I do blame Michelle

I do blame Michelle

Boogie signed with the Warriors for $5.3 million; Clint Capela believed he is a max contract player but the Rockets leveraged the market against him, and he signed for less. Marcus Smart is on an average of $13 million per year, much less than he expected. Joakim Noah just got cut from the Knicks because his contract was practically unreadable.  It is obvious there is a significant imbalance between what players are worth (think they are worth) and what teams are offering, yet not a single player voiced their displeasure with the National Basketball Players Association and the role it had in creating this situation.

In an interview with Kevin Draper, published in the New York Times, the NBPA executive director Michelle Roberts decided to speak up about the displeasure with how the cap spike in 2016 was handled by the NBPA. The title of the article quotes her saying “Don’t blame the players”. I do blame (some) players, but mostly, I blame Michelle Roberts.

Before I get into the details, let me make one thing clear. The NBA is a three-party system with owners on one side, players on the other side and the league office in between (with a note that the league has a tendency to side with the owners as they de-facto own the league and hire the commissioner, currently Adam Silver). I have no intention implying nor will I state that ALL THE BLAME is on the players union or Michelle Roberts. It most certainly is not, and at most times in life, all sides have their share of the blame.

THE BLAME

If you read the interview with Roberts you can notice that three issues are mentioned in the opening section:

  1. Warriors signing Boogie,
  2. LeBron going to LA
  3. The overall competitive balance of the league being disturbed

I will touch on these as well, but the major issue with the interview is that it does not address nor explore the greatest responsibility Roberts as the director has to her union members. As Roberts herself says in the interview: “We exist to enhance the lives of the players — to provide them with freedom, opportunity, job security and economic wealth,” she wrote. “We actually believe we can provide it all — all these things, plus competition. The fact that one of the 30 teams, at this moment in time, is having its own moment, doesn’t trouble us or make us question the merits of our system.” Competitive balance is something the union needs to take into consideration, but only as a factor that influences what they are here to protect – wages of their members and their quality of life connected to their employment. If competitive balance leads to more revenue and higher wages, it has to be a consideration. Also, there should be a professional ambition amongst the players not to have a juggernaut like the Warriors. My main contention is not that the union disrupted the competitive balance of the NBA, but that the union failed to maximize the “freedom, opportunity, job security and economic wealth” of its members. That is their “blame”, one that Roberts does not address.

CONTEXT

A union is an organization that organizes workers so that they could collectively discuss and agree upon terms of their labor with their employer. The idea is quite simple; the employer has a significant advantage in talking terms with employees as individuals because he or she can just say “This is my offer, take it or leave it, if you don’t want to, someone else will’’, so to counter that advantage, workers join and negotiate as a unit. Therefore, there are no “others that will.”

The National Basketball Players Association is colloquially known as the players union, and it represents NBA players and protects their interests. The most important job the NBPA has is to negotiate a Collective Bargaining Agreement between the players and the owners. The CBA is a document that defines conditions of employment (wages, working hours and conditions, overtime payments, holidays, vacations, benefits, etc.) and procedures for dispute resolution. Player’s wages are defined as a percentage of something that is called Basketball Related Income. Basketball Related Income (BRI) essentially includes any income related to basketball operations received by the NBA, NBA Properties1, NBA Media Ventures, or any other subsidiaries. It also includes revenue from businesses in which the league, a league entity or a team has an ownership stake of at least 50%. BRI, among other things, includes:

  • Regular season gate receipts, minus taxes, facility fees, reasonable expenses, and specific charges including those related to arena financing
  • Broadcast rights
  • Exhibition game proceeds, minus summer league expenses
  • Playoff gate receipts
  • The value of all complimentary tickets, minus “excluded complimentary tickets” (1.9 million tickets in 2018-18, increasing by 50,000 each season thereafter)
  • The value of complimentary suite admissions
  • Novelty, program and concession sales (at the arena and in team-identified stores within proximity of an NBA arena)
  • Parking
  • Proceeds from team sponsorships
  • Proceeds from team promotions
  • Arena club revenues

To simplify it, every dollar made that is connected to the NBA goes into the BRI. At the end of the year, the league issues what that number is and it is the base for the salary cap of the following season. In the current CBA, the players get 51% of BRI through wages and benefits. Not to get all tangled up in math, basically, that amount (the player’s share) is divided amongst 30 teams, and that’s how you get the salary cap.

The second paradox of the NBA is that in a country so obsessed about the free market it is a highly regulated market with a lot of elements of socialism. The draft, rookie scale and restricted free agency resulting in players having little if any control in the first 7 years of their career, the salary cap limiting expenditure on players thus restricting the free agency period (not a lot of market freedom in free agency) implies you can’t apply capitalist free-market thinking to such a system. There are pros and cons of such a system, and I will not get into it now, but you need to acknowledge the reality of this situation when thinking about the status quo. So until they decide to make the NBA a free market, all parties involved need to take responsibility for being participants in a regulated system.

THE SPIKE

One of the significant elements of the BRI is the national TV deal. When the NBA negotiated a new TV deal, it became clear there will be a massive influx of cash into the system and that there will be a drastic jump in the salary cap.

As this was an unprecedented event, the league office suggested a cap smoothing. Instead of having one large spike and then small increases, the increases would be leveled to approximately the same amounts each year. As Mike Bass, NBA spokesman writes in an e-mail for the NY Times article: “Under the concept we discussed, the total salaries paid to players in the aggregate each season would not have changed, but smoothing would have allowed for steadier, incremental Cap increases, instead of a one-year spike.” The NBPA rejected that suggestion.

THE CONSEQUENCES

2016 free agency:

  • Joakim Noah, 4 years, $72.6 million (avg. $23.6 million)
  • Bismack Biyombo, 4 years, $72 million (avg. $23.6 million)
  • Luol Deng, 4 years, $72 million (avg. $23.6 million)
  • Evan Turner, 4 years, $70 million (avg. $23.6 million)
  • Ian Mahinmi, 4 years, $64 million (avg. $23.6 million)
  • Timofey Mozgov, 4 years, $64 million (avg. $23.6 million)

Except for their friends and families, is there anyone out there who does not think these players are overpaid? Why overpaid? Let’s compare prices on the NBA market a year after that.

2017 free agency:

  • Joe Ingles, 4 years, $52 million (avg. $13 million)
  • Kelly Olynyk, 4 years, $50 million ( avg. $12.5 million)
  • PJ Tucker, 4 years, $32 million (avg. $8 million)
  • Jeff Teague, 3 years, $57 million (avg. $19 million)

If you combine three free agency periods since the cap spike, the contracts of 2016 free agency make 48% of all contracts!!

And then we have this contract:

  • Kevin Durant, 2 years, $54.3 million (avg. $23.6 million)
    The cap spike made room in the Warriors budget to sign Durant. That room was partly there because they drafted their three all-stars and had them on reasonable contracts (Curry was on a very cheap contract because at the time when he was signing it he was an injury risk), but this was a realistic option that had to be taken into account when considering cap smoothing. So when Ms. Roberts says they had nothing to do with it, that is not true. The players union did play a role in creating the situation for Durant to make the decision he made.

THINGS LEFT UNSAID

“We exist to enhance the lives of the players — to provide them with freedom, opportunity, job security and economic wealth,”
Very often it is not about what someone said, but what they haven’t said or pointed out. The union is here to enhance the lives of ALL the players. There is no doubt that the cap spike greatly improved the lives of 2016 free agency players, and consequently diminished the lives of players that hit free agency in the following years (remember, we are dealing with a heavily regulated market that does this for the sake of parity). I am pretty sure Joe Ingles, PJ Tucker, Marcus Smart, and Clint Capella are also in the union, and Michelle Roberts had to ensure that they get paid according to their productivity on the court, and it is a fact that today’s wages are vastly unrepresentative of the on-court production of the players.

“It would be quite counterintuitive for the union ever to agree to artificially lower, as opposed to raising, the salary cap. If we ever were to do so, there would have to be a damn good reason, inarguable and uncontroverted. There was no such assurance in place at that time.”
Ms.Roberts is right when she says the cap would’ve been artificially lowered. What she fails to mention is that it would be lowered in the first year so it could be artificially increased in the following year. In total the amount of money that the players would get would’ve been the same, the difference being it would’ve been more equally distributed among the players. So as far as “damn good, inarguable and uncontroverted” how about ensuring equal opportunity for your members and not contributing to a severe imbalance in the league?

“She dismissed the idea that the 2016 spike had caused a soft market this year. “We opened free agency with 9 teams that had significant Cap room, in excess of $10 million each,” she wrote. “Frankly, before the spike, that’s about as healthy of a start as we’ve ever had.”
This is a classic one, the key here is “before the spike.” That’s like me saying to you that $27.000,00 per year is an excellent wage because in 1990 you would’ve been living large with that money. Yes, before the spike that maybe would’ve been a healthy start because before the spike the cap was $60 million and not $90 million.

“I get that there are folks who believe that some of the contracts executed post the smoothing rejection was too large,” she wrote. “I vehemently disagree as I am sure do the players that negotiated those contracts. However, if that’s the beef folks have, take it up with the GMs that negotiated them. The argument that we gave teams too much money to play with is preposterous.”
I get it, she has to protect her members, but going all in and saying that she vehemently (strongly and emotionally) disagrees is just not necessary. I would be willing to wager that if you give me a bottle of booze and a few hours with Deng, Mozgov or Noah, I could get an “if I were a GM, I wouldn’t sign me to this deal.” So just saying the last part would’ve been enough, you don’t need to embarrass yourself. On that last part, Ms.Roberts is 100% true. If you want to talk about those contracts, the primary culprits here are the GM’s/owners. No one had a gun to their head, and that is on them.

CONCLUSION

I do not place all the responsibility for the competitive imbalance we have in the NBA on the players union. The one with most power holds most of the responsibility and in the NBA that always comes back to the owners of the teams and their GMs. But the union did contribute in opening up the option of Durant on the Warriors which created the spike in the perfect moment, and then the drop in cap increases which makes it harder on the other 29 teams to catch up with them.

What I hold Ms.Roberts much more responsible for is the imbalance of wages and productivity on the court, all those 2016 free agency players being significantly over-paid at the detriment of other players. She is their leader in questions like these, and as much as the players themselves voted against the cap smoothing proposal, it was her job to predict and explain the future ahead.

P.S.

One thing that was changed in the CBA was the “over 36” rule. The over-36 rule prevented teams from signing players to four- or five-year deals if they would turn 36 or older throughout the contract. The limit was increased to 38 years of age. How many players in the NBA realistically could’ve wanted such a contract?

I guess you can negotiate stuff if you are vehement about it…