SBD/June 25, 2012/Leagues and Governing Bodies

Could NBA's New Salary Cap Rules End Up Hurting Small-Market Teams?

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Thunder, Grizzlies have been in the bottom five in average payroll for past five years
The NBA's overall revenues "did not increase enough" in '11-12 to push the league's salary cap and luxury tax "significantly beyond current levels" until '13-14, according to sources cited by Ken Berger of CBSSPORTS.com. The '13-14 season is the first "under a more punitive luxury tax designed to rein in big-spending teams." While NBA officials have "lauded the presence of so-called small-market teams in the playoffs," this season was "simply more of the same." League salary data indicated that three of the four teams to reach the conference finals "were in the top five in the league in payroll: Boston (2), Miami (3), San Antonio (5) and outlier Oklahoma City (17)." Of the "top five teams in average payroll for the past five seasons, all made the playoffs: Dallas (1), the Lakers (2), Boston (3), New York (4) and Orlando (5)." Only Memphis (27) and Oklahoma City (28) "made the postseason from the bottom five in average payroll over the past five years." League execs "expect the spending gap between the top and bottom to narrow as the effects of the new CBA kick in, beginning in 2013-14 with vastly more onerous luxury-tax provisions." Some of the financial reset "is expected to phase in during free agency this summer as teams position themselves to comply with the new guidelines and new player contracts begin to converge with old ones on teams' salary books."

LEARNING CURVE: While revenue-sharing "enhancements ostensibly are in place to redistribute the NBA's $4 billion of wealth and help low-revenue teams, many executives are unfamiliar with the criteria and are having difficulty factoring that into their long-term payroll and roster planning." NBA Deputy Commissioner & COO Adam Silver said, "So far based on this agreement, [Mavericks Owner] Mark Cuban's behavior seems to have been altered by the new collective bargaining agreement. The Lakers' behavior has been altered. It's very difficult to predict. It's an extraordinarily harsh tax once it fully kicks in." But Silver added, "Because it's a soft cap, a team has the ability to spend more money than other markets and it puts small markets at a disadvantage. ... The question is whether big-spending teams or large-market owners are willing to spend to go significantly into the tax" (CBSSPORTS.com, 6/22).
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