Call me a hater but these NBA deals are insane I have to google the players getting paid🤔🤔 #nonamechecks #productiondoesntcount— DeAngelo Williams (@DeAngeloRB) July 1, 2016
So it is now true that middle-of-the-road, average NBA players are now getting massive, fully guaranteed contracts that perception would tell you they aren't "worth" and they don't "deserve". How did the middle class in the NBA start raking in the dough that the rookies can't touch and the big players somehow don't receive either. But, unlike what DeAngelo Williams and Emmanuel Sanders believe, this has become the new normal not just in the sport they're commenting on, but their's, as well as hockey, soccer and baseball. As fans, observers, and wannabee economists, we must all re-set what our expectations of "fair value" are, even in the era of moneyball and advanced analytics which have tried desperately to re-set those expectations in the other direction. How did sports leagues get to this point, and how can we as fans adjust our expectations?Looks like I chose the wrong sport 🤑🤑😂#nbafreeagency— Emmanuel Sanders (@ESanders_10) July 1, 2016
In every major sport in this country, the wages that rookies can make are capped or slotted depending on where they are drafted, or in the NHL, playing as a rookie at all. The NBA has had a rookie scale since the 1998-99 lockout, the NFL's is new as of the recent CBA, MLB players are paid slot value based on where they are drafted, and NHL players entry-level contracts are bonus and incentive laden with little base money. So, as rookies are paid less and less in order to prevent madness like Matthew Stafford's initial NFL contract in which he nearly became the highest paid player on his team, or how Wayne Gretzky ended up becoming an Edmonton Oiler and escaping the Entry Draft, where else is the money going to go with established salary floors in the NBA, NHL and NFL? Combine this with the incentives teams have to re-sign their players in most leagues by being able to offer them longer term deals, very few high end players ever end up hitting free agency to begin with, and those that do end up being of lesser quality with the demand for their services increasing.
What also adds to the insanity is that in the NBA and NHL, contracts are artificially limited at the top end. A max contract is part of the NBA's furniture, as are contract lengths in the NHL to prevent what had become so prevalent in recent years before the 2012-13 to prevent backdiving the contracts to lower cap hits. Limits at the top and bottom ends of the scale have meant that those in the middle, in theory the largest group of players, get to reap the rewards that the big fish and rookies can't touch. This means that players like Mike Conley in the NBA and Milan Lucic in the NHL can strike it rich while better players sit out as they're tied down by restrictions that tether them when they're at the top of their game. Both leagues have a salary cap floor, or a minimum amount of money needed to be spent on payroll, which means that in order to make the floor as revenues spike for both leagues, who reaps the benefits of all that extra money in the system? The middle men. What is different about the NBA compared to its peers in the NFL and NHL is that those two leagues have prided themselves on parity and competitive balance that the NBA will never see, and because of the weird timing of free agency with this CBA and when the new TV contracts kicked in, the world has seen how average NBA players are making more than most NFL and NHL players will make in a lifetime.
The phenomenon of the "middle class" suddenly becoming unconscionably wealthy is not NBA exclusive. The NHL's supposed "middle class" is being paid out of proportion to even what the top players are worth, i.e. Andrew Ladd is making as much money next season as John Tavares is with the Islanders. While the NHL's hard cap and few exceptions to it mean that wages are more controlled than they are in the NBA, rising HRR and a new expansion team down the road means there is more money in the system for the Loui Eriksson's and Dave Bolland's of the world (he is the second highest paid forward on his team, even though he likely won't play a minute this season). And in the Premier League, as TV contracts massively inflate the coffers of every club thanks to largely equal distribution of those massive funds, as is the case in American sports, clubs like Crystal Palace are able to make 38 million Euro bids for players that should in theory be way out of their league, such as Michy Batshuayi, who is heading to Chelsea. There are no salary caps in the Premier League, and UEFA's Financial Fair Play is easily exploitable and practically worthless in practice.
What has now emerged from the NBA's Supermarket Sweep of spending on sub-standard second tier players is a crisis of perception, and potentially a labor crisis. Naturally, the owners in smaller markets are going to want to tamp down on these ridiculous contracts for the game's so called middle class, which the NBAPA is going to fight back on, hard. NHL owners are probably going to want to do the same, because there is no clean way to get out from under bad contracts in both leagues as the deals are almost fully guaranteed. NFL players are watching with earnest interest and wondering why they're not given fully guaranteed contracts considering the game they play and the dangers they face, and why their earning ceiling is so much lower than Mike Conley's, for instance.
Regardless of whether contract figures like what have been handed out in the NBA and NHL over the past few days are the new normal, and they are in many respects, there is a massive problem in creating not only equity within the system, but an effective tiered mechanism so players can be paid what they might be really worth, not what an inefficient and closed market believes they are worth. Thanks to the multiple and artificial limitations imposed on the closed markets for most leagues, including the NBA, the very few players who are not restricted in what they can earn and how long they can earn that for end up reaping the rewards, and fans and observers are left to scratch their head as to why.
CBA negotiations for all sports leagues are incredibly contentious, and will grow even more so as the money infused into these leagues continues to skyrocket, which makes the likelihood of any clear compromise that rectifies the inefficiencies and the madness unlikely. And as with every CBA negotiated in every league, a new and unforseen problem emerges every single time which ends up becoming easily exploited and renders most of the hard work from before practically moot.
Thanks to these inefficiencies, caps and the like, players like Evan Turner, Troy Brouwer and Mike Conley can cash in like they're on the Nickelodeon Super Toy Run while their respective leagues top and bottom feeders can do little if anything about it and onlookers peer on in shock, horror and amusement.
Mike Conley's $153 million record breaking contract is not the new normal. The future Mike Conley's getting similar if not bigger contracts is.