Salary Cap Chat With Larry Coon 9/21/11

1. Jono

   Hey Larry,
   Is it because currently America’s economy is really bad that we have a lockout or is their any other reason?

   • Larry Coon

     We have a lockout because:

     1) The previous deal expired (not related to the economy).

     2) The owners are losing money (somewhat related to the economy).

     3) The owners want significant changes made to the system (slightly related to the economy).

     4) The players disagree about the extent of the losses (not related to the economy).

     5) The players disagree about the nature of changes that are needed to the system (not related to the economy).

     So the economy is a factor, but certainly not the principal factor.

     Okay everyone, that’s it for today. Talk to you again next week.

2. Jhayee

   IS TRACY MCGRADY GUD FIT IN ORLADO??

   Jameer Nelson,Hedo Turkoglu,Earl Clark, Ryan Anderson for
   Ben Gordon,Charlie Villanueva..

   tnx

   • Larry Coon

     I don’t think so. McGrady’s just about done.

3. Sven

   Hi Larry, wouldn’t it be fair to both players and owners that contracts can be voided if certain basic standards aren’t met like f.e. code of conduct, BMI,…(not stats per game).
   The NBA & NBPA could serve as arbitror.

   • Larry Coon

     The ability exists already, but it’s tough to enforce. Any attempt to void a contract would be grieved by the players association.

4. Toby

   thank you for your time,
   big fan of your work
   wondering if i could talk to you about the lakers

   [REST OF YOUR MEGA-QUESTION SNIPPED]

   • Larry Coon

     Not only do we not like article-length questions, we ESPECIALLY don’t like when you ask the same questions in different people’s chats. It denies others the opportunity to get their questions answered. Eric Pincus answered this question yesterday. See his chat for the answer.

5. James

   If they wanted an hard cap wouldn’t that be counter productive? Doesn’t it mean players would have the same money available to them in all cities? How would that stop them from still choosing Miami chi of LA

   • Larry Coon

     You will never be able to completely level the playing field. Certain cities will always have advantages — warm weather, tax advantages, night life, etc. You can only hope to level out the playing field as best you can. It’s a fallacy to think that if you can’t completely eliminate the advantage, then you shouldn’t do anything at all.

     It’s also incorrect to think that a hard cap will guarantee parity. Maybe indirectly it’ll have an effect, since for teams like LA, NY & Miami to sign someone under a hard cap, they’ll have to get rid of someone else, and those guys will have to go somewhere.

     But overall I think a hard cap will be a bad thing. It won’t curtail spending in a way that other spending controls can’t also achieve under a soft cap, and it’ll have a lot of disadvantages. For one, it’ll reduce the middle class. For another, it’ll make it difficult if not impossible to preserve fully guaranteed contracts. That’s why in the end I think we’ll still have a soft cap.

6. David

   At this point is there any action that could facilitate a faster negotiation process i.e. union decertification, the NLRB decision, Mayan Doomsday prophecies for 2012, or is this CBA negotiation doomed to be a slow war of financial attrition?

   • Larry Coon

     Most of the ancillary items such as the federal lawsuit and the NLRB complaints, are pretty low likelihood. Decertification would almost definitely slow down the process. I think their best bet is sitting at the negotiating table.

7. jj

   Im a huge basketball fan and there’s no doubt michael jordan was great but I can’t help but feel he’s overrated.. u mean to tell me of all the players in basketball history he’s the greatest or he’s just been notice in the 90s in recent years. I don’t see anyone giving kobe bryant that edge of being the best. It would be hard to say who the best in the world

   • Larry Coon

     Comparing players across eras is difficult. Jordan is one of only a few that belong in that conversation, however, and yes — he was that good. But don’t discount players like Bill Russell — and Russell has the hardware on his side. Check out Bill Simmons’ Book of Basketball if you haven’t already read it — he spends a lot of time discussing this issue. For instance, his argument of Russell over Chamberlain is pretty solid.

8. Stephen

   Larry, do most players realize that in the long run, their refusal to accept a hard cap will only end in them eventually accepting the deal and in turn they potentially lose millions of dollars due to not recieving paychecks during the lockout? I just don’t understand how they think they will “outlast” the owners in this thing.

   • Larry Coon

     I talked about this situation in my last piece for ESPN which is HERE.

     You’re right that the owners can outlast the players, and the owners have a much longer window to recoup any lost income.

     For both sides it’s a matter of weighing the options:

     1) The deal on the table right now.

     2) The deal they can get later by waiting & continuing to negotiate, minus any income they lose in the meantime.

     3) The deal they can get by decertifying and suing for antitrust, multiplied by the likelihood of prevailing, minus any income they lose in the meantime.

     4) The deal they can get by decertifying and continuing to negotiate, minus any income they lose in the meantime.

     If at any time the deal on the table looks like a better option than the others, they’ll settle.

     If at any time, the first two options look worse than rolling the dice with decertification, then they’ll strongly consider decertifying.

9. Wile E Coyote

   Do you know if the rumored staff-level CBA mtg is happening today? If so, any news on what is being discussed, agreed upon, etc?

   • Larry Coon

     It was supposed to, but I’m on the opposite coast so I don’t know for sure — and I haven’t been monitoring Twitter since I started this chat.

     The two sides are essentially coming down to the wire for being able to start the season on time. Both sides met individually last week, and I’m sure today’s meeting was about seeing whether there’s enough common ground for being able to bring the big guns back into the room and seeing if they can get a deal done.

10. Ben

    If the owners achieve a 50/50 revenue split with the players with no hard cap demand, then do you an agreement will take place?

    • Larry Coon

      A few months ago someone from the players’ side told me they’d be in trouble if it got down to 50/50. I don’t think they’ll want to go that far — of course, that’s not to say they WON’T go that far when the season is about to be cut or canceled entirely, and they are facing the impending and immediate loss of income that they’ll never recoup.

      My current thinking (based on my own intuition, not what I heard directly) is that the owners may have a percentage range in mind — say 50% to 53%. Above 53% they won’t make any deal at all. At 50% the players can have pretty much the system they had in the previous agreement, which includes a soft cap. Between those two extremes the system will be somewhere in the middle — the lower the percentage, the more of the previous system the players can preserve.

      So yeah, I think that at 50/50, with a system similar to what they had before (but with a few changes), they could have a deal fairly quickly. To get there, the players would have to come down on the guarantee, and the owners would have to come down on the changes to the system.

11. Damon

    Why is it that both sides feel the need to set aside an EXACT percentage of BRI? Why not have a wider range between the minimum percentage the players get and the maximum they players get so that the owners can save some money when times are tough and spend money if things are good?

    • Larry Coon

      Your idea has merit — there’s no reason the maximum guarantee and the minimum guarantee have to be the same number. Having a range would put some control in the owners’ hands — when they really do scale back, like they did this season, they won’t be penalized (as long as they are over the minimum guarantee).

12. Wile E Coyote

    Hi Larry. Why can’t they just make the lux tax system much more severe? Like 2x for 70-75 million, 3x for 75-80 million, etc. Would have the effect of a ‘de facto’ hard cap for owners while allowing the players to claim victory on avoiding a hard cap & unguarenteed contracts.

    • Larry Coon

      The luxury tax system was pretty much a failure. It was supposed to accomplish two things:

      1) Control spending. What happened was that the competing teams simply saw it as part of the cost of doing business, so it helped increase the divide between the “haves” and the “have-nots,” without really curtailing spending where it mattered.

      2) Serve as a form of revenue sharing. But it was based on the premise that the teams that needed to share their revenue were the higher spending teams. This wasn’t always true. Again, it effectively prevented small-market teams from spending enough to compete, further increasing the divide.

      It’s a much better idea to address the first problem with a lower league-wide revenue split and tighter exceptions, and address the second problem through true revenue sharing. That way the revenue sharing can be directly tied to the size of a team’s market and the team’s ability to maximize it.

13. Ben

    Do you think the owners would agree to a soft cap system with no sign & trades and no mid-levels or bi-annuals, but would allow for teams to re-sign their player(s) even if over the “cap”?

    • Larry Coon

      My prediction continues to be that when all is said & done, we will continue to have a soft cap system, but it will be tighter than it was before — i.e., some exceptions will be cut back or eliminated.

      Bird rights (re-signing your own players when you are over the cap) is even acknowledged by the league as a good thing, and I expect them to remain.

      I also expect the mid-level to remain, because it’s the principal means of preserving the NBA’s middle class. However, it doesn’t need to stay at five years. I expect the contract length to be cut back — maybe to three years.

      I can see sign-and-trade, as well as the bi-annual, going away.

      As long as the owners get the revenue split where they need it to be, they can tolerate a soft cap — especially one with the exceptions reined-in a little.

14. David, Toronto

    Okay, in theory the players’ bargaining stance is at at something like 52% of BRI. But what changes does this imply. It can’t mean a much bigger escrow, because that would amount to a rollback of current salaries. I’m not that naive to think players are going to rush to take that. So what do you think are the most palatable ways the new CBA could translate a 52% BRI into lower individual salary/compensation costs?

    • Larry Coon

      The escrow system will continue in the new CBA as long as there’s a league-wide guarantee. Since salaries are determined before the season and the guarantee is figured out after the season, they have to hold back some salary during the season.

      Let’s say the guarantee ends up at 52%, which is about an 8.8% salary cut from the previous 57%. They could, as you said, simply withhold more in the escrow fund, and leave the salaries alone. But even though the players would have a hard time getting over the idea of a salary rollback, I think it makes more sense, because:

      1) It’s effectively a salary rollback anyway.

      2) New contracts would continue to be signed under the “old” salary scales, and you’d have a salary system that is slightly disconnected from reality.

      3) Most importantly a rollback can be fine-tuned to protect certain players. In order to gain an overall 8.8% reduction, they COULD just chop everyone’s salaries by 8.8%. Or better yet, they could decide to protect certain players. Maybe the minimum-salary guys aren’t cut at all, the mid-level guys are cut by 8.8%, and the higher-salary guys are reduced a little more than 8.8% to bring the overall total to the right number.

15. Scott

    The Jazz need to trade someone from their loaded frontcourt. Al Jefferson to Houston makes a lot of sense to me. Who says no to an Al Jefferson for Courtney Lee and Hasheem Thabeet deal? Jazz could include GS’s 2012 1st round pick as well.

    • Larry Coon

      If I’m Houston I’m very concerned about Jefferson’s injury issues. That, more than what they’d have to give up, would be their principal concern.

16. Wile E Coyote

    Wouldn’t it be easier to dump the soft cap and all its related strange rules & just have a lux tax cap with strict penalities? Then you don’t have BYC, inability to trade player in package after a trade, MLE, traded player salaries within X%, … issues. If one team takes on more salary, they will just have to pay more tax. And if the tax is high enough, even big market teams won’t try to “buy a championship.”

    • Larry Coon

      I think there are some — like Tim Donahue at 8 Points 9 Seconds — who have examined this premised and decided it probably wouldn’t be a disaster if they just did away with most of the cap system.

      But I don’t think the luxury tax is really a solution to anything.

17. Dennis

    It seems the media wants the players to cave in and agree to a new CBA with the owners. But that also means that the media wants the players to agree to bad deal. thoughts?

    • Larry Coon

      I think your premise is wrong. I for one am not on either side’s side, and don’t want either side to cave to the other. I just want a deal done in time to start the season on time.

      I haven’t talked to anyone else in the media who doesn’t feel the same way.

18. martyn

    Can the Lakers get Chalmers given their cap situation?

    • Larry Coon

      No idea. Right now there IS no “cap system.” They’ll need to agree on a new one before we can figure out whether some player is obtainable.

19. Pete

    Over/under on where the (probable) new hard/flex cap ends up?

    • Larry Coon

      Just a guess? If they solve it this week, 51.5%. If they wait, 50%.