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NBA “stretch provision” may mean more bad contracts

Nov 28, 2011, 2:09 PM EST

Kris Humphries AP

We kind of refer to this as the Eddy Curry Rule.

In the NBA labor deal is what is called the “stretch provision,” which will help teams get rid of underperforming players on big deals. It can only be used on new contracts but here is how it works: If you want to get rid of a player you can buy him out then stretch out his contract on your books for double the length of the deal plus one year. For example, if a player is owed $20 million over two seasons and he gets waived, the team can stretch him out so his deal so on the official salary cap ledger he only costs them $4 million a season for five seasons.

But that is going to lead to some funky bidding, suggests Chris Sheridan at Sheridanhoops.com. He uses the upcoming free agency of Kris Humphries as an example.

Team A is willing to give Humphries a three-year contract starting at $8 million. With 4.5 percent annual raises, Hump would have an offer of $25.08 million sitting on the table.

But Team B really needs someone to do the dirty work under the boards. So they make Humphries the same offer but with a fourth year added on, fully guaranteed at $9.08 million. Now, Hump is looking at a $34.16 million deal. Which one do you think he’s going to take? Team B’s, of course.

Then, after three years, if Humphries is a $9 million burden on Team B’s 2014-15 cap, they can waive him using the stretch exception, and he will count against the cap for only $3 million per season over the next three seasons.

Teams are going to figure out how to game the system, and this is one way it will happen. And it is easier for larger market teams to have a few of those bought out, stretched out deals (and replace them with new, productive players) than it will be for smaller market teams that can’t go into the luxury tax realm as easily.

With things like the stretch provision and shorter contracts, teams can make the bad decisions of their GMs go away more quickly. The thing is, it leaves those same GMs with more decisions to make — there will be more roster turnover every season and more player personnel moves to be made. For bad GMs that means more chances to screw up, for the best GMs it means more chances to shine. As it was before, good drafting and management will be what wins in the NBA.

  1. Chris Fiorentino - Nov 28, 2011 at 2:41 PM

    Agree completely with you here, Kurt. And as I said when the first posting of this rule came out, this is going to be a benefit to the players way more than the owners. because there is more DEAD MONEY on the cap, spread out over more years, this is more money to be spent on the team payroll.

    For example, if a team has $10 million in dead money because of this rule, they would have had $25 million if not for this rule…meaning they can sign $15 million more in long-term contracts that season. more money for players. More dead money from the cap. A team could literally have a cap figure of $80 million, with monies attributable to 20 or more players over years of bad contracts, and this would be a huge benefit to the players. Eventually, it is going to hurt the team…but for a big-market team, it won’t be much of a bother because, as Kurt writes above, those teams can afford the luxury tax.

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