A month into the NBA’s annual free agency period, many available players have had to scrounge for whatever they can get or opt into existing deals. After teams’ wild spending in 2016, there simply isn’t enough money to go around.
A decision made in 2015 by the National Basketball Players Association continues to cloud the league’s salary cap picture. With a massive new television deal looming, the union chose to reject an NBA proposal to gradually smooth that influx of cash into the cap, instead preferring a historic, one-time spike in 2016.
It’s a decision that ranks among the most consequential in NBA history, allowing the Golden State Warriors to assemble quite possibly the most talented team ever by adding Kevin Durant; producing a heap of millstone contracts among other teams; and leaving free agents the past two summers with a largely barren landscape.
Since its effects began dominating transactions, perhaps no topic has been discussed in NBA circles more than that 2015 decision. Was the NBPA right to reject the league’s offer in favor of more immediate money for its players? Should the league have done more to persuade the union that smoothing was the responsible long-term choice?
The truth is, based on interviews with top officials from the league office and the union, no one properly predicted what could happen. But both are forced to live with the consequences.
A common misconception is that if the players had agreed to smoothing, they would have been paid less than they eventually were by saying no to the league’s proposal.
Under the terms of the NBA’s Collective Bargaining Agreement (CBA), the players are entitled to a fixed percentage of the league’s basketball-related income (BRI) regardless of the cap. If smoothing had been enacted, the league would have made up the difference by cutting a check to every player.
The NBA proposed working that money in over a period of years, roughly as a cap jump from the projected $70 million in 2015-16 to about $80 million in 2016-17; $90 million in 2017-18; and $100 million in 2018-19.
“We knew, when we went to the union with the proposal, that they had the right to say no,” Commissioner Adam Silver said in June. “I didn’t anticipate they would say no, but they did.”
From the NBA’s perspective, the logic was clear: The players would still be guaranteed the same percentage of BRI, but free agents over the next few years — not just those in 2016 — would be able to benefit from the rising cap.
For the NBPA, it wasn’t so simple. Since the brutal negotiations of the 2011 CBA — which saw the players lose several BRI points — players and agents had been eyeing the new television deal.
“Everybody was targeting the end of [the previous] TV deal,” said Ron Klempner, the NBPA’s senior counsel for collective bargaining. “People were lining up for 2016.”
Indeed, more players became free agents in 2016 than at any point in the past five years (171, as opposed to 140 in 2014 and 129 this summer), according to numbers supplied by both the NBA and NBPA. With the cap projected to soar from that $70 million figure in 2015-16 to a projected $89 million (it turned out to be $94 million) in 2016-17 — and an estimated $108 million in 2017-18 — agreeing to smoothing would mean the union would cut that projected cap leap in half.
Saying no would let the NBPA do something else: raise the maximum and average salaries for players by huge amounts. It would have gradually increased regardless, but the chance to permanently alter what were considered normal salaries — going from, say, $10 million to $15 million for an average starter, and $5 million to $10 million for a typical backup — was an enticing proposition.
And the union was coming off a three-year stretch in which it not only lost those labor negotiations in 2011, but had its longtime executive director, Billy Hunter, exit under a cloud of allegations about his business and hiring practices.
This presented both the players and Hunter’s successor, Michele Roberts, a chance to say no to the NBA — and with credible reasoning.
During that labor dispute in 2011, the NBA’s negotiators told the union to focus on how the league was going to grow in coming years as the players gave up several percentage points of BRI.
Both sides knew the next television deal would be a big part of that growth. In October 2014, they learned just how big it would be when the NBA announced a nine-year, $24 billion pact with ESPN and Turner Sports.
“There’s never been a better time to be an owner of an NBA franchise — or, frankly, any professional sports team,” Ted Leonsis, chairman of the league’s media committee and owner of the Washington Wizards, said then.
The league had landed the megadeal it craved, but now had to figure out what to do with the cash that was about to come pouring into its coffers.
Its solution was smoothing. But during All-Star Weekend in February 2015, Roberts — with LeBron James, Chris Paul and Carmelo Anthony standing behind her — declared it wasn’t happening.
“The proposal that the league submitted . . . would artificially deflate the salary cap,” Roberts said. “And that, of course, meant that players’ salaries would not increase as much as they would otherwise were it not for smoothing.
“That pretty much was what killed it.”
Two days later, Silver recognized the reality of the situation.
“I don’t want to act like it’s a terrible problem to have, where we’re thrilled that based on the interest in the NBA we’re able to command these big increases in the television market,” he said.
“And we will live with our deal.”
The union expected the league to counter; the NBA never did. The league’s thinking was that smoothing made sense. If the union didn’t want to do it, so be it. With that, both sides agreed to let the money flow in as it arrived.
Doing so had unintended consequences.
Teams spent virtually all of their cap space, rather than showing restraint as the league anticipated. The union expected teams to hand out short-term deals; instead, they liberally offered four-year pacts, limiting room in future seasons. Teams spent so much, in fact, that the projected $108 million cap for last season dropped to $99.1 million.
Durant joining the Warriors, meanwhile, created a juggernaut and made smoothing a permanent part of the NBA lexicon. As the rest of the league has tried to catch the NBA’s most super superteam, half the players in the 2017 All-Star Game have already changed teams.
To say the league is in a bad place is foolish. Ratings are soaring, as are its franchise valuations. While the Warriors may not be good for competitive balance, they give the league a team for fans to root for — or against. Frankly, if Durant hadn’t decided to join the Warriors, it’s possible this wouldn’t be a topic of discussion at all.
But he did. So until those awful 2016 deals finally expire, and the Warriors become less dominant, smoothing will be up for debate.
“It’s hard to look back,” Silver said in June. “I haven’t talked to Michele Roberts all that much about it since then. I’ve read where she said even very recently . . . that she doesn’t regret, or the union doesn’t regret, saying no. So we accept that. We live with those consequences and move on.”