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Sssmush
07-14-2012, 12:58 AM
Ok real quick, this explains why superstar players on the verge of free agency are such unbearably hot commodities, and why for instance Orlando has been willing to drag its franchise through the mud for so long.

The big clue is the new max contracts give out to Hibbert, Lopez, Gordon, MacGee, etc.

Due to the salary cap, there is an artificial limit on max salaries for all players, including superstar players. But the cap on max contracts, in terms of value, is set at or below the level of average players.

Think about it: if Lopez or Hibbert is worth max dollars, and in fact teams have rushed to pay them those so called "max" dollars, then Dwight Howard is worth far more. BUT, under the new CBA, you are only "allowed" to pay him the same as those guys, the same max dollars you can offer to any player.

So, the "gap" between Lopez or Gordon's value, in terms of ticket sales, TV revenues, merchandise, playoff revenues and franchise valuation, and Dwight Howard's value, is like free money for whichever franchise is lucky enough to own the rights to Dwight. That team can either keep him on the team (assuming he doesn't singlehandedly destroy their franchise) or trade him for a ton of valuable assets.

The gap between what teams are "allowed" to pay for a superstar, which is the same as you can pay for an average player, and what that superstar is worth, is the "gap" and is the reason teams are competing so ferociously for these players. Whoever has Dwight will be receiving "X" dollars in revenue, while only having to pay out X-(maximum salary limit) for him. This gap actually benefits a small market team like Houston far more than a large market team, as they will be able to hold onto more of that extra loot.

This is, ultimately, actually kind of an argument for wider revenue sharing, in a weird way, if I'm not mistaken, although I am very much against revenue sharing and have wished the NBA was run more like the European soccer leagues. But it could be argued that, given all these stupid salary caps and restrictions, the extra revenue from these handful of cashcow players should probably be shared. Like Charlotte languishes on NBA foodstamps, and Orlando is cashing giant Dwight Howard money checks, or Cleveland is cashing giant Lebron $$$ checks, etc, when ultimately this is literally just the luck of the draw, a lottery, that determines which teams get the extra cash. The equation is different for big successful teams like the Lakers/Knicks/Celtics etc who bring in tons of cash regardless, and are forced to pay out $50M + in revenue sharing.

Aust
07-14-2012, 01:03 AM
psure everyone already knew about this

Sssmush
07-14-2012, 01:06 AM
psure everyone already knew about this

I haven't seen it spelled out anywhere.

All the news stories seem to be more focused on the kind of "cult of personality" of the star players.

The "every team needs a superstar to win a title, and Dwight is one of the only superstars out there" trope.

IgglesFanInCO
07-14-2012, 01:13 AM
since when did mcgee get a max contract?

Sssmush
07-14-2012, 01:14 AM
since when did mcgee get a max contract?

I just saw he is being offered $50M

IgglesFanInCO
07-14-2012, 01:32 AM
I just saw he is being offered $50M

5 years 50m is not a max, its less per year than Deandre Jordans contract

JasonJohnHorn
07-14-2012, 03:26 AM
The "max" deals these guys have been getting this offseason, aren't actually "max" deals, they are the max that can be offered to a player who is coming off their rookie contract. And actual "max" deal is like around 20 mil, which is 5 mil more than what these guys are getting.

When these deals run out, THEN they will be able to sign "MAX" deals, not "max" deals. You get what I'm saying? So guys like Dwight and LBJ and Wade are still making more than the "max" deals being offered to guys coming off their rookie contract.

I think we will see that most of the young guys get the "max" deal off their rookie contracts, will NOT be getting "MAX" deals when these contracts are done.

PraiseJesus
07-14-2012, 03:32 AM
Yes. This was my main point in the BOYCOTT THE NBA thread

It's a war between players and small market owners and the fans r getting screwd

hornetsfansydne
07-14-2012, 04:02 AM
Ok real quick, this explains why superstar players on the verge of free agency are such unbearably hot commodities, and why for instance Orlando has been willing to drag its franchise through the mud for so long.

The big clue is the new max contracts give out to Hibbert, Lopez, Gordon, MacGee, etc.

Due to the salary cap, there is an artificial limit on max salaries for all players, including superstar players. But the cap on max contracts, in terms of value, is set at or below the level of average players.

Think about it: if Lopez or Hibbert is worth max dollars, and in fact teams have rushed to pay them those so called "max" dollars, then Dwight Howard is worth far more. BUT, under the new CBA, you are only "allowed" to pay him the same as those guys, the same max dollars you can offer to any player.

So, the "gap" between Lopez or Gordon's value, in terms of ticket sales, TV revenues, merchandise, playoff revenues and franchise valuation, and Dwight Howard's value, is like free money for whichever franchise is lucky enough to own the rights to Dwight. That team can either keep him on the team (assuming he doesn't singlehandedly destroy their franchise) or trade him for a ton of valuable assets.

The gap between what teams are "allowed" to pay for a superstar, which is the same as you can pay for an average player, and what that superstar is worth, is the "gap" and is the reason teams are competing so ferociously for these players. Whoever has Dwight will be receiving "X" dollars in revenue, while only having to pay out X-(maximum salary limit) for him. This gap actually benefits a small market team like Houston far more than a large market team, as they will be able to hold onto more of that extra loot.

This is, ultimately, actually kind of an argument for wider revenue sharing, in a weird way, if I'm not mistaken, although I am very much against revenue sharing and have wished the NBA was run more like the European soccer leagues. But it could be argued that, given all these stupid salary caps and restrictions, the extra revenue from these handful of cashcow players should probably be shared. Like Charlotte languishes on NBA foodstamps, and Orlando is cashing giant Dwight Howard money checks, or Cleveland is cashing giant Lebron $$$ checks, etc, when ultimately this is literally just the luck of the draw, a lottery, that determines which teams get the extra cash. The equation is different for big successful teams like the Lakers/Knicks/Celtics etc who bring in tons of cash regardless, and are forced to pay out $50M + in revenue sharing.

You say it benefits the small market teams but I think it happens to benefit the bigger markets because they can simply generate more revenue by simply having more people in the cities, same reason these superstars want to go to the larger markets, to generate more sponsorship by more people seeing their names. I think this is why there is a greater push for revenue sharing now as more and more teams are realising this same fact and think they are hard done by for not being able to market their product to the same amount of people as the Knicks, Lakers, Bulls etc.

However I do agree with the rest of your post that the reason these guys are getting such huge contracts is because of the salary cap, one of the reasons I think the NBA needs to change its salary structure. How to change this I don't know but creating a more level playing field in terms of parity would be a good start. You will always have teams like the Bobcats and Wizards who are rubbish but maybe the gap between those teams and the Thunder's and Heat's of the world could be bridged a bit

Sssmush
07-14-2012, 07:12 AM
You say it benefits the small market teams but I think it happens to benefit the bigger markets because they can simply generate more revenue by simply having more people in the cities, same reason these superstars want to go to the larger markets, to generate more sponsorship by more people seeing their names. I think this is why there is a greater push for revenue sharing now as more and more teams are realising this same fact and think they are hard done by for not being able to market their product to the same amount of people as the Knicks, Lakers, Bulls etc.

However I do agree with the rest of your post that the reason these guys are getting such huge contracts is because of the salary cap, one of the reasons I think the NBA needs to change its salary structure. How to change this I don't know but creating a more level playing field in terms of parity would be a good start. You will always have teams like the Bobcats and Wizards who are rubbish but maybe the gap between those teams and the Thunder's and Heat's of the world could be bridged a bit

Well, kinda what I'm saying is, that the maximum salary for these superstars is kept artificially low, which unbalances things somewhat.

For example, currently you see teams fighting over Dwight. Dwight has ruled out a lot of teams, but if he hadn't, then in addition to Brooklyn and Houston, you would probably have Minnesota, NY, Indiana, Atlanta, Portland, virtually every team in the league would be making crazy offers to Orlando for Dwight. Same thing if Lebron was going into free agency next year, or was an unrestricted free agent right now this summer, it would be even crazier.

The problem is that these athletes are worth HUGE bucks to a team. FAR, FAR more than what they are allowed to be paid. That's why these teams are going crazy and players are jumping and being pulled from team to team. It's like a xmas day sale at Sears, and there are 10 big screen TVs in the middle of the store on sale for $100 each.

Now, if the teams were free to pay market value, then it cools down. Ok, you really really really want Dwight howard or Lebron, rah rah rah "The Decision" etc. But, what if Cleveland can offer Lebron $50M a year? Or what if Orlando can offer Dwight $50M a year? They're certainly worth it in terms of revenue... but now their salary cost is almost equal to their actual value... so A LOT of the excitement and demand for them, and a lot of the freedom to just go to any team they choose and build a super team, kind of goes away or quiets down.

Like, you want Dwight or Lebron at $19M a season, you want that big screen TV, but at retail prices, if that TV costs $1200, ok, yeah, maybe I'll buy it, maybe not, I'll shop around, there's lots of TVs. Right?

Like the whole salary structure of say "is Kobe worth $30M a year" is only relative to the salary cap, which is again an artificial limit. Kobe brings in far, far more profit for the Lakers (and the whole league) and is a huge bargain at $30M a year. Just look at what Lopez, McGee, etc these guys are getting paid. And that is AFTER teams amnesty players and are still paying them, so really they're paying double. They're paying $12M a year or whatever to amnesty Scola for 3 years, lets say, PLUS they're paying $12M a year for the new guy, and they can't make the deal fast enough.

It reminds me of a limit poker game, where EVERYBODY calls on every street, because it's limit, so it's only $8 to call each time, and you can get to the river and see if you made your draw. People call raises or raise themselves preflop with impunity.

whereas, if it were NO LIMIT, ok, now, people get really careful and think about things, because you could be playing for stacks on any hand, so you don't just carelessly commit $$ unless you are serious.

Sssmush
07-14-2012, 07:25 AM
Like think about Houston.

Houston is ready to ship 3-4 promising youngb players and 3-4 high draft pick for Howard, but, more tellingly, they are wiiling to "take back" an additional $30M+ of salary annually for guys they don't want, Turkoglu etc, guys they would waive or cut if they could.

But they're willing to pay Dwight "max" dollars of $20M, plus pay these other players who are virtully worthless for them an extra $30M a year. PLUS they will amnesty Scola and pay him $12M a year off the cap.

So Howard's market value to Houston must be well in excess of $60M as they see it. Consideringwhat they will give up in trade, probably 2x or 3x more than that.

StarvingKnick22
07-14-2012, 08:13 AM
This is why I can wait for Stern to Retire. S.O.B is trying to go out with a bang

torocan
07-14-2012, 09:27 AM
The Salary Cap is essentially the equivalent of price controls.

It's like the government saying, "Nobody shall pay more than $30K for ANY car..."

In theory it's great, however a Mercedes is a Mercedes and a Lada is still a Lada. Teams will pay what they feel a player is worth, whether it is directly through salary, or indirectly through a trade.

Superstars are worth more than the current Max Contract, however Teams were bankrupting themselves by overbidding the Superstars to ridiculous levels. So, the NBA stepped in to limit the potential damage.

Now, the Teams aren't bankrupting themselves on the Superstars, they are instead going to bankrupt themselves on the next Lower tiers of stars.

A team that Might have paid Dwight $25M is only going to pay him $15M, however, that team still has $10M in their pocket... I wonder what they'll spend that on?

Oh right... another STAR!

With so few Superstars to go around, Teams are now free to bid up the value of the Next tier (the Hibberts of the world) and the Next tier and so on.

Of course this is only half the equation, the other half is far more to blame... and that's the SALARY FLOOR.

Teams are REQUIRED this year to spend 80% of their Cap Space. Next year this rises to 85%.

In theory this is supposed to ensure that teams that lose money are expending a reasonable amount of their resources before they can come whining to the League about a lack of profitability.

The flip side of the Floor is that it drives up Tier 2/3 players. After all, if you can't land Dwight, and you MUST spend 80% of your salary cap, you aren't going to do it with Veteran Minimum players.

So, if you have a bunch of money that you MUST spend, would you rather spend a few Million extra for an actual IMPACT player? Or would you rather stand on principle to save money, then end up having to fill your bench with mid priced players that will only end up being posterized?

In the end, the jump in the salaries of Tier 2/3 players was inevitable.

Lower max salaries left more money on the table.
Higher salary floor added more money to the table.

End result : Lower salaries for Superstars. Higher trade value for Superstars. And higher salaries and trade value for Stars, and those that might be Stars someday...

LakersIn5
07-14-2012, 11:18 AM
there should be no salary cap. bow.

Sssmush
07-14-2012, 03:42 PM
The Salary Cap is essentially the equivalent of price controls.

It's like the government saying, "Nobody shall pay more than $30K for ANY car..."

In theory it's great, however a Mercedes is a Mercedes and a Lada is still a Lada. Teams will pay what they feel a player is worth, whether it is directly through salary, or indirectly through a trade.

Superstars are worth more than the current Max Contract, however Teams were bankrupting themselves by overbidding the Superstars to ridiculous levels. So, the NBA stepped in to limit the potential damage.

Now, the Teams aren't bankrupting themselves on the Superstars, they are instead going to bankrupt themselves on the next Lower tiers of stars.

A team that Might have paid Dwight $25M is only going to pay him $15M, however, that team still has $10M in their pocket... I wonder what they'll spend that on?

Oh right... another STAR!

With so few Superstars to go around, Teams are now free to bid up the value of the Next tier (the Hibberts of the world) and the Next tier and so on.

Of course this is only half the equation, the other half is far more to blame... and that's the SALARY FLOOR.

Teams are REQUIRED this year to spend 80% of their Cap Space. Next year this rises to 85%.

In theory this is supposed to ensure that teams that lose money are expending a reasonable amount of their resources before they can come whining to the League about a lack of profitability.

The flip side of the Floor is that it drives up Tier 2/3 players. After all, if you can't land Dwight, and you MUST spend 80% of your salary cap, you aren't going to do it with Veteran Minimum players.

So, if you have a bunch of money that you MUST spend, would you rather spend a few Million extra for an actual IMPACT player? Or would you rather stand on principle to save money, then end up having to fill your bench with mid priced players that will only end up being posterized?

In the end, the jump in the salaries of Tier 2/3 players was inevitable.

Lower max salaries left more money on the table.
Higher salary floor added more money to the table.

End result : Lower salaries for Superstars. Higher trade value for Superstars. And higher salaries and trade value for Stars, and those that might be Stars someday...

I'm not really that concerned about the salary floor. That was a concession the players won, to ensure that salaries stay at a certain level, and that their share of the overall revenue pie stays consistent. With all the revenue sharing or taxing of the big market or long tradition teams, that doesn't really make that much of a difference. Players like Lopez, Hibbert, Lin, Gordon, etc are clearly worth $12M a year, in an absolute sense, because multiple teams are bidding for them and making them those offers. If teams are jacking up salaries because they feel that there won't be enough average players in the future for them to throw money at in order to stay above the salary floor, then that would be pretty bad, pretty hopeless, but that is not what's happening. As I understand it, going "under" the floor is similar to a 1:1 luxury tax anyway, that just pays back into the league salary pool or whatever.

The obvious question for Houston is, what do they have to offer Dwight? And the obvious answer is, nothing. If there were true free agency, Houston wouldn't send all its picks and prospects for Howard, nor would it take on Turkoglu, Richardson, Reddick etc or amnesty Scola and still pay him $12M a year, just to pay Dwight $20M. They would simply offer Dwight $60M a year and keep their other young players. This is clearly what they would want to do if they had the choice. And a huge offer like that will also slow down big market teams like LA and New York because of the sheer magnitude.