This past offseason, the Brooklyn Nets’ front office went on a spending frenzy. General manager Billy King, with the financial assistance of majority team owner and Russian billionaire Mikhail Prokhorov, signed starters Deron Williams, Brook Lopez, Gerald Wallace and Kris Humphries. Though Humphries has been diminished to a reserve role over the season he and the other players have received contracts that basically give each player $10 million or more per season. In addition, at the very beginning of the off-season, the Nets acquired star guard Joe Johnson from the Atlanta Hawks, who came along with a contract that awarded him almost $20 million in 2012-13 and over $20 million over the next three seasons. But while the Nets felt like they needed to spend as much as possible over the summer, many teams began to take a more finance-saving stance on roster moves, and have continued to do so, because of the Collective Bargaining Agreement (aka CBA) that was signed to resolve the 2011 NBA lockout.
What is causing teams to want to spend less besides general costs? While the CBA made salary cap taxes for teams $1 for every $1 above the salary cap in the 2011-2012 and 2012-2013 seasons, it also increased tax rates for progressive spending above the salary cap as more is spent. This includes an incredibly staggering $3.25 in taxes for every $1 above the tax level if a team spends $15 million to $20 million over the salary cap.
While Brooklyn acquired a top-level talent in Joe Johnson for not too much skill-wise, Atlanta, and its then new general manager Danny Ferry, shed Joe Johnson’s ridiculous contract off of its salary books. In addition, before this past trade deadline, Atlanta was expected by many executives around the league to trade Josh Smith, arguably the team’s best player. Smith has been quoted as saying that he wants a max contract when he becomes a free agent this upcoming offseason, but the Hawks are pretty unlikely to offer this, despite how impressive of a player he is. However, the Hawks ultimately decided to hold onto Josh Smith. If the Hawks were in this type of situation a few seasons ago, there might have been fear
throughout the organization that they would be doomed if Smith did not re-sign in the offseason. But because of the financial implications of the new CBA, having financial flexibility has become a more attractive move to teams throughout the league, which is the situation the Hawks have left
The Memphis Grizzlies took to trade action well in advance of the trade deadline. In the first of two early deals, the Grizzlies sent reserves Marreese Speights, Wayne Ellington and Josh Selby to the Cleveland Cavaliers in exchange for Jon Leuer, who was seldom used on the Cavs. This deal saved the Grizzlies about $6 million in salary for this season, as Leuer and Selby’s contracts have the same value, while Ellington is owed around $2 million and Speights is owed around $4 million. In addition, Speights is also already signed and owed money next season, while Leuer is not. Many thought that after this trade, the Grizzlies would not make any more big moves, but they were wrong. In the second of these early deals, the Grizzlies traded their star forward Rudy Gay, along with Hamed Haddadi, to the Toronto Raptors in a deal that fetched them Tayshaun Prince, Austin Daye and Ed Davis, and also sent Jos?e Calder??n from the Raptors to the Detroit Pistons. With this trade, the Grizzlies gave up almost $18 million in salary for 2012-2013, mostly because of Rudy Gay’s high payroll, and only took back $12 million in salary. The trade was even great for basketball reasons as well. The Grizzlies replaced Gay with a solid, and $10 million per year less expensive, small forward in Prince, and received two young assets that they could develop in Davis and Daye. The Grizzlies also beat first-seeded San Antonio without Rudy Gay and with this same core in the 2011 NBA Playoffs.
The 2011 Collective Bargaining Agreement has changed and will continue to change the landscape of the NBA like no one could have imagined. With star players such as James Harden, Joe Johnson and Rudy Gay being traded because their teams don’t want to dip into the ever-increasing luxury tax, who knows who will be moved next? Only time will tell.
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