Salary Cap Chat With Larry Coon 10/5/11

1. philip fletcher

   I understand the need to be profitable. Yet I myself am a union man. I see most of these players playing their butts off. That is what the laborforce is all about getting the job done to the best of their ability. The funds that are involved or lack their of is usually a failure of the management. It is poor handling of funds by those who handle the money not the ones earning the money. Why do the owners not understand that? Also revenue sharing is just that if your revenue is twice the other teams you still must share, that again is the owners issue not the players. Why can’t the owners see that it their fault if one team profits and another does not the problem is with them, not the players, what is it the owners cannot see?

   • Larry Coon

     Your premise assumes poor handling of funds. Well, it doesn’t assume it — you say so directly. Sure, there are cases where this is true, but by-and-large that’s not the case. Non-player-salary costs have risen significantly, which is part of the problem. Franchise valuations also contribute to it. A lot of the rest of it comes from long-term debt accumulated from funding past operational losses.

2. Larry

   If a 50/50 offer is on the , how do players believe they can do better than that with court proceedings? If that’s not bargining in good faith , I dont know what is.

   • Larry Coon

     The players’ NLRB complaint charges that the league engaged in bad-faith bargaining by refusing to negotiate in good-faith in the months leading up to the lockout, essentially stalling until the players were locked-out. The fact that they went to 50% only yesterday could be interpreted to support that argument.

     The best the NLRB might do is lift the lockout. The real threat comes in the form of decertification followed by an antitrust suit. If they prevail, the players could be awarded triple damages — that’s around $6 billion per year.

3. Clint in New Zealand

   Would a hard cap favour any of the teams who have preserved cap space?

   • Larry Coon

     Depending on exactly how it’s implemented….sure.

     If teams are over a hard cap and have to get under right away, then their only choice is to get rid of players. Teams under the cap may be able to take advantage.

4. Brian

   at this time – what % season could start on like 11-15 or 12-1 & have full 82 games. its obvious they arent starting on time now. whats % of 50 game season & % of 0 game season? i think stern’s 49-51 bri deal should be something the players could take. when the public hears the league offering basically 50-50, public opinion is going to turn against the players, it sounds like at this point the owners are giving in to more player demands and the players wont decrease their bri share & are compromising less than the owners.

   • Larry Coon

     It will take about 30 days to go from a Stern-Hunter handshake to opening tip-off on the first game. The league has already said Monday is the deadline to hold a full 82-game season — after that, they’re cancelling the first two weeks. If they have a deal on Monday then the season will start around November 9. Presumably the games scheduled for November 1-8 will be rescheduled, like rain-outs in baseball.

     I don’t think it’s so much a matter of public perception as lost revenue. For every week of the season that’s lost, a huge amount of money is lost as well. If the players are holding out over a percentage that amounts to, say, $100 million, and they lose $200 million in collective salary getting to the point where they might get that deal, then it’s a net loss for them.

     You could say that the players would make it up over the lifetime of a deal, but it’s also true that few players will be playing over the entire lifetime of the deal. Most of them would lose money they’d never recoup.

5. Volkan, Antakya Turkey

   Mr. Coon i hope you are doing fine

   either hard cap or soft cap (or flex cap), owners will have to pay agreed percentage of BRI.
   I mean when total payment would be same each case why players insist on soft cap?

   second question, what would happen if the union decertifies?

   • Larry Coon

     A soft cap allows individual teams to sign players but go over the cap; a hard cap doesn’t. So in a hard cap system if a team is NEAR the cap, then they can only offer X dollars and nothing more. The overall effect will be to squeeze out guaranteed contracts and/or the middle class. Neither of these is acceptable to the players.

     I talked about union decertification HERE and also HERE.

6. Nick

   Name the players most likely to get traded when the season starts

   • Larry Coon

     That’s a hard question to answer without an agreement in place.

     Dwight Howard & Chris Paul are two big-names to figure out, but they’re also two of the names most affected by the new agreement. It looks like the owners are trying to put in a “Melo Rule” to prevent players from extorting teams into trading them. If this happens, then the Magic & Hornets might be more inclined to hang onto their all-stars.

     One player I expect to be traded no matter what is Chris Kaman. The Clips have DeAndre Jordan ready to take over and desperately need a front-line three. Kaman is the trade bait.

7. Jeff

   The approx. $400 million in revenue that doesn’t count as BRI – what constitutes that amount? Is it just the extra % of suite revenue, naming rights and signage or is there something else?

   • Larry Coon

     Things like arena signage, luxury suites, naming rights, etc. These are things that can’t be ascribed exclusively to the NBA team playing in the arena.

8. tony

   As steve kyler points out and chris sheridan points out and Berger from cbs sports. If they don’t don’t get a deal done by sunday it would be ridiculous. They are essentially a percentage or 2 a way from a deal. Wouldn’t you agree?

   • Larry Coon

     It’s hard to pin down a percentage exactly, because some of the estimates are somewhat apples-to-oranges. Are we talking about a percentage of raw revenue, BRI, or BRI minus some overhead? That determination skews the final results, and makes their positions harder to compare. In addition, the offers are now being expressed in ranges rather than hard percentages — this further confuses matters.

     It looks like the owners’ offer is averaging about 50%, and the players about 53%. That’s still pretty significant, but certainly within range of hammering out their differences.But the players especially seem to have drawn a line in the sand. A deal may still be struck in the 50-51 percent range, but it won’t be struck this week.

9. Bill Simpson

   Why didn’t the knicks just wait and sign melo during the free agency? He unquestionably wanted to play in NY and they could have kept chandler, gallinari, etc.

   • Larry Coon

     I know Mark Warkentien is a fan of George Patton, who said “An imperfect plan, executed violently today, is better than a perfect plan executed next week.”

     The team would have to deal with a LOT of contingencies if they waited for free agency. For one, who knows (even today) if the new cap system would provide them with the kind of cap room they’d need, or would provide Denver with a franchise tag that allows them to hang on to him?

10. matt

    Hey Larry love your work! My questions are, do you think that the players ultimately walking out on the owners yesterday, ends up netting (no pun intended) them a worse than 50/50 split of total BRI? And do you think Fisher/Hunter panicked as a result of the “power” agents memo? THank you sir, I look forward to your answers.

    • Larry Coon

      Last question –

      I think it doesn’t affect the split, but it could still affect them in the pocket book. A 50/50 split today is better than a 50/50 split two weeks from today, because games will be cancelled, revenues will be lower, and their split will be less.

      I think Fisher & Hunter panicked a little, but I think it was called for. It appears the agents were trying to butt-in, and this is a very delicate process. They could have usurped their ability to strike a deal.

      That’s all for today folks — thanks for reading & participating!

11. Shem in Honolulu

    Yesterday, during his news conference, Stern mentioned that the owners were willing to authorize guaranteed contracts. Do you know any more about this? Authorize and require are not the same thing, however. Do you think that if the owners required full guarantees for the first 3 years of all veteran contracts, that would be sufficient to get the players to accept a harder cap?

    • Larry Coon

      I think it was simply his way of saying that the rules regarding guarantees would remain the same, essentially.

12. matt

    do teams still have to pay players guaranteed contracts for 2011-2012 even if there isn’t a season?

    • Larry Coon

      Nope. A lockout would be pretty ineffective if teams didn’t make any money but still had to pay the players.

13. matt

    Am i the only one who thinks a team could fetch dwight howard in a trade if they also were to receive one or both of orlando’s horrible contracts. aka agent zero and/or hedo

    • Larry Coon

      I think it’s the other way around, I think ONE condition of trading for Howard would be that the other team would have to take Arenas or Turkoglu. It’d probably be Turkoglu, since Howard’s & Arenas’ combined salaries would be very difficult for any team to trade for. (This all assumes rules similar to the previous rules.)

14. Matt Sutton

    Larry…assuming that a deal is struck before Monday, what would free agency look like an what goals might the Lakers have/be able to do

    • Larry Coon

      If a deal is struck Monday then the two sides would vote on it within a couple days. Once that happens and we know we have an agreement, then it’ll be like the July Moratorium — teams will be able to talk to players, but nobody actually can be signed or traded until the final agreement is drafted, proofed & signed a couple weeks later.

      The rest will be chaos — teams will open their doors to players, but official reporting dates are set by the CBA, so there’s no way to even require players to attend until the deal is signed. In addition, teams will be completing their roster decisions while “training camp” is ongoing — players will be signed, traded, and dropped into the middle of camps. Then there will be an abbreviated preseason — in 1999 they had three games each — before opening night. Players will be rusty, insufficiently trained, and not in sync with each other yet. All the makings for stellar basketball.

      Shortened seasons seem to favor teams that make few changes from the previous season — for instance, the Spurs won it in 1999, and were pretty stable. The Lakers, in contrast, hired Kurt Rambis as a rookie coach, added Dennis Rodman for comic relief, and crashed & burned. I can see some minor tweaks — a backup center, finding re-signing or finding a replacement for Shannon Brown, and filling-out the end of the bench — but that’s it.

15. matt

    r teams still allowed to use their player options on certain players at the moment?

    • Larry Coon

      Teams can’t do ANYTHING with players at this moment.

      Assuming they had a deal today and resumed business next week, those options needed to be picked up by June 30.

16. Anthony

    Is it possible that a deal will be done but the full 82 game season won’t begin until Christmas and end on the July 4th weekend?

    • Larry Coon

      They won’t play a full 82-game season if they go that long without a deal. On Monday they’ll cancel the first two weeks of games. Those games won’t be made up. As time continues to pass they’ll continue to pare games off the season. When they get to a number below which they can’t call it a legitimate season (in 1999 it was 50), they’ll cancel the season entirely.

      If we have a season that starts around Christmas, expect it to be around 65 games long.

17. matt

    Do u think R.Felton for J.Calderon is a fair deal? Raps get cap relief and Jose’s defensive flaws would be covered in portland. Jose would just love to dish out dimes if he were on that blazers squad.

    • Larry Coon

      Felton is a better player with a cheaper contract. Why does Portland do this deal?

18. Andy

    Larry, I have read elsewhere where you say that the 51/53 split reportedly offered to the players by the league protects the players’ salaries from going below 51%, and protects the owners from salaries going above 53%.

    My question is: In the 51/53 split, at which number(s) do the luxury and escrow taxes kick in? 51%, 53% or a combination of the both?

    • Larry Coon

      Sorry I didn’t get back to your second email, my friend. I had a chat to prepare for.

      My presumption — and as with the my interpretation of the splits, this is based on my reasoning, and not any specific details I actually heard — is that they will continue to set the cap and tax threshold based on a percentage of BRI. In other words, the system (including escrow) would continue to work the same as in the old agreement, and the guarantees would split. In the previous agreement the players’ guarantee and the owners’ guarantees were both set at 57 percent. In this system, the players would be guaranteed no less than 51 percent and the owners would be guaranteed to pay no more than 53 percent.

19. Karl

    Do you think we’ll be doing this again in 6/7 years?

    • Larry Coon

      2005 was a lot easier than 1999. Maybe if we’re lucky it’ll be only every OTHER negotiation that gets sticky.

20. Michael Prokop

    Why is it that people are thinking that the owners are “compromising” more, when the changes in terms discussed (i.e. bri-split, etc) are more in the owners favor than the players as compared to the prior CBA.
    For example, the last bri was 57%, anything less than that is a players compromise, regardless of if it ends up being 56%, right?

    • Larry Coon

      It depends on your outlook. You could say that the previous deal is now expired, so that 57% no longer exists. Sure, there’s some presumption that the negotiations pick up where the previous deal left off, but that’s all it is — a presumption. In reality, the owners & players agreed on what they could live with through 2010-11, and now it’s time to talk about what they can live with starting in 2011-12.

21. Justin Krieg

    I dont understand how the “Melo rule,” removal of bird rights for player traded in contract year, would eliminate player’s holding teams hostage. Doesn’t it just force teams to make decisions on players sooner (when they are more valuable w/ bird rights)?

    • Larry Coon

      You have a point, but for one, it moves the deadline from the middle of a season to the offseason. Also, the longer the player has to stay with his team before becoming a free agent, the less palatable it may be. I think it does more to encourage players to stay with teams, and gives the teams a little more flexibility in dealing with the problem, but it certainly isn’t a panacea.

22. Karl

    Is Stern a genius? People see 50/50 and automatically assume that is as fair as it gets, regardless of how much the owners losses are.

    • Larry Coon

      He also worded it as 50-50 of a pie from which a significant amount was already held back (but later on in the day his offer didn’t include that holdback). He knows what he’s doing.