So-So Players’ Salaries Soar in N.B.A. Flush With New TV Money

July 07, 2016

So-So Players’ Salaries Soar in N.B.A. Flush With New TV Money

This article by Marc Tracy from The New York Times is a fantastic take on the bloated salaries coming out of this year's NBA Free Agency period amidst the salary cap hike. For some players in particular, the contracts are shocking. And with over $3 billion being spent on just 70 players so far, this has become the sports topic of the summer. 

For today's blog, I've posted the Times article below, and welcome your take on these crazy NBA contracts by commenting below. 

-Brandon

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Timofey Mozgov is a journeyman N.B.A. player who averaged 6.3 points a game last season. Last week he agreed to a four-year, $64 million deal with the Los Angeles Lakers. It was a little like a character actor suddenly being paid more than Will Smith for a bit part in a summer blockbuster.

The past week in the N.B.A., in which players whose contracts had expired began to negotiate new deals, has turned the sports economy on its head. An infusion of billions of dollars into the league’s coffers from a television contract agreed upon two years ago has led to this: That random guy on the bench is getting upward of $15 million a year.

After his deal was announced, Mozgov told The Los Angeles Daily News that he planned to spend the summer “sitting on the beach and drinking a piña colada.” Or five million piña coladas.

Matthew Dellavedova, who last season often sat on the Cleveland Cavaliers’ bench alongside Mozgov, also cashed in, agreeing to a four-year, $38 million deal with the Milwaukee Bucks. Ryan Anderson, a sharpshooter who plays questionable defense, scored $80 million over four years with the Houston Rockets. That annual rate, $20 million, is higher than what any player made on last season’s 73-win Golden State Warriors, including Stephen Curry, the league’s two-time most valuable player.

The numbers were even bigger for players considered more talented, even if they are not recognizable to casual sports fans. The Memphis Grizzlies agreed to give Chandler Parsons $94 million over four years and Mike Conley $153 million over five years — the biggest contract in N.B.A. history. Conley is a very good point guard; LeBron James he is not.

This startling redistribution of wealth is a product of a TV rights extension that will go into effect next season, under which ESPN and Turner (which carries games on TNT) are paying the league $24 billion over nine years — about a 180 percent increase over the last contract. The enormous jump was seen as a reflection of the general value of live sports in an age of DVR and YouTube clips and specifically of the appeal of a star-stocked, exciting league.

“As shocking as the numbers seem, the reality is the business is that much stronger, and the players are just getting their rightful share,” said Marc Fleisher, a basketball agent and the son of Larry Fleisher, who helped found the N.B.A. players union.

The salary cap — the maximum amount each team can spend on salaries (with some exceptions built in) — was $70 million last season, a $7 million rise from the previous season. But next season it will be $94 million, and it is projected to be $107 million for the 2017-18 season. Also rising was each team’s salary floor, mandating that franchises spend at least 90 percent of the cap’s value on their players.

Translation: There had never been a better time to be an N.B.A. free agent than this month, and there may never be again. Players whose contracts expired at the end of the recently completed season hit the jackpot as frenzied teams scrambled for bodies.

“Panic is probably not the right word, but teams get afraid that they’ll be left with nothing after months and months of planning and seeing everyone get snatched up quickly,” Fleisher said.

Each pro sports league has its own, often complicated salary structure. Right now, basketball players seem charmed in comparison with their counterparts in the N.F.L. and Major League Baseball.

In the N.F.L., where the players’ union is relatively weak, contracts are typically not even guaranteed. In baseball, which has the strongest union and no hard limits on spending, the biggest stars have received gargantuan contracts. But the equivalent of a Dellavedova — a reserve utility infielder? — probably does not receive $9.5 million a year.

Because N.B.A. salary rules also restrict maximum payouts, favor veterans and strictly slot rookie contracts, many milquetoast players are paid above what their open market value would be. If there were an Occupy Wall Street of the N.B.A., it would not consist of the 99 percent revolting against the 1 percent. Rather, its youngest players and maybe its biggest superstars, who many argue are paid less than what they are truly worth, would take on the vast middle class.

“Veterans have decided, ‘We want to shift the money from rookies to veterans,’” said Warren Zola, who teaches sports business at Boston College’s Carroll School of Management. That decision was reached when most of this season’s rookies were too young to drive.

Though basketball fans generally believe that more revenue should go to the players rather than the owners, many have nonetheless been dazzled by recent deals.

“I wasn’t shocked Chandler Parsons got a max contract,” Joel Martinez, who, under the name The Kid Mero, co-hosts a popular podcast, said on Twitter, “until I found out it was for basketball and not spraying cologne at Abercrombie.”

After committing nearly a quarter of a billion dollars to Conley and Parsons, the owner of the Grizzlies, Robert Pera, posted an image of one of the Little Rascals throwing money out a window.

 

 

As much money as Pera and his fellow owners are throwing around this summer, though, they, too, are enjoying the N.B.A.’s boom times. The high contracts reflect a fundamental reality: Business has never been better.

“The bottom line is the players get somewhere between 49 and 51 percent,” Fleisher said, referring to the current apportionment of what is known in the jargon as basketball-related income. “So the fact that the players are getting this just shows you how much the owners are making.”




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