The beginning of NBA free agency has been a hodge-podge of Dwight Howard rumours and Brooklyn Nets paying max contracts to B-list players.
The real story that has come out of this Kardashian-esque nonsense is the emergence of "poison-pill" contracts given out to players who did not come into the league on guaranteed rookie contracts automatically given to first round draft picks.
The short of the story is that after Gilbert Arenas bolted from the Golden State Warriors to sign with the Washington Wizards in the early 2000s, the league needed a way for teams to keep players that they didn't draft in the first round. To do so they instituted the "Gilbert Arenas" rule which meant that contract salary raises had to be minimal in the first two years of a restricted-free-agent deal. In theory, this would mean that average salary amounts would be similar to what the original team could offer even though the team does not hold that player's Bird rights, which would normally allow a team to exceed the salary cap to sign their own restricted free agents.
What's happened this year is teams have realized the two-year barrier to that rule, and have begun backloading contracts that would put the other team over the salary cap if they were to match the offer sheet. For example, Jeremy Lin, last year's break-out point guard for the New York Knicks, signed an 3-year offer sheet for nearly 25 million dollars with the Houston Rockets. The contract is not unreasonable for a starting-calibre point guard but what the Rockets did differently is Lin's contract will earn him around five million in the first two years of the contract and balloon to nearly 15 million in the third.
For New York, this means that to match the offer they would risk being over the luxury tax significantly in year three. This would mean that the Kicks would pay dollar for dollar tax for the entirety of Lin's salary. Essentially, by back-loading the contract or "poison-pilling" it, Houston has used the CBA to prevent the Knicks from retaining their own player.
This while not against any particular rule, goes against the spirit of negotiation and fair play that is allegedly obligatory in any agreement between organizations and the unions they deal with. How is this solved? Well, for the time being, nothing can be amended due to the nature of how CBA contracts are negotiated and signed but is there any room for owners and general managers to behave in a more honest way? Should a three-year deal's salary payments not be divided equally? This is especially important considering that Lin is definitely more likely to be an 8.3 million dollar player and definitely not a 15 million dollar one.
The reasons that GMs and owners need to consider having a under-the-table agreement regarding backloading contracts in this way is simple. If Jeremy Lin is worth 15 million dollars, then so is Kyle Lowry, Raymond Felton, Wesley Mathews, Tyreke Evans and any other middling point guard not named Deron Williams or Chris Paul. By overpaying players, you in turn over-inflate the worth of those players and thus destroy competitive balance.
The league simply cannot be sustained by over-paying the sixth-best player on any given team. It is a GM's prerogative to improve their team by any means necessary but in this particular case, I'm talking to Bryan Colangelo and Daryl Morley specifically now, please consider the quality of league your contributing to by the contracts you sign.
If there was ever a finer example of inflating the value of something gone wrong look no further than
"Too big to fail" is only a good stratagem until the ice berg appears from out of the mist.
