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Report: NBA proposes franchise tag, non-guaranteed contracts

May 11, 2011, 12:52 PM EDT

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The proposal the NBA owners presented the NBA players union late last month would do away with fully-guaranteed contracts and adds a style of franchise tag, one that is different than the NFL’s but new to the NBA, reports Zach Lowe at Sports Illustrated.

Both would be a radical shift from the current collective bargaining agreement. It’s a proposal the players have said they do not like.

Contract guarantees could be a real sticking point. Currently, most longer contracts in the NBA are fully guaranteed (they don’t have to be, non-guaranteed years or a buyout clause can be negotiated as part of the deal, which  has happened in the case of Lamar Odom, Marcus Camby and others), so when you make a bad deal to sign Eddy Curry long term you or someone has to pay the man. All of it.

Sources also said the league’s proposal would ban fully guaranteed contracts. All contracts would have limits on the amount of money a player would be guaranteed to receive, and those guarantees would decline during the life of each contract. In other words, a player making, say, $5 million per season over four seasons would actually be guaranteed less than $5 million in each of those four seasons — and the amount guaranteed would drop each season. The idea is for teams to be able to get out of undesirable contacts more easily and avoid ugly Eddy Curry-style buyout talks.

That makes financial sense for the owners, and you can see why the players would oppose it. On one hand it would make it easier for franchises to erase mistakes and restructure their rosters — they could get out of salary cap hell faster — something fans would like. But if you do something stupid — say, offer Joe Johnson a six-year max deal — shouldn’t there be a price to pay as a franchise? Why should an owner/GM do something stupid and have a “get out of jail free” card to go with it?

Then there is the franchise tag.

The inability of Cleveland to retain LeBron James and Toronto to retain Chris Bosh scared a lot of mid-to-small market NBA owners, who wondered if they were every lucky enough to get a real star via the lottery would they be able to keep the player. That is why some owners have pushed for a form of the tag.

But what the NBA has proposed is different than the NFL version. The NFL franchise tag takes that player off the market, he is locked into his team with a top five salary at his position.

Instead, a team would be allowed to designate one player for preferential contractual treatment, including more overall money, more guaranteed money and at least one extra year on his contract. A player would have to agree to such a designation. It is designed to work as an incentive to get a player to remain with his team rather than as a roadblock to free agency, the sources said.

Take the situation between the Cavaliers and LeBron James one year ago. Under the league’s proposal, the Cavaliers would not have been able to unilaterally “tag” James a franchise player and bind him to the team for one more season. The Cavaliers would have been able to offer James various enticements he may not have been able to get from other teams, the sources said.

The NBA’s existing CBA already allows this to a degree, teams a player is with can offer more than other teams. In the case of James, the Cavaliers did offer larger raises and one more year on the deal, which would have totaled about $27 million more over the life of the deal. It wasn’t enough. That is why a shotgun sign-and-trade took place, so James could get those larger raises (although he took a smaller base salary and less overall money to leave).

But in a world with non-guaranteed contracts, the incentives that do guarantee more money could be a stronger lure to keep players with teams.

Which has always been a goal of the NBA. They realize the value of having Tim Duncan always being a Spur or Kobe Bryant always being a Laker. While those men should have the ability to test the market, the league benefits in marketing from having its stars be stable with a franchise.

The answers are not simple. And it’s going to take a long time for these two sides to get on the same page. But at least they are talking.

  1. aboogy123456 - May 11, 2011 at 1:11 PM

    I don’t think the Joe Johnson contract was actually a dumb move. I think Atlanta understands he’s not worth that type of money, but their options were limited. They either sign Joe johnson, which pretty much guarantees they are in the playoffs for a while, which brings more money to the team. I think they knew that they are not going to attract any other stars to come to Atlanta, so this is the best that they could do.

    Joe johnson is obviously not worth that type of money, but if you think that ATL could have made a smarter move, please comment, and I know it’s just a side point to this article but I thought it was interesting.

    • musilly - May 11, 2011 at 1:40 PM

      Fair point, I think part of the problem with Johnson’s contract is that the Hawks bid against themselves, as the Magic did with Rashard Lewis. Another interesting thing–to me personally at least–is that the contract can be read as an admission of a certain lack of ambition. Are they going to win a championship in the next five years, given their contract situation? Highly unlikely. I read the contract as suggesting something like “no, we won’t be champions, but we’ll be pretty good for the next few years and we’re okay with that.” It was definitely an interesting contract/decision.

  2. sknut - May 11, 2011 at 1:36 PM

    There are too many teams like Atl and Johnson where they have to overpay due to things out of their control ie.location, this seems to be isolated to the NBA. Thus having a tag would help those teams keep their star players and enable more competitive balance. Which is what makes all fans watch. I forget how good the NBA can be because my team (Wolves) stink its no fun as a fan to not care but by keeping better players on all teams not just a few its better for the league.

    • redstar504 - May 11, 2011 at 2:56 PM

      The league needs a true franchise tag because you are 100% right there are too many Atlanta’s out there either:

      1.) Overpaying to acquire or keep talent
      2.) Being bent over backward by star players that turn 3 year deals into 2 year deals by forcing in most instances (not Denver’s case) foolish trades by the deadline in year 3

      Just think in today’s NBA if Jordan had the same career path would he have stayed a Bull?
      -NBA Rookie contracts are 2 year deals with team options in years 3 and 4

      -Jordan’s first year the Bulls get 38 wins, crack the playoffs, 7 seed out round 1
      -2nd year 30 wins, 8 seed, swept out round 1
      **The Team could void here odds are they don’t**
      -3rd year 40 wins, 8 seed, swept out round 1

      At his point MJ could have started making noise about maybe not wanting to be a Bull tired of falling short and playing for a losing franchise (which Chicago was prior to MJ). He would have seen the Lakers and Celtics (the same ones that swept him out 2 times) take turns winning the championship his first 3 years. If he had the mind set of today’s NBA star he would likely been angry that his roster going into the year was made up of nobodies, has been’s, and rookie’s. He could have forced his way to LA or Boston the Bulls would have never been able to hit their stride that year like they did and the great Bulls teams of the 90’s would have never been.

      The NBA needs a franchise tag for that one reason. Developing a team takes time sometimes that one extra year of locking a guy down can make all the difference (it would have for the 87-88 Bulls). Limit the tag to a year or two of use, even one year would allow you to at least get the full length of a contract and let a team avoid the foolish move my star for junk February trades.

      What is being proposed is useless and almost exactly what is already in place today. The scarey thought is in negotiations usually one starts high and works down, but the fact that this is their starting point is a joke. It means they are not serious about a tag.

      I just get the vibe that the NBA likes the movement, trade demands, super teams, and the like. They don’t care about the smaller markets because they look at them as interchangeable parts. If the market doesn’t work then move the team and some other small city will be glad to have an NBA team.

  3. teke184 - May 11, 2011 at 2:21 PM

    Non-guaranteed contracts, as you said, should be a non-starter because there’s always the possibility of team options built into the back end of the deal.

    The franchise tag, though, should be considered after the events of the past year. Superstars holding teams hostage, between The Decision, LeBron insisting his cronies be part of the front office, the Melo and Deron Williams issues, etc., it’s gotten g*ddamn ridiculous.

    The idea should be that a team would have the leverage to get something for the player if they want out, NOT that a player should be able to dictate which team they’re going to, such as Melo chasing away all suitors but the Knicks. It should be a way to buy time for the team to get a deal rather than a way of permanently keeping a player where he doesn’t want to be.

  4. hnirobert3 - May 11, 2011 at 2:25 PM

    I’ve never been a fan of the franchise tag in the NFL. If a player is due to be a free agent, he should be allowed to be a free agent and pick and choose where he wants to go. I think they should increase the amount of money/contract years that a team can offer someone for staying with their team. They shouldn’t be held hostage though.

  5. cosanostra71 - May 11, 2011 at 2:36 PM

    I like both of these things. In most industries, if you are not performing to the level that you are being payed, you are fired. Also, I think that their version of the franchise would return a lot of power back to team management that has been taken from them by the players.

  6. purdueman - May 11, 2011 at 2:42 PM

    If I were an NBA owner, I’d let next season and if need be the season after that get cancelled unless the current absurd fully guaranteed contracts go away. The NBA needs to take that page from the NFL; if you can’t make the cut, you don’t get paid. If you get cut? Then let the open market determine what your value is. That’s the way successful American corporations work!

    IMO, the most idiotic thing in all of professional sports is the current NBA trade restriction guidelines that make slugs like Eddie Curry more valuable because they are a slug due to their expiring contracts than that as a player. If there’s a more asinine thing in professional sports, I’d sure like to know what that might be.

    As long as a “franchise tag” has to be mutually agreed upon with the player, all that that’s basically doing is revising the “Larry Bird” rule, thereby allowing players current teams to outbid all other teams for a players services. Where’s the harm in that?

  7. goforthanddie - May 11, 2011 at 3:04 PM

    As long as the franchise tag keeps players from Melo-ing, I’m all for it.

  8. jsprunner - May 11, 2011 at 3:28 PM

    What’s missed in all this is that the changes the league wants to make are not necessarily designed to benefit the league. They are primarily aimed at protecting owners from themselves and each other. Nobody forced ATL to give a max contract to Joe Johnson (they also gave Bibby a 3-yr deal and their best PG was already on their roster!); nobody made Memphis give $80 million to Rudy Gay (seemingly unwarranted at this point), and Eddy Curry did not use a gun to get the contract placed in front of him. And probably the most egregious “max” signing this offseason was that of Chris Bosh – certainly a nice player, but he’s not a #1 guy, he can’t lead a team anywhere on his own, and people don’t come out to see him. Think how much better Miami could have been if they had that $ available to fill out their roster (but that’s another story).

    They really should just put a “hard cap” in place with a minimum salary floor similar to the NFL. Also, the NFL’s franchise tag is not designed to let a team keep a player indefinitely into the future. The 1st year the player gets an average of the top 5 at the position; consecutive “franchise tags” in subsequent years require significant raises, which is why Carolina did not try to franchise Julius Peppers again – they would have had to pay him ~$20 million for a single year. Despite the current lockout, the NFL owners really are in a better place than the NBA owners.

    I hope the NBA figures it out. The playoffs have been an absolute blast this year…..

    • aboogy123456 - May 11, 2011 at 3:52 PM

      good points but you’re way off about Chris bosh. He’s getting $14 million a year, which is not really the type of money a number one player gets, and he isn’t a number one. Miami got a steal paying each of those guys only $14 million while carmelo and Amar’e each get $20 million.

      “Think how much better Miami could have been if they had that $ available to fill out their roster (but that’s another story)”

      There’s nothing they could have done that would be better. if you look at the free agents out there, you’re not getting anything for $14 million better than having bosh.

      • purdueman - May 11, 2011 at 4:05 PM

        aboog… the real underlying problem with the current NBA salary structure IMO is that there simply aren’t enough “name” players to go around (which in turn drives up the price for those who have achieved that status).

        This is a direct by-product of Commissioner Stern’s conscience marketing decision to market individual stars, rather than promote team play. Yes, that strategy has been in large part successful for making the NBA more internationally acclaimed, but it’s also at the expense of many small to mid-market sized teams who feel that they can’t financially succeed without having at least one recognizable “star” (hence once again name recognition means paydays more than what those players are oftentimes worth).

        Most small and mid-market teams though, thanks to La Bum James little offseason staged act, are now realizing that you don’t necessarily need a star or two to compete. Chicago has only one star and they aren’t doing to badly, leading the league in home attendance this year. Despite being basically forced to trade Mello, watch out for Denver in the next couple of years too.

        I don’t care how you try and justify it, but Bosh isn’t worth anywhere’s near $14M/year, just as Carlos Boozer isn’t worth anywheres near the $20M/year Chicago gave him either. But as long as the NBA continues to market “star power”, demand will continue to simply outstrip supply and continue to drive salaries to higher and higher levels.

        Do you for one minute think that Jack Nicholson would bother much with the Lakers if Kobe were traded and the team suddenly went into rebuilding mode with a bunch of unknowns? I doubt it, and what adds to the problem are the “one and done-ers” who now rarely have any name recognition coming out of college too.

  9. aboogy123456 - May 11, 2011 at 4:21 PM

    Yea I agree, I think basketball is so much of a team game but the league gets caught up too much in the stars, and it’s really all about money which I understand.

    my point was I think Bosh (like others) isn’t worth that much, but if you compare him to the rest of the $14 mil people around the league, he’s not bad at all. And the system is messed up, but i think from a basketball standpoint it was much better by the heat to get bosh, rather than 2 mid-level players, whoever they may be.

  10. trbowman - May 11, 2011 at 5:31 PM

    There won’t be basketball next season. These guys make the NFL/NFLPA look like best buddies.

  11. LPad - May 11, 2011 at 6:04 PM

    A few questions about the franchise tag:

    1) how is this different than the Larry Bird rule that the league got rid of? The only difference I can see is that the team can’t exceed the salary cap in making this deal.

    Which leads me to my second question: if the team can’t exceed the salary cap then wouldn’t they have to make their team worst to keep the franchised player?

    3) What is the time period between franchise tags? For example, would OKC be able to tag Durant one year and then Westbrook the next. If not, how does OKC keep Westbrook from going to LA when his deals up and OKC can’t offer him as much money as LA or because Utah decides they need a point guard because they franchised Durant (when his current deal is up).

    • purdueman - May 11, 2011 at 6:33 PM

      LPad: No matter how you slice it, franchise tags are bogus, hokey and bring a new set of problems. The only reason that the NBA would push for a franchise tag is to help mostly smaller and medium sized market teams retain their stars. In order to do so, they would have to be granted an exemption from any money going over the salary cap the team incurs as well as the maximum number of years that they were allowed to offer in as the overall package.

      The two things under the current CBA that I find most troubling though are:

      1) The goofy “salary matchup rules” for trades, which oftentimes make useless players with expiring contracts like Sloth Curry and Kwame Brown inexplicably more valuable than starting players. The mere fact the Lakers were able to acquire Pao Gasol because slug Brown had a big expiring contract is ludicrous44!; and

      2) The current rookie salary cap, which runs only three years (plus one additional restrictive year), for first round picks favors the players WAY too much. The reason that this flat out doesn’t work is that now we’re in the age of “one and done-ers” who come into league and need a lot of time, coddling and coaching up, these players once they finally become useful are then free to shop their services.

      Theoretically that means that the worst teams wind up investing a lot of time and development on many of the best young players who come into the league severely under-coached just then have to turn around and have to way overpay them to retain them or watch them leave without compensation, when usually they have done little up until that point to justify the money that their agents demand (and get because by then they are known entities and usually players on the rise).

      Thug Andrew Bynum is a classic example of this. He spent most of his first three years either injured or playing on the second team. Then he turns around still at only 22 years of age and the Lakers are forced to pay him over $10M/year on a new long term deal when up until that point he simply hadn’t earned it.

      Rather than monkeying around with a hokey, contrived franchise tag system, what the league should address is putting in place a binding arbitration system for players with three years up until they’ve played six years in the league before they can attain free agency. If that players team wants to either negotiate or accept arbitration, fine; if not then the player becomes an unrestricted free agent.

      Bottom line? There’s no way Bynum at only 23 years old and not having been a regular starter should come anywhere close to getting paid the reported $13M+ he’s slated to receive next season. The NBA needs to copy MLB’s CBA in this regard, and also allow teams to “buy out” future free agent years if they choose to do so.

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