New NBA Deal Won't Solve the Competitive Balance Problem

| by Hoops Karma

A new CBA has finally been reached, and it’s clear the players were gouged, David Stern is still so smug you want to punch him in the face, and supposedly some items have been put in place to help the complete lack of competitive balance in the league.

Steve Aschburner, a writer for, says “Restricting the flow of solid free-agent role players to the biggest-spending teams was a core value of the owners' ‘competitive balance’ claims.” Unfortunately, if you look closer at those mechanisms and extrapolate what can/will happen, I think the NBA just made itself more likely to remain a top-heavy league in which the richest teams with decent GM’s will continue to grab and hold top talent, and subsequently dominate.

Over the past few years, big-money teams have been able to abuse their position of power in order to consistently trade short contracts of bad players for long or soon-lengthened contracts of All-Stars (Pau Gasol and Carmelo Anthony to LA and NY come to mind quickly). Although there was a salary cap and luxury tax under the old CBA, teams with huge local media deals and deep-pocketed owners like the Lakers and Mavericks were able to go WAY over that amount year after year after year. The richest teams were able to add a mid-level exception (MLE) player every year, guys who often made great supporting starters or strong bench contributors, players the poorer clubs needed if they couldn’t afford to keep their All-Stars.

So what did the new CBA do to help small-market teams feel like they can compete if they don’t happen to land in one of the top two draft spots when special players like LeBron James, Tim Duncan, and Kevin Durant enter the draft?

For starters, the extend-and-trade (what happened with Melo’s exit from Denver) and re-signing of players with Larry Bird rights who were part of lopsided, mid-season trades (Pau Gasol) remain pretty much intact, so rich teams retain that humongous advantage when making deals that can decimate small-market clubs for years (which is what’s likely going to happen with Dwight Howard and Chris Paul this upcoming season). There is a provision in there that beginning in three years teams that are more than $16 million over the salary cap can’t participate in certain types of sign-and-trades (different than an extend-and-trade), but pretty much anyone can see how much of a non-deterrent this is on many fronts.

Next, teams can now only have one player on a max-salary contract that is worth up to 30 percent of a franchise’s salary cap. Sounds nice on the surface, but do you know how many max-salary players the Heat currently have? None. James, Wade, and Bosh all agreed to take close-to-but-not-quite-max-level dough so Miami could re-sign Udonis Haslem, one of those very good supporting players that clubs in less ritzy destinations desperately need if they’re going to be losing All-Stars like James and Bosh. As long as groups of great players can agree to take slightly less than max-salary money so they can play together, which will definitely happen, this new caveat won’t help competitive balance at all.

The new CBA has made some changes to which clubs can sign players to a mid-level exception contract in the off-season. Whereas before any club could sign a player to a $5 million per year MLE every summer, now only clubs that aren’t already $16 million over the salary cap (the cap is $58 million, the luxury threshold is $70 million, and these teams can’t be more than $4 million over that) can give a full MLE. For those teams that are over what’s essentially a $74 million cap, they can only sign players to “mini” MLE’s worth $3 million per year. I like the idea in principal, but why are rich teams allowed to sign anyone new for more than the league minimum? Not only that, we already know that MLE-type players will often gladly take less money to play for super rich clubs that usually give them a good chance to earn some hefty playoff bonuses or good endorsement deals since they’ll be playing in larger cities (how the Lakers signed Matt Barnes last year). This provision also does very little to help competitive balance.

Finally, the big new thing that’s supposed to be a game changer for competitive balance: new luxury tax penalties. In the past, teams that went over the luxury tax threshold (which again, is way over the thing called the salary cap) had to pay a $1-fo-$1 luxury tax. If they were over and added a $5 million player, they were actually going to dish out $10 million total for his services. We already know that when huge market clubs are bringing in over $100 million a year just on local cable deals, they will gladly go $20 million over the luxury threshold to stay in the title hunt. The new penalties for high-spending clubs are now larger and progressive, starting at $1.50-for-$1 (so a $5 million contact will cost $12.50 million) up to a $3.25-for-$1 tax for teams way over the threshold. This sounds like a great way to discourage teams from spending way more than other teams, but plenty of billionaire owners are already willing to pay the penalties that are in place. Plus it looks like teams above the luxury threshold might get some of that money back anyway (Sound impossibly crazy? Check this out).

Plus this now means that even less teams will go over the threshold, but the richest ones will continue to go just as far over. The franchises that are going to get pinched out and quickly scurry back under the $70 million threshold are the middle-class teams that were attempting to spend a little beyond their comfort zone in order to keep up with the big boys – teams like Denver and Houston whose player payrolls were $83 million and $75 million respectively last year. The Lakers, Mavericks, and Celtics (and sometime soon the Knicks) can laugh at this new, higher tax and will keep paying it so they can stay elite and because they can. What this new provision does is create an elite-of-the-elite group of teams that can go over the threshold and keep paying the tax. For example, health insurance is expensive, which is why 20% of Americans don’t have it. If the price of insurance went up 500%, the richest Americans would all still have it – this increase would not affect them, only everyone else. Same with these new luxury tax penalties. The result is that less teams will now be able to spend way more than the majority of other teams, meaning less clubs have a real chance to obtain big-name talent through trades and free agency. This obviously hurts competitive balance in a big-time way.

As you can see when viewing all of these new provisions together, nothing has been done to improve competitive balance in a league ruled by franchises that can charge insane prices for tickets and can obtain humongous local TV deals (FWIW: 4 teams have won 17 of the last 21 titles). In fact, the richest teams that can pay the luxury taxes and still turn monster profits just got a boost over everyone else.

And this sucks for fans who actually want a league with competitive balance, not just those people who talk about it.