To Guarantee Or Non-Guarantee?

Gagan SinghCorrespondent IFebruary 27, 2010

In the new CBA, the NBA owners apparently want to do away with guaranteed contracts and introduce the era of non-guaranteed contracts, so that teams are not handicapped by players that don’t perform after getting a big contract. As good as that sounds, it’s an idea that will not necessarily benefit the NBA. There are a couple of flaws that I see with this idea.

If the owners have the ability to cancel contracts at any time they choose, then I assume that players will have the ability to holdout if they believe they are being paid under market value just as players do in the NFL.

And unlike the NFL, one player holding out on a NBA team can have drastic results such as whether or not that team will end up making the playoffs or go golfing in mid-April. The attendance numbers for said team will also be affected since majority of the time in the NBA, the higher the number of wins, the higher the attendance numbers.

Also, having non-guaranteed contracts doesn’t mean that NBA GM’s will get smarter. At the end of the day, the NBA owners are in the position they are in because their GM’s opened up the vault and signed players to some horrendous contracts.

NBA owners have to learn that you cannot hire ex-NBA players, with minimal business knowledge and training as GM’s, and expect them to make decisions that will put more money in your pocket. And what makes anyone think that NBA GM’s will not continue to throw around money as they have? 

The NFL has non-guaranteed contracts and if we look at their example, teams still have the ability to guarantee some portion of the contracts if they choose to do so.

Assuming that is the way it will be with the new NBA CBA, then it’s not a stretch to say that the NBA GM’s could very well start to partly guarantee contracts to lure free agents. Partly guaranteed contracts could mean 10% of the contract, 25%, 50% or even 80% percent so the GM’s could put the owners back into a similar position they are in now.

At the end of the day, while non-guaranteed contracts may give the owners more financial flexibility and make players more accountable for the contracts they receive, it is still up to the GM’s and the owners to be more fiscally responsible when they hand out contracts.

You cannot be giving a player $111 million when your competitor can only offer him $80 million. Financial transactions like these just don’t make any sense.  If the owners truly want to stop losing money then they need to think twice the next time they agree to another contractguaranteed or non-guaranteed.