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Does reducing the size of a max contract mean more player movement?

Mar 1, 2011, 8:15 AM EST

Image (1) lebron_decision-thumb-250x191-15508.jpg for post 6206

There are not many things we can say for sure about the new Collective Bargaining Agreement that the players and owners are hammering out. Or will hammer out, right now they are just posturing. No actual work has taken place.

But we know two things are pretty much certain.

The owners will want less money and fewer years on max contracts. Why? Because they often give them to the wrong people and end up regretting it. They want to reduce the pain on their mistakes.

Secondly, the owners want to find a way to limit the movement of superstar players. The recent moves by LeBron James and Chris Bosh to Miami, followed by Carmelo Anthony determining where he wanted to play and forcing his way out of a smaller market to the biggest one scares the owners. They want to find a way to take that power from the players, to find a way for teams to hold on to their stars — their real meal tickets — so that there are not more Utah’s trading Deron Williams out of fear of what night be.

However, reducing max salary size may give the players even more power.

Your true superstar players — LeBron, Kobe and a handful of others — are vastly underpaid for what they generate in terms of revenue for the teams. On a true open market, LeBron would have made upwards of $40 million last season one respected agent told PBT at Summer League. But because LeBron made less he got to dictate a lot of the terms.

Henry Abbott at TrueHoop broke this down very well yesterday.

Think about it this way. Let’s say LeBron James was limited, by some upcoming CBA provision, to earning one dollar a season. In that world, every team in the NBA would be crazy not to sign him up. He’d be beyond valuable. He’d be a winning lottery ticket, that you can purchase for a dollar after they reveal the winning numbers.

With a salary like that, James really does have 30 owners at his feet. As he can’t ask to be paid what he’s actually worth, he can instead ask for … whatever he wants. Get me this teammate! Hire my buddy! Let me out of practice! Fire the coach! Stock this champagne on the team plane! It’s all worth it to the team, for a player who would be, effectively, contributing $50 million or so to the bottom line every year of his prime.

On the other hand, let’s say there were no limits at all on player salaries. Let’s say teams were allowed to pay James the $47 million (the New York Times’ Nate) Silver suggests his play is worth. Or maybe some owners make their own calculations about James’ value, and somebody offers James $75 or $100 million per season.

Well, now James is a guy with a fatter salary, for sure. But he’s also a guy whose return on investment has diminished. Now instead of 30 owners lining up, he might have one or two eager to employ him. Now instead of making a long list of demands to a team, a team would make a long list of demands to him. Now instead of telling the team how things were going to be, the team would be telling him how he can best make good on the enormous sums they are paying for his services.

In other words, to determine what happened to make superstars so powerful, you need to understand what made them so valuable. And a big part of the answer lies with a CBA that leaves superstars woefully underpaid.

It’s not going to go that way because the owners want to control costs and they see the bad max deals out there as one of their biggest expenses. The owners want to be protected from themselves and the deals they hand out. But that could just increase this clustering of stars in big markets.

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