4 Ways the L.A. Lakers Will Maneuver Financially in the New CBA
When the NBA and the players union agreed to a new collective bargaining agreement one of the main points everyone could agree on was that high payroll teams would suffer dearly.
Modifications to luxury tax rules that included hikes in the tax rates, how much tax teams could spend on free agents, and limitations on how tax teams could acquire players via trade were all designed to depress those teams' abilities to keep a high payroll teams intact for long stretches.
One could argue, then, that the team most affected by the new CBA was the Los Angeles Lakers.
After all, the Lakers have long been one of the highest spending teams in the league habitually paying the luxury tax in order to field a roster that's both talented and stacked with star power. The Lakers have also been one of the shrewdest operators on the trade market, making multiple moves to upgrade their roster -- for stars and for role players -- in recent seasons.
Year after year, the Lakers reside near the top of the standings not just because of their ability spend boatloads of cash, but do so wisely. In a league where true success can only be achieved through the combination of spending money on the right players (a team can't win by being cheap, nor can they win by spending on players that either aren't good or don't mesh well together), the Lakers have done so better than nearly any other team.
The NBA, in their pursuit of parity and profitability for all NBA franchises, saw this as an issue that needed to be addressed and pushed through a deal they hoped could make it happen.
So, here we are.
The Lakers find themselves in a situation where they'll need to navigate the new CBA wisely if they're to remain near the top of the league. The organization that's always found a way to build a competitive roster will have to find a way to continue to do so through a landscape defined by more restrictive rules and punitive payouts for a high payroll.
How will they do it? Let's get to it.
Keep Role Players' Contracts Short
The new CBA will require that teams maintain as much flexibility as possible when it comes to the contracts team's have on their books.
While this likely will not mean anything, changes for star and role players will surely be affected a great deal.
In the past, one way the Lakers negatively impacted their payroll was in handing out lengthy contracts to role players who probably did not deserve such long term commitments. Players like Luke Walton, Sasha Vujacic, and Steve Blake all received contracts for at least four seasons at rates that were at the top end of their market value.
In the future, having contracts like those on their books simply will not happen. Instead, what we'll see more of is what the Lakers did in the summer of the 2012 in regards to signing role players.
This off-season saw the Lakers sign Antawn Jamison to a one year contract for the veteran's minimum. It also saw them commit to a two year/$3 million contract for Jodie Meeks, but with the second year being a team option. And, even though more teams are signing their second round draft picks to guaranteed contracts, the Lakers chose to sign their two second round picks to non-guaranteed deals.
All of these contracts give the Lakers as much flexibility as possible in shaping their roster both for the 2012-13 season and beyond. If any of the aforementioned players end up showing they are good investments, the Lakers can work with them to try and keep them on board. If the opposite is true, the team can cut ties with all of them without any hindrances on their salary cap or payroll.
Moving forward, the Lakers will likely take this approach with any role player they try to sign. This will not only allow them the flexibility they need to keep their payroll levels reasonable, but to also find the right players to complement the players they have deeper financial commitments to.
Keep the Amnesty Provision Available
Unlike several teams who have already exercised their option to use the Amnesty Provision, the Lakers still have this card up their sleeve.
Based off the way the provision can be used, only four Laker players are eligible to be waived via amnesty: Kobe Bryant, Pau Gasol, Metta World Peace, and Steve Blake.
Obviously Kobe will not be amnestied so lets get that out of the way quickly.
However, in World Peace, Gasol, and Blake, the Lakers still have three players that can be waived with their contracts then not counting towards their salary cap or the luxury tax.
Do I believe the Lakers would amnesty Pau Gasol? No. Nor do I think Metta World Peace would be cut using this provision. Both players, while overpaid, still provide valuable contributions and are integral to the success of the team.
However, in Steve Blake, the Lakers have a player that could be waived via the amnesty provision and not have it drastically affect the team in a negative way. The team has enough depth in Chris Duhon and Darius Morris to off-set Blake's productivity in the coming seasons. And even though Blake is probably the better player than both Duhon and Morris for the 2012-13 season, the cost-benefit of having all three point guards on the roster would beyond that is low.
In the end, though, the point is not even about Blake (or World Peace or Gasol) and whether or not any of them survive the amnesty deadline in the summer of 2013. The point is that the Lakers maintain the option to cut their payroll and, more importantly, positively affect their luxury tax bill should they desire to.
And this represents another fabric of flexibility for the Lakers to maneuver with.
Shed Payroll in Any Trade
After all the contracts were added up and the final math was done, the Lakers actually took on about $13 million in salary in the trades that landed them Steve Nash and Dwight Howard. That's the difference between the nearly $86 million payroll in 2011-12 and almost $100 million they'll spend on salaries in 2012-13.
And while that is money very well spent, do not expect that type of splurging again any time soon.
Because even though the Lakers have clearly shown they will add payroll in the right deal, one of the better ways for them to maintain financial flexibility is to shed salary in their future trades.
In fact, at closer inspection, the Lakers already seem to understand this and have gone to this well in recent deals in order to reduce their hefty payroll.
In the 2010-11 season, the Lakers traded Sasha Vujacic to the Nets for Joe Smith in a trade that saved the team over $3 million. A year later, the Lakers saved a similar amount of money when acquiring Ramon Sessions from the Cavs for Luke Walton, Jason Kapono, and a first-round draft pick. Right after the Sessions trade, the Derek Fisher for Jordan Hill swap represented a financial savings for the Lakers.
In fact, even the vetoed Chris Paul trade allowed the Lakers to shave payroll when they were set to swap nearly $30 million in contracts (Gasol and Lamar Odom) for Paul's substantially lower deal.
So, in the future, expect even more of this from the Lakers.
If, say, the Lakers look to trade Pau Gasol you can expect that it will be for a significantly cheaper player (or group of players) ala the deals rumored in the last year that involved Derrick Williams or Michael Kidd-Gilchrist (two players who happen to be on their very cheap rookie deals).
Because it is this type of deal that makes the most financial sense for a Laker team that must pay attention to their bottom line now more than ever.
Avoid the Repeater Tax
The most punitive measure for a high payroll team comes from a clause in the new CBA called the "repeater tax". If you're unfamiliar with it, Larry Coon does an excellent job breaking down what it means here.
For our purposes, just understand that the Lakers will try to avoid the repeater tax at all costs. The payments they'd send out would be entirely too much and would drastically eat away at their revenue. No team, even one in pursuit of a championship, would want to expose themselves to payrolls that could include $115 million solely on luxury tax payments.
Fortunately for the Lakers, they already have their contracts staggered in a way where avoiding the repeater tax will be easy.
In the summer of 2014, the contracts of Kobe, Pau, Steve Blake, and Metta World Peace all come off the books. In fact, in that summer, the Lakers only have a single contractual commitment in what will be the final year of Steve Nash's contract. That paltry $9.7 million in payroll will set the Lakers up to not only be under the luxury tax threshold but to also be major players in what could be a very attractive free agent market.
Of course, the Lakers also hope to have Dwight Howard under contract and that will come with a hefty financial commitment. But even with Howard signed at a max deal, the Lakers would still be way under the luxury tax line and able to chase free agents.
This approach does come with its complications.
With Kobe coming off the books, the team will have a serious question as to whether Kobe returns (he's mentioned he may retire after his current contract expires) and if he does at what price. Would the Lakers continue to break the bank for an aging legend?
The same question could be asked of Pau Gasol. By that point the Lakers would hope to have won another title (or two) and Pau would be a major part of that. Would he be brought back and if so for how much and for how long?
In the end, none of this would affect the Lakers ability to get under the tax line and avoid the balloon payments that come with the repeater penalty, but they'd certainly affect the quality of the team. And while the former is the ultimate goal, the latter still matters a great deal.