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LeBron James Gordon Hayward.

Max contracts: The bizarre but necessary nature of the NBA's salary constraints

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Today’s NBA is shaped by the Collective Bargaining Agreement (CBA) between the NBA Players Association (NBPA) and the league itself. It is the CBA that has brought in the salary cap and it is the CBA that brought with it capped individual contracts. In 1997, salaries began to spiral out of control, with Kevin Garnett agreeing to the richest contract in NBA history after just two seasons and the owners realised something had to change.

"The owners drew a line in the sand and said, 'We've got to put a max in. This can never happen again,' " Eric Fleisher, Garnett's agent at the time, told Ken Berger and CBSSports.com.

How max contracts work is a little bit confusing even for experienced basketball aficionados. These contracts cap an individual’s salary based on years’ experience in the league and the value of the salary cap. A player who has been in the association for six years or fewer can be paid a maximum of 25%. If a player has played between seven and nine seasons, they can get 30% and, for ten years or more, that rises 35%. What this translates to for the 2015-16 season is broken down here, via nbcsports.com.

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Then there are the exceptions, starting with players re-signing with their current team. In that situation, a player may be paid up to 105% of his previous contract even if that breaches the aforementioned caps. Designated rookies may extend their contract with the franchise by five years, where other contracts are limited to four. This contract pays the player 25% of the cap unless they are eligible for the “Derrick Rose” rule, at which they get 30%.

There are so many players in the league today with max contracts and 12 were handed out in 2015 alone. Players like Anthony Davis and Damian Lillard were designated while stars such as LeBron and Durant are joined by players like Gordon Hayward and Wesley Matthews in having signed max contracts. Are max contracts necessary though? Are they good for the league?

Why should we get rid of max contracts?

This is probably the most popular opinion of pundits and fans today and for good reason. Max contracts have become something of a problem in the NBA with how many are handed out while only a select few deserve them. Berger's tremendous article on CBS.com outlines some of these problems.

Toronto Raptors v Cleveland Cavaliers - Game One

"Without the max, LeBron James would be making twice as much,” Berger was told.

That is probably correct. The true superstars of this league, like LeBron, Kevin Durant, and Russell Westbrook among others (Curry does not have a max deal) have their salaries massively reduced from what their impact deserves. These stars have so much of an impact on and off the court and are such an advantage for any franchise that capping their contracts seems ridiculous. Superstars draw in crowds and expand the fan base.

They excite, dazzle and thrill to draw a higher share of televised games and improve TV-based revenue league-wide. They can instantly add to a franchise’s value as LeBron did with Cleveland and they can carry teams on the court, again, as LeBron did with Cleveland.

Despite all of that, there is a breed of upper-tier players, just beneath superstar status, that also demand max contracts. These players do not have anything close to a similar impact and yet they pull in the same kind of salary.

Miami Heat v Atlanta Hawks

Think of Joe Johnson’s deal with Atlanta, the deal Wesley Matthews signed with Dallas this year or even the deal Al Horford will inevitably sign this offseason. Hayward, Greg Monroe, Enes Kanter all get max money too. These players all have serious talent but to suggest they can survive in the realms of the superstar is preposterous.

LeBron and co. are the lions of the NBA; strong and majestic, drawing in all kinds of crowds and capturing our imaginations. The bracket of players just below them are more like hyenas; effective in their own right but just not anywhere near as impressive. The problem is that max contracts mean these lions and hyenas are earning the same amount of money and that is wrong.

Why should we keep max contracts?

At first, this argument seemed redundant in comparison to the injustice above but a little thought unlocks many more things to consider. Aside from creating parity and stopping richer and bigger market franchises ruling the roost, max contracts, with their restrictions, allow us to have an association with a higher standard of team.

You can rightly argue that LeBron or KD should be paid much more and teams would always do so because of the revenue they generate. Heck, if you let them, franchises would probably offer up most of the cap to bring in such a player. They would then fill out the rest of their roster how they could and then let their superstar drag them onwards.

Oklahoma City Thunder v Golden State Warriors - Game One

With the restrictions, though, teams can form high-quality rosters and have a superstar and that is great for the league. Watching stars play on talented rosters is so much better than watching a star dragging forward a franchise as though it were a broken-down car. It gives them the freedom to be creative and brave and it leads to improved performances all round.

This also leads to some of the most exciting rosters we have ever seen. With superstars’ salaries limited, they can join forces on one team while still leaving that franchise with cap space. Without max contracts, we would not have seen LeBron with Wade and Bosh in Miami or with Irving and Love in Cleveland. We likely wouldn’t see Durant and Westbrook in OKC or even Curry, Thompson and Green in Golden State. Even if some stars lowered their demands to stay competitive, it just wouldn’t be truly feasible.

Teams without superstars might be able to form stronger, star-less rosters than today but then they couldn’t safeguard the potential stars they draft as they do today. New Orleans wouldn’t be able to protect Davis for the foreseeable future, nor Portland with Lillard. Max deals also help smaller-market teams keep their stars. 

Portland Trail Blazers v Golden State Warriors - Game Five

And if you’re worried about superstars not getting paid enough, it is worth consider their off-court income. Nick Foster of SI.com also acknowledged that max deals help teams keep their drafted stars while noting that stars get their money elsewhere, saying: 

"You get rid of max contracts, and you’re effectively taking millions from average players (who don’t have nine-figure shoe deals) so superstars can buy private islands. It would be “fairer”, but not in the best interest of the vast majority of NBA players. Meanwhile, teams fortunate and savvy enough to draft and develop multiple superstars would have to choose between either footing a colossal luxury tax bill or serving as a farm system for the rest of the league."

Stars who are truly worth more, get more. They are the league's best-paid players and draw in countless millions from sponsorships and endorsements, including shoe deals and signature shoes, and their fame opens up new opportunities for revenue.

LeBron, for example, has become something of an investor and will star in the upcoming Space Jam 2, in addition to rumours of a Nike deal in the absurd realm of $1 billion. Kevin Durant has launched an underwear range to supplement his income and James Harden signed a huge $200 million deal with Adidas.

Toronto Raptors v Cleveland Cavaliers - Game One

Stars who should be paid more than max contracts allow, make up for their reduced income elsewhere.

The verdict

I set out planning to join the crescendo of rational voices crying for an end to max contracts but now come to the opposite conclusion. For all of their faults, max contracts keep the league to a higher standard than would be otherwise possible. They let stars have solid rosters around them and let superstars team up for exciting times that hugely bolster league popularity, TV deals, and revenue in all areas. When ads are added to jerseys, you can bet that sponsors will pay a whole lot more for a team with multiple stars, for example.

Agreed, players like Matthews or Hayward should never be making the same money as Russ, Harden or LeBron. It is an outrage that they do, but if a superstar deserves more, he gets it elsewhere. Max contracts, as broken as they may seem, are good for the league, even if some players have to be overpaid for it.  Arguments for these bizarre max contracts to be abolished are understandable, but, without a better system, perhaps they are necessary.

Topics:
Eastern Conference
NBA
LeBron James
Cleveland Cavaliers
Central Division
Western Conference
Kevin Durant
Oklahoma City Thunder
Northwest Division

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