NBA Salary Cap Chat With Larry Coon 10/05/12

1. Deven

   I hear that Paul Millsap is in the final year of his contract with the Utah Jazz. Shouldn’t he have signed an extension a long time ago? What do you think will happen?

   • Larry Coon

     I think it makes more sense for him to test free agency, even if he plans to re-sign. The rules for extensions really don’t favor players opting for them.

2. jay

   NBA.com says NBA League Pass is $180 right now for a limited time. When does that Limited time offer end and how much is the regular price?

   Is it worth all that money?

   • Larry Coon

     I don’t know the regular price or when the limited time offer ends.

     As to whether it’s worth the price, only you can answer that.

3. Tasia

   Will an unsigned draft pick count against a team’s cap during free agency? Are teams allowed not to sign draft picks for more cap space?

   • Larry Coon

     Unsigned first round draft picks have a cap hold until the player is signed. You can find the amount of the cap hold for every pick in every season in the “First Year Salary” column here: http://www.cbafaq.com/scale2011.htm

     Unsigned second round picks do not have a cap hold.

4. nick

   i’ve always wondering this for salary cap purposes. For example deron williams had an offer from the nets and the mavericks but doesnt the state of texas not have an income tax? wouldnt his mean that the offer the mavericks had was actually worth more money then a team situated in new york with a high income tax? my question is does the nba scale contracts accordingly for salary cap purposes because it would seem he wouldve actually made much more money annually in dallas.

   • Larry Coon

     No, they don’t scale the contracts. It’s not as big an advantage as you might think, and there are lots and lots of variables determining the cost of living besides the income tax rates. Some states don’t charge sales tax — should they scale for that? Property tax rates vary — how about for that? Some homes are much more expensive — for example, compare home prices in Manhattan Beach versus Oklahoma City. Should we adjust for that? Endorsement contracts can be richer in LA and New York — how about that? Etc., etc. The best thing to do is acknowledge that it’s not a strictly level playing field, and that there’s little that can be done about it.

     The reason I say the income tax rate isn’t as big an advantage as you might think is because most jurisdictions with NBA teams require visiting athletes to pay a state income tax for the games they play there. Since ALL NBA players play at least some of their games in Florida, Tennessee and Texas, all NBA players therefore derive some of this advantage. Conversely, players with the Heat, Magic, Grizzlies, Spurs, Mavs & Rockets play part of their season in other states in which they have to pay income tax. It all evens out to a certain extent.

5. ?_?

   what is the basis of 82 games in nba why not 87 3 games per team

   • Larry Coon

     Remember, the 82-game season was established long before the league expanded to 30 teams, so the number of times each team plays the other teams has nothing to do with it. The more games that are played, the more revenue for the league, and 82 games provides the right balance of allowing a pre-season, regular season, playoffs and offseason, while maximizing the number of games (and therefore the revenue).

6. zedrix

   Aside from the rumored return to the Los Angles Lakers, what team(s) is Derek Fisher recently linked to?

   Any information why is he still not signed? Will he play for a veteran minimum? Is he looking for a multi-year contract maybe?

   • Larry Coon

     I don’t think Fish is going to return to the Lakers. I just don’t think there’s much interest from the team with so many point guards on the roster.

     I was hoping OKC would pick him up for another run, but Sam Presti seems to have other ideas. I think the main reason he’s not signed is because he’s 38 and his skills are on the decline — most teams would rather give those valuable minutes to young, developing talent.

     Derek’s best asset to offer right now is leadership & experience — which is why OKC signed him him last season. I can see him taking some time off, staying in shape, and signing with a contending team around February or March for the stretch run & playoffs. Playing partial seasons might extend his career another year or two.

7. sad sad lakers fan

   Hello Larry,
   just wanted to share my sadness. ive been a lakers fan for my entire life. i called TWC about the lakers channel and they told me they do not service my area which is wierd because i live in socal. they said only charter services my area. i called charter and they have no deal in place for the lakers channel. so here is a lakers fan who lives in southern california who is currently unable to watch his team . sigh.

   • Larry Coon

     I don’t think anyone — including providers like Charter and Cox — thinks a deal won’t be struck to bring the Lakers to so many SoCal customers. I’m in the local area and have Cox, so I’m in the same boat as you.

     These deals seem to go down to the wire, since they’re negotiating huge rights packages, and TWC has a lot of money to recoup.

8. James

   Good afternoon Mr. Coon!!
   Where does the money players pay the league for techs, flopping, etc… go? And can it be recouped in a tax write off as a business expense?

   • Larry Coon

     It goes to charities of the league’s and players association’s choice.

9. James

   NBA writers and analyst believe that Rudy Gays available for the right price. And I personally believe that STAT is available. Do you think HOU can get both and stay below the tax threshold?

   • Larry Coon

     I don’t think either one is really available right now. Yes, Memphis has an expensive roster ($79.4 million right now) in a market that can’t really afford that high of a payroll, but I don’t think they see Gay as their target for reducing costs.

     The Knicks are still intrigued by their Stat-Chandler-Melo core, and want to build on it as other teams start reducing costs preparing for the progressive tax. And that said, Stat’s is a pretty onerous contract to trade, given that it’s not insured.

10. Tim

    I was reading about guys who will become free agents next season (I.e harden, dwight, CP3 etc). Its said that they will recieve significantly more from their teams if they play out the current contract and sign a new one rather than extending. Why is this the case? Whether new contract or extending, its still with the SAME TEAM.

    • Larry Coon

      It’s not really the amount they make, it’s the amount they lock in.

      A free agent with Bird rights can sign a five year contract with 7.5 percent raises with his previous team. An extension can be for only four seasons, but this includes any seasons remaining on the current contract. So it a player signs an extension during his last season, the most he can get is three new seasons.

      Let’s use Dwight Howard as an example. If he signs an extension after Feb. 10 (the six month anniversary of his trade), he can get three new seasons totaling $66.2 million. If he re-signs as a free agent, he can get five years and $118.0 million.

      Yes, you can assume that even if the player opts to sign a three-year extension, he eventually will sign for those additional two years, so he won’t really be making less money. It’s all about locking-in that money now — a lot can happen in three years.

      I examined the issue in this article, comparing & contrasting the situations of Howard and Andrew Bynum (this was before the trade). My conclusion, considering all the factors at play, was that Howard should become a free agent in 2013, but Bynum should sign an extension.

11. Wendy

    Does the NBPA have a good case against the new flopping rule and its fines?

    • Larry Coon

      I’m done predicting what’s going to happen when the league and players association litigate an issue. The arbitration rulings often make little sense.

12. Alex B.

    There was an interesting question brought up in Daryl Morey’s Reddit AMA about whether a team should be building to win or building to win a championship? Do you think it is feasible given the need to be profitable, have a fanbase and sustain player morale to continue to preserve assets, not use cap space and develop slowly in order to win a championship? Or, in some cases, is it better for teams to cut their losses, just try to be a competitive team and have that 5% chance that they pull it off one year (a la the Hawks/Pacers)

    • Larry Coon

      I think it’s a team-by-team decision, which is partly based on the market. If you have a team in a small market you have to build a competitive team through the draft and player development, because you’re not a natural landing spot for big-name free agents. That takes time — either for your players to develop & mature, or for you to build up enough assets to trade for big-name players.

      But if you’re a team like the Lakers, which is a natural free agent destination, you need to recycle much more quickly. You’re not building on scouting & player development, you’re building on free agency. If you stay non-competitive too long the fans lose interest, which hurts revenues.

      I think teams need to have short-range and long-range plans for building a competitive roster, which are based on their market and a lot of other factors. Once they reach the point where they’re competing, they need to adjust on the fly, if necessary, to take the last step.

      Teams can be more conservative and build a merely “good” team, hoping for an occasional miracle, but I don’t think that strategy pays off in the long run. It’s like a poker player who chases pots post-flop — he’s going to win an occasional hand, but over the long run he’s going to lose money.

13. kasey

    if the thunder let harden leave or they trade him due to financial reasons do you see kevin durant leaving after his contract is up? this is not lebron and the cavs, dan gilbert made it clear he was willing to spend to win. but if okc isnt willing to spend why would a superstar want to stay? look at what the lakers and miami are doing. durant must feel at a disadvantage if his owner isnt willing to do the same

    • Larry Coon

      “Willing to spend” is a nuanced term. The team is already bumping up against the luxury tax, in the 28th biggest market. It’s not clear how much of the league is going to be willing to continue spending into the tax once the progressive and repeater rules take over.

      Beyond just raw spending is sustainability — if a team (not just OKC) spends a huge sum on just 3-4 players, how is it going to fill in the rest of its roster and remain competitive over time? It’s a much bigger decision than whether to spend on one guy — it’s how to model a roster so it remains competitive long-term under the league’s new economy.

14. SatBchMagicer

    Hi Larry, NBA camps have started, all’s right with my world, hope same for you and family. Since some fans(a few contributers?) still seem confused: The next chance for any of 15 teams still having ‘amnesty right’ to use it won’t occur until July 10-16, 2013(i.e. after ‘CBA start’ of 13/14 season), correct?

    • Larry Coon

      Correct — amnesty runs for the first week after the July Moratorium ends.

      We’re quickly running out of amnesty-eligible players. Any team that used their amnesty can’t use it again. Any player who was signed, extended or traded since December 2011 can’t be amnestied. There are only about 50 players left who can still be amnestied.

15. Cameron Beeder

    Say the Heat and Lakers match up in the Finals, and neither is willing to compromise on its base philosophy for this year (Miami plays its “positionless” lineup with LeBron at the 4 and Bosh at the 5, and LA pounds it down low with their ridiculous size). Who would seem to have the advantage there? Neither side would presumably stand a chance trying to stop the other.

    • Larry Coon

      I think it’d be a great series — as you said a match-up of teams with very different styles. But I think the Lakers can match up better against Miami than Miami can match up against LA.

      And there’s a lot of “positionlessness” to LA as well. On defense, down low Howard and Gasol can pretty much switch on anything. They have two perimeter defenders in Metta and Kobe who can cover a lot of players from 1-3, and can funnel players to the bigs from either side. And Metta looked really impressive when I saw him this week — I think he’s going to have a much better season this year. On offense, they’re going to be running a version of the Princeton this year, which is a read-and-react offense similar to the triangle they ran under Phil Jackson (Tex Winter based the triangle on the Princeton).

      When all is said and done, while “positionless” might be a nice term to throw around, what it really boils down to is an accommodation for their lack of size, and a lack of skill at the one and five spots. The Lakers have a system that delivers that AND brings the size.