The NBA has a soft cap, and that produces something I call the “Kobe Bryant Conundrum” or KBC. That’s what happens when a team’s two inherent goals come into conflict.
NBA franchises are first and foremost teams, with a goal of winning games and ultimately championships. However, they are also businesses, the objective of which is to make money.
Everything is fine when both of those things align. For example, having LeBron James on your team right now is a boon to both winning and profiting.
That's not always the case, though. The KBC is what occurs when a player’s tenure and accomplishments with a franchise are so vast that his financial value outweighs his competitive value. When that happens, either he takes less money or the team he plays for takes fewer wins.
The 2015 offseason presented four examples of the KBC:
- Dwyane Wade opted out of his contract and wanted more money from the Miami Heat. He settled for a one-year, $20 million contract, while his less accomplished teammate, Goran Dragic, inked a near-max deal.
- Tim Duncan took only $5 million to make room for LaMarcus Aldridge to come to the San Antonio Spurs.
- DeAndre Jordan spurned the Dallas Mavericks to return to his Los Angeles Clippers, raising the question of whether it was “worth it” to Dirk Nowitzki to have taken a pay cut last summer.
- All the major free agents spurned the Los Angeles Lakers, which seemed to vindicate the two-year, $48.5 million extension Bryant signed last season.
The Revenue Paradigm
Bryant was easily the highest-paid player in 2013-14, making $30,453,805. And the Lakers were the highest revenue-earning team, making $293 million, according Kurt Badenhausen of Forbes. Bryant played only six games—all of them badly. He contributed just minus-.4 win shares, according to Basketball-Reference.com.
He did not earn his check on the court. But the team made money, so one could argue that Bryant “earned” his money just by being a Laker.
How much of that revenue was because of Bryant is hard to say. The Lakers are one of the most storied franchises in the history of North American sports, and they play in the second-largest city in America. It’s not a zero-sum game where they wouldn’t make any money if it weren’t for Bryant.
Bryant also raked in $34 million in endorsements, again, according to Badenhausen. So, Bryant benefited from the Lakers name outside of his paycheck as well.
So much is intertwined it’s impossible to pull apart an exact number, but suffice to say both team and player made bank off the relationship.
And therein lies what’s at the heart of the “revenue paradigm.” Guys like Bryant aren’t getting paid for what they will do; they’re getting paid for what they already did.
Ken Berger of CBS Sports argued after Bryant inked his extension:
So a portion of what Bryant will be paid over the next two seasons amounts to a sort of lifetime achievement award.
Having entered the NBA just before the league successfully put a cap on maximum individual player salaries, it can be argued that if Bryant were paid what he was truly worth over the past decade-plus, the Lakers would owe him another $250 million -- at least.
It’s a valid point that Bryant made that $48.5 million before he even signed the contract. In the revenue paradigm, everything that happens after he signs is irrelevant.
This argument doesn’t just apply to Bryant, but to all four of our players in question. Each is arguably the greatest player in his respective franchise’s history. Each has led his team to at least one title. And none have ever donned another NBA uniform.
The Winning Paradigm
Conversely, how much a player is financially “worth” to a team—and whether he should be compensated accordingly—are moot in a salary-capped league. Whether one agrees philosophically with the cap or not, it is there.
The easy argument here is that if the players are making money for the owners, instead of being cheap, the owners should spend some of it.
But, how much correlation is there between spending and winning?
I was able to get salaries going back to 2002-03 from Patricia’s Various Basketball Stuff. I then obtained the tax information from Mark Deeks at ShamSports.com. Combining the two, I determined how much money over or under the cap each team spent in each season over the last 12 years.
In the chart below, the vertical axis shows how much the team spent in taxes and salaries relative to the cap. The horizontal axis displays the winning percentage. The shapes denote teams, and the colors represent years. The line across the middle is a trendline.
Hovering over any datapoint will reveal the specific data for it. Filter by teams by clicking them, either in the chart or legend. Holding down the control key will let you select multiple teams. Finally, use the slide bars at the bottom to change the parameters. It’s interactive for a reason. Feel free to play.
Unsurprisingly, there is a strong correlation between spending more money and winning. Teams that fall short of the cap tend to not do well, though, the 2010-11 Chicago Bulls were $4.4 million shy and won 62 games. This year’s Hawks also hit 60 wins without going over.
But they are outliers. The average winning percentage of teams below the cap is 38.2 or about 32 wins.
What gets interesting is when you split the non-taxpaying teams over the cap from the taxpaying teams over the cap. In the chart below, the first tab shows the former; the second tab shows the latter:
Contrary to popular belief, there’s actually a negative correlation between winning and paying the luxury tax. In fact, of the 25 teams that have paid at least $100 million in combined salaries and taxes, only the 2009-10 Lakers and 2010-11 Mavericks have won the title.
Remarkably, the other 23 teams have an average winning percentage of just 51.9 percent. Clearly, spending lots of money doesn't solve everything.
There are a variety of reasons for that. The New York Knicks throw ridiculous volumes of cash at everything, hoping it will result in wins. It rarely does. Last year, for example, they spent over $9.3 million per win, more than any team in history.
By contrast, the San Antonio Spurs have produced a culture where players are willing to take less money to facilitate winning.
Furthermore, increasingly, the limitations placed on teams over the “apron” are very real. They make it hard for a team to make moves that are needed to “tweak” a roster and get over the top.
That’s not to say there’s no place for a max-contract player. But, they have to be giving max-contract play in return. As you can see in the next chart, teams who have paid the luxury tax and gotten prodigious production from their highest-paid player have fared well:
Consider that nine of the last 13 champs have paid the tax. Those teams received an average of 13.1 win shares from their highest-paid player.
|Win Shares for Highest Paid Player on Taxpaying NBA Champions|
|Team||Year||Highest Paid Player||MP Win Shares|
|Miami Heat||2012-13||LeBron James||19.3|
|San Antonio Spurs||2002-03||Tim Duncan||16.5|
|Miami Heat||2011-12||LeBron James||14.5|
|San Antonio Spurs||2006-07||Tim Duncan||13.0|
|Boston Celtics||2007-08||Kevin Garnett||12.9|
|Los Angeles Lakers||2008-09||Kobe Bryant||12.7|
|Dallas Mavericks||2010-11||Dirk Nowitzki||11.1|
|Los Angeles Lakers||2009-10||Kobe Bryant||9.4|
|Detroit Pistons||2003-04||Richard Hamilton||8.1|
It helps to have elite players, and it’s worth it to pay them whatever you can. But spending similar money on less-than-elite players is counterproductive. And that includes players who are great but no longer playing at an elite level.
This all goes to illustrate that merely spending money doesn’t equate with winning; spending money wisely does.
The NBA champion Golden State Warriors’ starting five of Stephen Curry, Klay Thompson, Harrison Barnes, Draymond Green and Andrew Bogut made just $30.6 million last year. Bryant and his backcourt teammate, Jeremy Lin made $31.9 million. Who do you think spent their money better?
It’s just not wise to throw massive amounts of money at players who are well past their primes, regardless of what they’ve done for their franchise.
So, one way or another, someone is going to bite the bullet. Either owners are forced to eschew a franchise player, much to the chagrin of its fanbase, or a player has to bypass salary for the chance to win games.
Another aspect of the KBC is that a player’s teammates are forced to sacrifice winning when said player takes more pay than he’s competitively worth.
Is there a way to resolve this in a way that’s fair to everyone?
I propose a “Legacy Rule” where only a portion of a qualified “legend's” check would apply toward to the cap. Players at least 32 years old and with the same team for 10 years would be eligible. The tenure would not have to be continuous, so players such as LeBron James (when he turns 32) and Kevin Garnett who left and came back to their original teams could still benefit.
Legends would have a stepped portion of their salary included in the cap. For each year of eligibility, 10 percent of his salary would not count, topping out at 50 percent.
Thus, even though the player’s salary would rise, the punitive nature would parallel his declining skills. Also, as the cap rises, the percentage of the cap that a player’s salary uses would be less detrimental to the team.
For example, let’s say that Wade signed a five-year deal starting at $20 million. This is what the impact would look like, using cap projections from Jonathan Givony of Draft Express.
|Proposed Salary Arrangement for Wade Under|
|Year||Salary (in millions)||Percent Reduction||Against Cap (in millions)||Cap (Projected, in millions)||Percentage of Cap|
By the time his contract ended, only about 12 percent of his salary would be included in the cap.
Everyone wins in this situation. The player wins because he doesn’t have to lose money. The team wins because it doesn't have to sacrifice being competitive. The fans win because they still get to see their favorite player but can still hope to make the playoffs. The NBA wins because everyone is happy.
In my best Oprah voice, “You get a win. You get a win. You get a win. EVERYBODY gets a win.” If I could propose something to discuss at the next collective bargaining session, this would be it.