The NBA's Balancing Act

Curing what ails the modern NBA — from tanking to superteams — requires changing the rules of the CBA. A proposal for what that would look like.

By Ben Falk and Jordan Brenner

These are heady times for the NBA. In any number of measures of popularity, the game is surging: ratings and attendance continue to rise; gear and merchandise are flying off the shelves; the NBA is thriving on social media. It’s no surprise, therefore, that various writers have begun mentioning what once seemed unthinkable—that the NBA could someday overtake the NFL as America’s most popular sport.

But the NBA’s powers that be can’t grow complacent. It wasn’t so long ago that the league was the subject of scorn and ridicule, defined by slow, grinding games and unlikable players, an image crystalized by the Malice at the Palace incident in 2004. If there is a lesson to learn from the NBA’s struggles in the early part of this century, it’s that innovation and change are not necessarily bad things, and the league must constantly be on the lookout for threats to its relationship with fans. And it isn’t that hard to see the seeds of danger lurking on the horizon — or at least a storm of angry tweets.

The NBA just saw its fourth straight Finals featuring the Warriors against the Cavs, while Golden State got even better in the offseason with the addition of DeMarcus Cousins. Debates over tanking continue while franchises in the middle of the pack face calls to tear it all down lest they get stuck on the “treadmill of mediocrity.”

All of these problems stem from the same source: the CBA. The system has created a league of (few) haves and (many) have-nots, dictated by which team ends up with a star in the first place. From there, we see a version of The Matthew Effect: the rich get richer while the poor get poorer.

It’s actually not clear how big of a problem this is. The league has never been in a better position. Perhaps super-teams are what the public wants, even as a significant portion of fans complain about the symptoms of such a system. As Adam Silver said in June: “You could do more to achieve parity, but you also don’t want parity of mediocrity either.”

This is the NBA’s balancing act. On the one end lie star clusters and super-teams, dynasties and dominance, all of which might draw in more casual fans and elevate certain stars to cultural prominence. On the other end, true parity gives teams and fan bases as equal an opportunity as possible to compete, creating more intrigue and level competition.1

It’s important to recognize that there are always tradeoffs when shifting from one end of this spectrum to the other and that no system is perfect. For example, while a hard cap might ensure more parity, it would also mean less roster continuity. As Silver said in that same press conference: “Historically, one of the issues in our league was we didn’t necessarily want to break up teams. There is a different sense in the NBA than the NFL, and the chemistry and dynamic that comes together with a group of players.”

Teams face difficult choices under the NBA’s current framework because of the massive value of star players. If they lack someone in that elite stratosphere, it’s that much harder to add one through free agency or trades (unless they’re located in a desirable market), because top players want to win. To get that first star, then, a team has to draft one. To draft a star requires a high pick or a lot of luck. Thus, we’re left with the debates over tanking and how to assign draft picks fairly.

But that discussion misses the root cause of tanking: the limited set of paths teams have to success. Change that aspect of the NBA and you fix all of these problems at once. No more superteams. No more tanking. No more teams stuck in the middle, with a tear-down the only way out.

What might such a fix look like? Let’s dream for a second, and think about what would happen if we made two big changes:

1) Eliminate Maximum Player Salaries

Did you know that Hassan Whiteside and Giannis Antetokounmpo will earn virtually the same salary next season? That Gordon Hayward makes more money than James Harden? The two greatest inefficiencies in the NBA market are rookies and players receiving maximum salaries, for the simple reason that their earnings are artificially capped.2 LeBron James signed a four-year, $153 million contract with the Lakers this summer, but how much more money could he have made without restrictions?

By limiting his ceiling—and that of other truly elite players—the NBA is unintentionally making it easier for teams to horde stars. When the best players in the league can get the same contract anywhere, they don’t choose their destination based on money. Instead, since The Decision, stars have opted to play with other stars, usually in cities they deem desirable. Without a maximum salary limit, some might still do that, but it would require them to leave massive amounts of money on the table. In a world without maximum contracts, the Heat never would have been able to form their Superfriends team unless LeBron, Dwyane Wade and Chris Bosh had each taken massive pay cuts compared to what other teams could have offered them.

By eliminating the player max but keeping the salary cap in place, teams would decide what proportion of their available money would be worth investing in a single player and would have to balance the related consequences. Do you want to pay LeBron $50 million a season? Go for it—and just be prepared to disperse the other $50 million available under the cap among 14 other players. This system would lead to far more diversity and creativity in roster construction, particularly in conjunction with a pair of related, radical changes.

2) Eliminate the Draft and Rookie Salary Scale

With no draft and no rookie scale, new players would enter the league as free agents. These stars-to-be would choose their destinations the way other free agents do: their potential for playing time; the amount of money offered; quality of teammates; and any other factor that they deem important. This would eliminate the tanking problem without creating its inverse problem—making good teams even better—in the way that any tweaks to the draft order would. Rookies might choose to play on teams that already have stars, but they’d likely forgo money and playing time to do so.

Meanwhile, go back to the earlier point about varied roster construction. Say you’re the Atlanta Hawks and you don’t want to chase Kevin Durant with an offer starting at $50 million per season next summer. But you also believe that the best way to win in the NBA is by acquiring stars. Maybe, then, you’d continue to clear cap space this season and then offer contracts starting at high dollar values to each of the top three prospects entering the NBA next June. Sure, you’d struggle initially, but you’d be on the rebuilding superhighway, and the team would be a hell of a lot of fun to watch in the meantime. It sure beats tanking and trying to add those types of young players over a multiyear period.

Taken together, this system gives teams all sorts of flexibility in deciding how to build a winning roster, while ensuring they are all working from a similar pool of resources, given the salary cap. We’d see teams built around a single superstar and those with a balanced starting five. We’d have precocious young squads and groups of aging vets banding together for less money, but one more shot at a ring. We’d be back to debating the best way to construct a championship roster, rather than how many titles in a row the Warriors will win. It’s exciting just thinking about this type of NBA.

It’s also too good to be true. These types of changes would have to be collectively bargained, and both sides would raise serious objections. The rank-and-file players would squawk loudly, because more money for rookies and the game’s biggest stars would mean less to go around for everyone else. And everyone else makes up the vast majority of the player’s union. Without some creative way for those players to make up some of the money they’d lose there’s simply no way they’d support this system.

The owners would object too. They, of course, are the ones who pushed for the rookie scale and maximum salaries in the first place, after watching Glenn Robinson sign a 10-year, $68 million contract as a rookie in 1994 and Kevin Garnett ink a then-obscene six-year, $126 million extension in 1997. Owners decided they needed to protect themselves from themselves, even though their concerns have proven to be short-sighted over time (given today’s lack of competitive balance). But owners still think that way and, even though the salary cap should limit their overall spending, they are unlikely to relinquish a cap on individual earnings.

So, unless all parties involved decide to sacrifice their own interests for the good of the game—ha!—we need to come up with some sort of compromise that addresses this issue in a less radical, and hopefully more realistic way. What might this look like?

1) Allow teams to pay one player more than the maximum salary.

Under this proposal, teams would be able to use an exception to pay one player more money than the maximum salary. However, if the team already has a player who was signed using this exception, they would be unable to acquire another—whether through a signing or a trade. This could be combined with lowering the max salary in general (perhaps to 20% of the cap for all players) so that the difference in what stars could make from teams offering them an above-max deal would be even larger.

The easiest way to ensure competitive balance and give as many teams as possible a shot at acquiring a star is to give franchises a chance to offer the top players more money than they could get elsewhere. Players would have to choose between making significant financial sacrifices or playing with elite teammates. If this system had been in place over the previous few years, the Warriors would have been able to go above the max salary for either Steph Curry or Kevin Durant, but not for both. One or the other would have needed to take an enormous pay-cut to play together. Meanwhile, Klay Thompson and Draymond Green may have been offered contracts by other teams that were much larger than the Warriors could pay them. Again, they could have stayed together, but they would have had to leave a lot of money on the table. The above-max exception would give other teams real advantages in luring stars away.

It would also make it hard for these elite players to team up in the first place. The Rockets, for example, would already have been paying James Harden more than the max salary last summer, and therefore could not have then traded for Chris Paul if Paul were also earning more than the max.

This provision would obviously have a massive impact on the structure of teams, and would also limit the trade destinations for elite players. As with all of these suggestions, there are various tweaks that could be applied to make it more palatable if it was deemed too draconian.

2) Shorten rookie contracts.

In this scenario, we won’t be eliminating the rookie salary scale, but we would allow young players to earn their market value more quickly by getting to free agency sooner. Rookies would sign two-year deals with a team option for the third season, instead of the current two years plus two team options. Additionally, we would get rid of restricted free agency, so that by the end of that third year, players would be free to move wherever they’d like. Yes, that could potentially cost teams that put in the time to develop a player, only to watch him bolt after three seasons. But those teams would still own the player’s Bird Rights when trying to re-sign him. Meanwhile, these changes would reduce the value of draft picks in general, which could help curtail tanking. Teams might still view the draft as the easiest way to acquire a star player, but if the franchise isn’t good enough (either on or off the court) he is unlikely to stay. In this universe, Karl-Anthony Towns, Kristaps Porzingis and Devin Booker would all be unrestricted free agents this summer.

3) Change the incentive rules in contracts.

The goal of these changes is to give as many teams a chance to compete as often as possible. We don’t want teams stuck in multi-year rebuilding efforts with no clear light at the end of the tunnel. Meanwhile, these first two changes would place more emphasis on cap management and free agency. A league where the best players take up more of the cap and rookies get to free agency sooner is a league where dead money on a team’s cap exacts a much higher cost.

How do we make sure that bad contracts don’t trap teams? Shortening contract lengths would help, but the union is unlikely to accept that change. Instead, we propose easing the restrictions on bonuses so that a team’s cap sheet more accurately reflects the production of its players.

Right now, so-called “unlikely” bonus clauses (those that were not achieved by the player in the prior season) can’t count for more than 15% of a player’s base compensation. So if a player is making a guaranteed $10 million per year, he can’t have bonuses worth more than $1.5 million. If that limit were raised, or even removed, teams could sign players to contracts with lower base salaries that increased drastically as their performance did. Imagine Nerlens Noel wanted to bet on himself this summer: perhaps he’d sign a longer deal with the same low base salary he ended up agreeing to, but with significant incentives if he achieved certain statistical benchmarks. If he never puts it together, his salary would stay near the minimum. But if he begins to fulfill his potential, he’d be paid appropriately.

There are other, smaller changes that would need to be made to make all of this work. For one, this system is likely to squeeze the NBA’s middle class. If teams have to pay big money for young players earlier than before and can throw additional money at max-level players, that cash has to come from somewhere—most likely from lower level veterans. Changes would need to be made in order to make sure those vets don’t lose too much of their earnings (and therefore support the changes in the collective bargaining process). One option we’ve toyed around with is sharply increasing minimum salaries for those with significant years of service.

Those smaller details can be bargained and adjusted. The key is the big changes that we’ve suggested, the ones that would change the way teams operate and, most importantly, seem feasible.

This would create a league that, in our opinion, would be better for teams, players, and fans. Sure, plenty of people might object to these proposals; perhaps they prefer dominant superteams. Still it’s impossible to ignore the growing backlash to the Warriors and the continued debate over tanking. Those who criticize the current environment need to understand its root causes, though, as well as the steps that would be necessary to create real change and the tradeoffs such moves would require. Competitive balance is a worthy goal—it just demands careful attention, lest the scales tilt too far in the other direction.

  1. Although some recent studies cast doubt on the importance of uncertainty of outcomes to sports fans. 
  2. As explained on Cleaning the Glass last year 
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