The NBA hammered out a new Collective Bargaining Agreement. What are the implications for the new deal for lottery teams?
Fans of live basketball rejoiced last week when it was announced the NBA and the Player’s Association had come to an agreement on a new Collective Bargaining Agreement. Avoiding the lockout-shortened seasons of the recent past, the two sides amicably hammered out a new deal that will keep basketball on the court for at least six more years.
While the overall framework of how the league runs its business will stay the same, a few significant changes came about in the new deal. One of the core goals of the new agreement seems to have been putting more power in the hands of teams to retain their superstars. Teams can now offer long and lucrative extensions to their players that far outpace the numbers available to a player in free agency.
There are a number of other rules that have been tweaked, from starting the season ten days sooner (and thus decreasing the number of back-to-backs) to raising minimum salary contracts.
What are some of the implications of this new deal for teams currently in the lottery?
A Return To Tanking
To win a championship in the NBA, you need superstars.
That’s a core tenet of basketball – indeed, sports in general – and has driven the strategies of front offices for decades. Each season, the teams that reach the NBA Finals are the ones with superstar talent, from LeBron James and Steph Curry to Tim Duncan, Kawhi Leonard, Dwyane Wade, and Dirk Nowitzki in recent seasons.
There are three ways to acquire a superstar: drafting him, trading for him, or signing him in free agency. Teams have pursued all three routes as a franchise strategy, from Philadelphia’s blatant tanking for top draft picks to Houston’s gathering of assets they flipped for James Harden to Dallas’ yearly free agent pandering.
Teams without a superstar (or needing a second) generally have to pick a route to pursue. Boston is currently pursuing all three avenues, but that’s a unique situation built on the back of many shrewd moves by their front office. For the rest of the league, they have to pick their poison.
The new CBA has introduced the designated player exception, which offers extensions of six years. This extension is not eligible to a player who has recently signed with a new team, nor to players traded after their rookie extensions. There is also a provision for that player to make up to 35 percent of the cap, up from a maximum of 30 percent under the old agreement. For those players who hit elite benchmarks, these rules massively increase their earning potential.
This means that teams hoarding cap space flexibility to sign stars are going to find less options on the market, as their four-year contracts cannot hold a flame to a six-year extension with maximum raises. The recent flameouts of the Lakers, Knicks, Mavericks and Kings in free agency happened in an environment where players moved around more freely; now even less stars will be on the market, meaning less options for those teams with cap space.
The trade market for stars will also be depressed due to the technical wording of the new extension rules. Players traded while on their second and third contracts will not be eligible to sign these long and lucrative extensions. This means that the trade-and-extend route undertaken by Carmelo Anthony in forcing a trade to the New York Knicks would now not be possible.
This is going to leave the draft as the best avenue to acquiring a star by far. Star players on rookie contracts are always underpaid, but now they will also be financially influenced to stay with the team by which they were drafted. Stars such as Demarcus Cousins and Anthony Davis are not only incentivized to stay with their teams for their second contract, but now for their third as well.
Teams such as Dallas and Miami have eschewed the draft in recent seasons to pursue big-money free agents, but each are struggling and could be in position to let this season go. Tanking this season could ensure an elite prospect that will stay in town for the next decade, while fighting to stay relevant in order to draw potential free agents becomes a less attractive option.
This new rule also increases the likelihood of another team taking the “Sam Hinkie” approach, deliberately tanking for multiple seasons to acquire a stable of young talent. The next team to strip everything away and play to lose will have learned from the communication mistakes of Hinkie’s term in Philadelphia, and a progressive owner could take the jump to set up his team for long-term success.
Early Decision Time
As Kevin Pelton of ESPN wrote recently, the same rule also introduces another possibility into the equation: young stars may seek to trigger their exodus prior to signing their second contract. This will allow them to stay eligible for a maximum extension with their second team.
For example, Andrew Wiggins is a future max-player on a team toiling in the lottery. If he signs his second contract with the Timberwolves, he will make significantly more money by signing his third contract with Minnesota than leaving in free agency or via trade to play elsewhere.
If Wiggins decides he doesn’t want to continue playing in Minnesota but wants to maximize his earning potential, he could attempt to force the Timberwolves to trade him in the next year or so before signing his next contract. This would allow him to stay eligible for a maximum extension with his next team.
Players could look to Demarcus Cousins as an example of the worst-case scenario. The Kings have repeatedly failed to put the right pieces around Cousins, most likely the league’s best player never to play in the postseason. As his second contract runs down, with the new rules, he must choose between a four-year contract starting at 25 percent of the cap or a six-year extension starting at 35 percent of the cap. Over the life of the contracts, the difference could clear 100 million dollars.
That’s a huge difference and will result in some thick tension between Cousins and the Kings. That situation may influence the youngest stars in the league as they begin reacting to the new rules.
Restricted No Longer?
One of the largest inequalities in the free agency process has been restricted free agency. While unrestricted free agents were visiting with teams and verbally agreeing to deals during the league’s moratorium period, restricted free had to wait until two weeks later to agree to terms. Interested teams often had limited space remaining to offer after spending a few weeks adding talent. The players’ current team then had 72 hours to match, a decision they could often make after doing the remainder of their major business.
The rules have now changed and to the benefit of those players hitting restricted free agency. Rather than waiting to sign offer sheets, restricted free agents can now agree to terms on July 1st, same as unrestricted free agents. Their teams then have just 48 hours to match, a period that could be entirely within the moratorium.
This has a clear implication: restricted free agents are going to start moving around a lot more. There will be more teams willing to spend their cap space on an offer sheet that will be decided on within two days, giving those teams time to find another option while there are still players available.
More teams giving their best salary spots to RFAs means better offer sheets, harder for the current team to hold onto. In addition, if that team matches, they may be doing so before knowing what other opportunities they may have in other players. This will cause less teams to match, allowing more movement around the league.
In past collective bargaining agreements, restricted free agents were victims of a system, unable to choose their next home. Now they have more freedom and a greater possibility to choosing where they work, both boons of a new CBA that seems to be doing its best to address inequalities in the system.
Overall, those new steps will have obvious ripples rolling through the league. But with the above implications are countless others that we cannot even see yet. As the new agreement goes into place on July 1st, keep an eye out for just how things change around the league.
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