This article is Part 2 of ‘Defining NBA Superteam’ that explores the concerns of superteam proliferation and some remedies for this phenomenon.
Are superteams a concern for the league?
As highlighted in Part 1, star empowerment being the driving force of superteam formation is a fairly recent trend. And if you buy the notion that superteams of the last decade are becoming a vastly different animal than those in the early years of unrestricted free agency, the question is whether this trend away from competitive balance (not to be confused with parity) is concerning.
The answer is actually quite murky. While the league has publicly acknowledged in the recent past that superteams are not ideal, franchise values are hitting all-time highs, and there may just be a simple shift in the demographic toward more casual and younger viewers across the globe even if some portion of fans lose interest.
But a more adverse scenario could be that attendance and viewership decline as the same couple of teams repeatedly cruise to the Finals without much suspense. The lack of interest might be exacerbated by the diminished value of a championship given strong expectations that superteams will win. For one, the GOAT himself has claimed he’s not a fan, which is not surprising since he probably would not have won 6 rings if stars in his day joined forces during their primes:
“I think you want to be able to have competitive balance in the league. And if a player is able to choose/determine what team he wants to play for, then you are going to have some talent discrepancy in the league… You start to see a little bit of it now where all the stars try to get together on the same team, but I think it’s going to start to hurt the overall aspect of the league from a competitive standpoint. Only one or two teams will be great and the other 28 will be garbage.” — MJ
If NBA front offices are disincentivized to manage for personnel stability and long-term viability (see NY Knicks staff turnover), the NBA could end up closely mimicking Major League Baseball, where big market coastal teams suck up top talent on small and mid-market teams, essentially bypassing the costs of player development and reaping the benefits of peak production immediately. From a business perspective, many have argued that the concentration of big market MLB teams and the lack of incentive for small market teams to pay up and compete is at least partly to blame for the persistent decline in attendance at MLB games over recent years.
Bringing Back Competitive Balance
Here are some remedies:
- Bidding process in lieu of drafts and buyout market
If good players can demand a change of scenery on a whim, then why bother with a draft that’s increasingly becoming pretense for organizational control? Moreover, why should top prospects be held to artificial below-market pay (as measured by that cohort’s win shares) during some of their prime earning years simply because they’re inexperienced?
In lieu of a draft and a rookie pay scale, prospects can instead be allocated via a multi-round bidding process, where players are obligated to sign 3+1 contracts (3 years plus a 4th year team option) with the highest bidder. The bidding teams in turn are bound by available cap space (perhaps up to the luxury tax threshold). Further, each team that remains below the luxury tax threshold can be given ‘rookie exceptions’ equal to the lowest accepted bid, which can be used to pitch prospects that do not receive bids. The prospect can then agree to a deal of up to 3 years with his preferred suitor, similar to free agency.
Similarly, players in the buyout market should also be subject to a bidding process instead, with teams bound by available cap space or exceptions (see story here). This would likely minimize the recent trend of still productive/above-average ring chasers parading to contenders at virtually no cost to their new teams. (e.g. Aldridge, Griffin, Drummond, Anthony, etc.)
The net effect of all this should be that superteams become harder to sustain (less chance for cost-controlled rising stars or bought-out ex-stars to fit under the cap with a couple of other max contracts). Additionally, expensive teams built via free agency are less likely to outbid others for future stars or ring chasers which lowers the odds of team stacking. On the other end, the incentive for rebuilding teams to tank would be reduced drastically, as bottom feeders can no longer rely on the draft lottery or try to trade away rising stars for future picks. Finally, rookies’ fates are no longer left to chance/tanking ability (lottery).
As an example, under this scenario the 2014 Cavs would have faced a vastly different decision process. Instead of LeBron returning via free agency knowing that its consensus #1 pick (Andrew Wiggins — who had a high probability of becoming a star at that time) would be traded for Kevin Love to form a Big 3, the Cavs would have to decide between bidding for Wiggins and offering LeBron a big contract. Meanwhile, LeBron would need to decide if teaming up with Kyrie would be enticing enough, since another team with more cap space (short of him taking a massive discount) would likely outbid the Cavs for Wiggins and thwart the chances of having him to trade for Love.
2. Introduce at-will contracts in addition to guaranteed contracts
This idea goes hand in hand with #1 in maximizing both the influence of market forces and player mobility. Essentially, players with say 3 years of experience can opt for an at-will contract that is set each year according to his fair value (somewhat similar to salary arbitration in the MLB). Alternatively, a player can elect to sign a traditional guaranteed multi-year deal if offered.
Players with at-will contracts can be traded or given a severance package at any time without a cap hit. If traded, the acquiring team can either assume the prevailing terms or renegotiate a multi-year deal. Meanwhile, players on multi-year deals sacrifice some flexibility for financial security in the form of a massive trade kicker that would be activated for the acquiring team.
First off, having two types of contracts would cater to varying levels of ‘loyalty’ or risk tolerance among players. Secondly, infusing a ‘poison pill’ in some trades should serve to reduce both trade demands by players and lopsided fire sale trades by management. Even though this reduces the liquidity of the trade market overall, in theory the integrity of a long term deal is preserved by encouraging a greater proportion of the returns on player investment to accrue to the original teams that made the commitment.
3. No more max contracts; introduce revenue sharing with players
Eliminating max contracts was discussed in a previous post as the most direct antidote to the runaway superteam problem. However, the main hurdle to implementation comes from the reluctance by the National Basketball Players Association (NBPA) to vote against its own interests. Specifically, since salaries of elite players are capped and teams are required to spend at least 90% of the salary cap, middle tier incomes become artificially inflated, which is favorable to the vast majority of players.
It’s unclear if revenue sharing among players making below the mid-level is feasible on a practical level, but in theory the NBA could boost average salaries, eliminate max contracts, and keep the salary cap stable all at the same time by calibrating the luxury and repeater taxes (e.g. increasing the tax or adding more tax thresholds) such that a meaningful amount of the revenue raised can be put into escrow for players making below the average salary (with phase-out as salary approaches the average in a given year).
Such a concept would make a number of players better off with the bonus pay mitigating the impact of eliminating max contracts (this year, offending NBA teams are set to pay more than $320 million in such taxes). Just as importantly, this would make superteams very difficult to sustain.
4. The Franchise Tag (see here for the LeBron Rule)
In addition to the protections I noted previously, here’s an extra twist: the incumbent team can re-sign this designated player and only have 2/3 of the contract counted towards the salary cap. For instance, a $60 million/year deal would constitute a cap hit of only $40 million per year. A new team trying to pry away this player via free agency or trade would need to pay 25% above the standing offer due to his tag (i.e. $75 million with full cap hit).
5. Adjusted Cap Holds (see here for the Durant Rule)
