How The New CBA Destroyed The NBA Trade Deadline

In the weeks leading up to the 2014 NBA Trade Deadline, reports were out that NBA insiders expected this to be one of the busiest trade deadlines in recent memory, or more specifically, since the 2011 lockout and the new Collective Bargaining Agreement that commenced.

As quickly as those reports leaked, they were contracted. And if last Thursday left your trade deadline fix unresolved and unfulfilled yet again, then you can look no further and blame that aforementioned 2011 lockout and more specifically, the new CBA.

Before the 2011 lockout, there was seemingly always at least one trade at the deadline, or near it, that caught your interest, made your head turn, caught you off guard or by surprise, or had some video game feel to it. Whether it was the 2003 trade which swapped Gary Payton and Ray Allen, or the 2005 trade that sent Chris Webber to the Philadelphia 76ers, giving Sixers fans false hope of a long awaited superstar to play alongside Allen Iverson for the first time in his career, it seemed as though every year we could count on some sort of blockbuster to analyze and debate. It was an NBA holiday, a day we all looked forward to as our own personal NBA Christmas, after Christmas itself had come and gone. But now, it is effectively over with, at least the blockbuster portion of it.

Obviously, there is still–and probably always will be–a trade deadline. It just isn’t the day we all grew up with and grew so fond of. And to blame, whether intentionally or not, we have the NBA’s new Collective Bargaining Agreement.

The new CBA, combined with general nanagers who are becoming more and more savvy in the advanced metrics era and who use advanced statistics more and more to calculate every move they intend to make, are effectively shutting the trade deadline down.

The GMs play a part, but don’t be fooled, these same general managers, in the old CBA, would still be making deals and trading picks and taking on expiring contracts like the good ol’ days if it weren’t for the new shape of the NBA. So, sure, the league-wide awareness of the importance of draft picks and good contracts has risen, but those same picks and good contracts matter more because of the new CBA. The fact is that the GMs are just smart enough to realize the implications, and therefore, there’s less room for error and careless mistakes, especially with owners looming over their shoulders who do not want to pay the fees that come with say, acquiring an expiring contract. In the old CBA, it was a non-issue, and in most cases, an asset.

The main issue? The luxury tax. And to perennial tax payers, the bigger issue is, the repeater tax.

In the new CBA, the luxury tax goes as follows:

– $O-5MM above tax line = $1.50 penalty per dollar

– $5-10MM above tax line = $1.75 penalty per dollar

– $1O-15MM above tax line = $2.50 penalty per dollar

– $15-20MM above tax line = $3.25 penalty per dollar

– For every additional $5MM above the tax line, rates increase at $0.50 per dollar, or in other words, they increase A LOT.

In past years, teams would pay $1.00 for every $1.00 above the tax line; therefore, if a team was $7 million over the tax line, they paid $14 million total. Under the new system, the team would pay $1.50 per dollar for the first $5 million, and then $1.75 per dollar on the remaining $2 million for a total of $10 million in penalties. Add that on to the $7 million that the team is already over the cap, and that $14 million turns into $17 million very quickly. You can see where this starts to get expensive. It’s exactly what makes expiring contracts, like Pau Gasol‘s $19 million one, which used to be desirable for a team who would want him for the stretch run, so undesirable and borderline untradeable anymore.

The repeater tax increases the rates listed above by $1 each. The repeater tax applies to teams who land themselves over the NBA’s luxury tax threshold any four years in any five-year period.

Hit page 2 for more on why Chandler Parsons is the best contract in the NBA…

So, for our same example above, a team in the repeater tax would be paying $2.50 on every dollar for the first $5 million and then $2.75 on every dollar for the next $2 million, bringing that same total up to $18 million in luxury tax, plus the original $7 million that the team is over the tax, for a grand total of $25 million. Again, you can see where this can get expensive, and exactly why GMs have become even more savvy. It’s partially because they have to, or else they’ll lose their jobs. If you’re an owner and you’re acquiring Pau Gasol, and Pau’s contract takes you $7 million over the luxury tax threshold, that $7 million is then costing you $17 million, or worse yet, $25 million if you’re in a repeat tax year. Suddenly, acquiring Pau Gasol becomes one expensive accommodation.

The short version of that explanation is that in the new CBA expiring contracts aren’t the commodity they once were. Teams, large market or small, would pay the extra $7 million in tax money for Pau Gasol’s services for the remainder of the year. They won’t, however, pay an extra $17 to $25 million for him, and most can’t afford to. Outside of the New York Knicks, Brooklyn Nets and Los Angeles Lakers, teams can’t afford that extra coin on their luxury bills at season’s end, which is where the smarter GMs come into play.

These are the reasons general managers like R.C. Buford, Sam Presti, Sam Hinkie and Daryl Morey are so vital.

Second-round draft picks used to be thrown around like dollar bills at a strip club on deadline day–if nothing else, they would never stop a team from making a deal. Now, and with the help of advanced scouting, they are coveted.

Teams are now using their scouts to work hard to find second-round draft picks, who can become real assets. They still miss more often than they hit, but when they do, it’s basketball scouting glory.

Take the Houston Rockets’ Daryl Morey for example. In 2011, he and the Houston Rockets (who Sixers’ GM Sam Hinkie was also working for at the time) drafted Chandler Parsons with the 38th overall pick. Houston then signed Parsons to a four-year deal that guaranteed Houston could keep Parsons at a salary of under $1 million for each of those four seasons. This wasn’t the first time a second-round pick was taken in the second round, but it was one of the first times it worked so joyously for a basketball franchise. Chandler quickly emerged as a valuable NBA swingman, much more valuable than his contract, and under the new CBA became the staple of such deals for second-round picks. These contracts give the franchise control over the player for a very long time. Obviously, first-round picks can be signed to four-year deals as well, but come with higher salaries that increase annually at set rates.

A player like Parsons, when drafted, will be ecstatic to receive an NBA contract of four years (remember, NBA contracts are guaranteed). These picks give the organizations even more leverage, because their agents are more likely to allow team (not player) options at the end of, say, years two and three. Suddenly Chandle Parsons is (widely considered) the best contract in the NBA. Under the new CBA, with strict hard cap rules, these contracts become that much more vital. If you can have a guy contribute what Parsons contributes to the Rockets, at under $1 million per season, that gives you a ton of flexibility and plays a large role in your team’s ability to acquire James Harden and sign Dwight Howard.

Keep reading for more on how the NBA is a copycat league…

As we know, the NBA is a copycat league. Teams witnessed this and followed suit. Sam Hinkie witnessed it first hand, which is partially why he was willing to settle for all of those second-round picks at last Thursday’s deadline instead of at least one first-rounder as he initially insisted on, and partially because no one was giving him a first-round pick for either Spencer Hawes or Evan Turner.

Before Hinkie took over the Sixers, the team drafted Lavoy Allen with the 50th pick in the draft and inexplicably signed him to a one-year deal, forcing them to dip into their mid-level exception when it came time to sign him to a two-year, $6 million extension just a year later. But in stockpiling second-round picks (potentially six in all), perhaps Hinkie drafts a ton of players in that round, or packages the picks to move up in the round and find his own Chandler Parsons, and maybe, just maybe, sign him to the same incredible deal Chandler Parsons is currently playing under. At the very least, he’ll end up with a boatload of second-round picks of which he and his assistants can decide who are the guys they are signing to similar deals with, more than likely, team options. General managers are realizing that they have a lot more leverage over second-round picks than they do first-rounders, and are using it to their advantage.

As, Lakers GM Mitch Kupchak told reporters last Thursday, “Picks have become more valuable than ever, it used to be you could get a second-round pick pretty easy. Now they’re almost as hard to get as a first-round pick.”

He’s exactly right. Also, in years past, Mitch would have been able to unload Pau Gasol’s expiring contract, which we covered above. But their were no picks available, and no one was taking on that salary.

The same goes for the Phoenix Suns and Emeka Okafor‘s $14.5 million expiring contract. But no takers. Not in today’s NBA.

Twenty-three players changed squads in the final day that trades were allowed to occur in the NBA. Of the 23, only three were starters: Steve Blake, Evan Turner and Spencer Hawes. The former two will be backups with their new teams. Of the other 20, I’d bet next to none have any impact on this upcoming NBA postseason.

The Los Angeles Clippers basically gave away two players just to avoid the luxury tax. The Miami Heat traded Roger Mason Jr. essentially to open up a roster spot. Not a single first-round pick was dealt in the final week leading up to last Thursday’s deadline.

At the last NBA Trade Deadline before the Lockout, and the new CBA, we witnessed Carmelo Anthony get traded to the Knicks; Deron Williams get traded to the Nets; Baron Davis and the first-round pick that became Kyrie Irving to the Cleveland Cavaliers. We witnessed the Jeff Green/Kendrick Perkins swap between the Oklahoma City Thunder and Boston Celtics and even Aaron Brooks got swapped for Goran Dragic and a first-round pick. The point? It was a fun, busy time period. It was basketball porn. It was like something we would do in a video game. It was awesome. So many big names, a couple All-Stars, first-round picks, the whole nine. They should run segments from those times on ESPN Classic because those days are gone.

Today, the best executives manage their salary cap wisely, avoid the luxury tax as they stockpile and hoard draft picks, otherwise knows an inexpensive talent. That philosophy is being embraced by more and more teams each year, making picks harder to come by and leaving almost nowhere to dump off a bad contract.

But this is the NBA we live in today. The NBA wanted to be more like the NFL in this matter. Well, congratulations, you succeeded. And no one likes it. Perhaps that’s why NBA fans dub the NFL the No Fun League. Now, our own league wants to be just like it. They’ve certainly succeeded in at least one aspect, because the trade deadline is certainly no longer fun.

What do you think?

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