sits out free agency? Some executives at other teams are fired up about Philly’s extreme tanking. Some of that anger comes from a heartfelt concern over competitive spirit and the league’s image. Some of it is envy. Hinkie’s bosses have green-lit an unprecedented multiyear exercise in losing that guarantees him long-term job security few GMs ever see.
And that plan isn’t crazy, or wrong. It’s an extreme use of rules available to anyone. Other teams have selectively tanked individual seasons, but shied away from extended losing in fear of alienating fans, losing customers, and falling deep into the red. Philly hasn’t fallen into the red yet, and it appears unconcerned about other possible consequences.
McDaniels isn’t the first player to go the one-year route. Carl Landry did it with Houston when Hinkie was there, and he signed a three-year, $9 million contract after his rookie season. That’s a win. Lavoy Allen signed a one-year deal with the Sixers in 2011, and after a solid showing in the playoffs, the Sixers had to dip into the midlevel exception in order to re-sign him to a two-year, $6 million deal — a ripple that had a disastrous trickle-down effect involving the amnesty provision, Nick Young, and Kwame Brown.
The Sixers of today don’t have to worry about that doomsday scenario. They might have more than $50 million in cap room this summer. They can make McDaniels a restricted free agent with a one-year, $1.2 million qualifying offer — guaranteeing themselves the right to match any offer McDaniels receives from another team. If McDaniels blows up, the Sixers can match such an offer or just re-sign him into their cap space. If he doesn’t, McDaniels could just sign that $1.2 million qualifying offer and enter restricted free agency again a year later.
This is a negotiating loss for Philly, and a win for players who want control of their futures. More second-rounders picked in the 30s should at least think about this route, though it can be scary, especially for players with urgent financial needs.
It doesn’t necessarily terminate the four-year contract model for second-rounders; the Sixers just signed Jerami Grant, the 39th pick, to that exact sort of contract.
As for Gee, you’ve heard the jokes by now — including from me: How many teams has he played for? Can we get him a jersey with the logos of all of those teams?
Gee signed a three-year, $9.75 million deal in 2012. The final year, slated for the 2014-15 season, was fully nonguaranteed. The contract did not specify any date at which Gee’s full $3 million salary for 2014-15 would become fully guaranteed — a so-called “trigger date.” That meant any team that had Gee on its roster this season could waive him without cost at any moment until January 10, when league rules mandate all contracts become fully guaranteed.
In other words: A team could keep Gee, dangle him in trade talks as instant cap savings, and waive him on January 9 if none of those talks bore fruit. That’s a crappy place to be as a player, even if you’re getting regular paychecks along the way.
Agents typically push for earlier trigger dates, though sometimes the push isn’t as vigorous as perhaps it should be. Second-rounders who sign multiyear contracts in which Years 2 and 3 are nonguaranteed often push for a Year 2 trigger date of June 30 after their first season. That forces teams into a choice: Either waive the player on June 30 or pay his full salary for the next year.
The June 30 date is crucial, since it allows any player who gets waived to enter the free-agency fray when it starts on July 1. Some players have trigger dates specifically set up for the end of summer league in Las Vegas, so that they can enter free agency in mid-July after their incumbent team has gotten one last glimpse of them in competitive games.
Gee didn’t have any trigger date in his deal, and now free agency is over. Rosters are full. He is fighting for the final roster spot in Denver on a training camp contract.
That isn’t super funny. The players’ union has emphasized trigger dates for years at agent seminars, but the spotlight on Gee has sharpened the focus around the issue, per several league sources.
“It should be as critical a piece of the negotiations as anything else,” Bartelstein says. “You see all these players carried on rosters throughout the summer and fall, used as nothing more than accounting chips in a trade. In the meantime, other opportunities for them fall through.”
“I’d never do a contract that doesn’t have a guarantee date,” says Gee’s agent, Happy Walters, who did not negotiate Gee’s initial Cleveland contract. Walters got the Cavs to restructure some things, including Gee’s payment schedule last season, but the Cavs would not relent on the trigger date, Walters says.
Hopefully, Gee isn’t in financial straits. He earned more than $6.5 million over the last two seasons. He’s not a second-round pick hoping to secure at least one six-figure deal.
And some of these crazy nonguaranteed contracts can work in a player’s favor. Keith Bogans earned a cool $5 million on a nonguaranteed deal last season as a necessary pawn in the Nets-Celtics mega-trade, and then as a Boston trade chip for any team seeking cap savings. It looked like the gravy train would ride on after the Cavs acquired Bogans over the weekend, but they flipped him to Philly, and the Sixers have no real need for Bogans (or his contract).
The Pelicans signed Melvin Ely last April to a deal that carried a nonguaranteed $1.3 million salary for 2014-15. Ely earned nearly $30,000 last season for the Pelicans. He is not an NBA player. New Orleans knew this. It just wanted his nonguaranteed contract in order to facilitate the web of transactions that led to Omer Asik, and they paid Ely $30,000 for the privilege. God only knows how they selected Ely, but lucky him.
We’re all pawns to some degree. I’m a line item at ESPN, just like you’re a line item wherever you work. Companies across all industries talk of employees as “assets.” That language is dehumanizing, but to act as if it doesn’t exist — or even that it shouldn’t or wouldn’t exist in a “better” world — is both hopeful and a bit naive.
But the issue of control is real, in basketball and elsewhere. Leaning on stars to skip Team USA in the summer is on the same continuum as trying to attach as many nonguaranteed years as possible to the back end of contracts — and to do so without any trigger date.
Again: Management “controlling” labor isn’t a new thing. Teams will find more creative ways to do it as league rules evolve. But it’s not a joke, and both agents and the union need to fight hard for fairness.