Raising The Floor

Darius Soriano —  October 4, 2011

Competitive balance is the new buzzword of the lockout. It’s so important, it’s become a sticking point in the CBA negotiations. The owners want to limit team by team spending in order to preserve it. Whether through a hard cap or through a luxury tax system so punitive to curb spending, the thought is that if the highest spenders have a ceiling low enough to reduce league wide payrolls, competitive balance will be improved.

Thus the argument is laid out that if you simply put a system in place that makes teams like the Lakers, Mavericks, and Knicks spend less, the overall health of the league will improve.

But what of the teams that live at the other end of that spectrum? What of the teams that willfully spend as little as possible? Few people seem to discuss them very much when talking about the health of the league. At Sactown Royalty, Tom Ziller (in a larger – and very good – post about the correlation between spending and winning) makes the following point about teams that live near the spending floor in relation to teams that are willing to dish out more money on player contracts:

Teams that are rebuilding are going to mimic the Kings and spend as little as possible. Teams that can compete for the playoffs or a title will spend as much as they can. There will be teams spending as much as legally possible — to Hell with reasonable, look at how much Mark Cuban has spent over the past decade — and teams saving every dime in terms of future flexibility. There will be a substantial salary spread as large as is possible under salary floors and caps.

Under the recently expired CBA, the spending floor was 75% of the salary cap. This past season, the Kings actually found themselves below that threshhold and faced the prospect having to add players or pay the players they had more in order to get above the spending floor. The fact that the Kings reached such lows on the payroll level was a big story, especially within the context of their owners financial issues and the desire to move the team to Anaheim. But from a competitive balance standpoint, this story got little traction.

Tangent now to the NFL who in their most recent CBA agreement this past summer raised their salary floor to 90% of the salary cap. In past agreements that number was 84% but by raising it, they’ve essentially ensured that low spending teams will have to spend on par with every other franchise. Some of this was likely in response to the NFL’s uncapped year in which there was no spending floor and several teams greatly reduced spending, but I believe it’s more in response to claims that some teams habitually spend close to the mininum possible in order to maximize profits with little incentive to improve the team. (Note, this mindset doesn’t have to be limited to teams with little chance of winning. If you’re a contender that’s below the cap – as the Eagles and Patriots have historically been – you can still limit spending under the assumption that your team is good enough to win without further payroll commitments.)

Will the NBA take note? If competitive balance is going to be the canned phrase tossed around by ownership for the desire to harden the salary cap and limit spending, I hope they’re looking at the other end of the spectrum too.

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As an aside, I don’t believe spending more will necessarily lead to greater success on the court. Teams like the Lakers and Mavs don’t win more because they spend more, they win more because they’ve spent more on players that actually make a difference. The Isiah Thomas Knicks are the prime example of this. As I’ve said many times before, there are only a handful of truly great players that deserve max contracts yet many players have them; spending more isn’t always smart.

Not to mention some of the best players in the league, at least as of last season, were on their original rookie contracts that paid them pennies in comparison to their actual value. You think Kevin Durant and Derrick Rose are worth what they made last year? The presense of rookie scale deals and a cap on individual salaries means that market value will always be a relative term in compared to what players actually earn.

All that said, if spending – and it’s relationship to competitive balance – is going to take center stage in these negotiations I hope the other side of this story is reported as well. Because as teams cry poor and lament their inability to compete based solely on the fact that other teams spend through the roof, I’m hoping that the league recognizes that it can do something about that disparity in spending that has little to do with lowering the ceiling on the high payroll teams.


Darius Soriano

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