Red94 | essays and musings on the nba and houston rockets

via NBA Salary Cap FAQ:

65. Are teams really competing on a level playing field? Since the tax rate is different in the different states and Canada, don’t the teams in a more “tax friendly” state have an advantage over the other teams?

Yes they do. For example, since Florida has no state income tax, an offer from Orlando will offer a higher net income than the same offer from Los Angeles. However, the league added a regulation to help neutralize the tax disadvantage of Canadian teams. All teams are permitted to offer a signing bonus of up to 20% (see question number 64). For U.S. residents in Canada, this bonus is taxed at just 15%. Using this bonus, Canadian teams can nearly achieve tax neutrality.

I was just now reading this in Coon:

Performance incentives are classified as either “likely to be achieved” or “not likely to be achieved,” and are only included in team salary if they are “likely to be achieved.” The league office determines what is likely and what is not. Their guideline is whether the criterion was achieved in the previous season. For example, if a player had seven assists per game the previous season, then an incentive based on seven assists per game would probably be classified as “likely to be achieved,” but an incentive based on eight assists per game would probably be classified as “not likely to be achieved.”

Incentives must be structured so that they provide an incentive for positive achievement by the player or team, and are based upon numerical benchmarks (such as points per game or team wins) or generally recognized league honors (such as MVP or all-NBA first team). The numerical benchmarks must be specific — e.g., a bonus may be based on the player’s free throw percentage exceeds 80%, but may not be based on the player’s free throw percentage improving over his previous season’s percentage.

…which brought to mind the following:

When I ask Morey if he can think of any basketball statistic that can’t benefit a player at the expense of his team, he has to think hard. “Offensive rebounding,” he says, then reverses himself. “But even that can be counterproductive to the team if your job is to get back on defense.” It turns out there is no statistic that a basketball player accumulates that cannot be amassed selfishly. “We think about this deeply whenever we’re talking about contractual incentives,” he says. “We don’t want to incent a guy to do things that hurt the team” — and the amazing thing about basketball is how easy this is to do. “They all maximize what they think they’re being paid for,” he says. He laughs. “It’s a tough environment for a player now because you have a lot of teams starting to think differently. They’ve got to rethink how they’re getting paid.”

The issue of these contractual incentives is not a trivial one as they bear cap implications.  (I did not include the text of that part for the sake of simplicity, but click the link to read more.)  But I wonder – if the Rockets most likely do not base incentives upon conventional measures, and are also tight-lipped about their proprietary metrics – how does the league determine the likelihood of their incentives?

This was interesting.  From Coon:

52. Can existing contracts be renegotiated?

A contract for four or more seasons can be renegotiated after the third anniversary of its signing, extension, or renegotiation that increased any seasons salary by more than 8%. Contracts for fewer than four seasons cannot be renegotiated. A contract cannot be renegotiated between March 1 and June 30 of any year. Only teams under the cap can renegotiate a contract, and the salary in the then-current season can be increased only to the extent that the team has room under the cap. Raises in subsequent years are limited to 10.5% of the salary in the first renegotiated season. The renegotiation may not contain a signing bonus. Contracts cannot be renegotiated downward players cant take a “pay cut” in order to create salary cap room for the team or to contain fewer seasons.

Again, a team over the salary cap cannot renegotiate a contract. An interesting case of this was Shawn Kemp with the Sonics. Kemp, who was unhappy with his contract and wanted to renegotiate, could not get a larger contract from the Sonics because they were over the cap. Kemp forced a trade to Cleveland, who was far enough under the cap at the time to give him the large contract he wanted. Kemp’s contract was renegotiated soon after the trade.

Fourteen years later, the Kemp saga is even more mind-blowing in retrospect - Jim McIlvaine was responsible for destroying a mainstay Western Conference powerhouse of the 90′s.  Recall that fresh off a finals defeat to the Bulls, Sonics management, looking for an interior presence to help push them over the top, signed McIlvaine to a 7-year, $33.6million contract, coming off a year in which he averaged a gaudy 2.3ppg and 2.9rpg (to go along with 2bpg).  Kemp, of the feeling that he had been underpaid, naturally was livid, and the rest, as they say, is history.

It’s interesting because I was not aware that it had been Cleveland’s ability to renegotiate Kemp’s contract which had facilitated the deal.  I’ve been of the opinion for some time that actual cap space is overrated (as top tier free agents do not switch teams outright) and that it is flexibility (ie: length of contract, cheap assets) which is critical for smart management.  But this example would seem to present one overlooked template through which cap space can be a boon.  Though of course, the circumstances would be rare (ie: a disgruntled star making less than the max, but eligible for renegotiation), but the possibility does exist.

Sidenote on Kemp: He’s the one guy from the 90′s, moreso than anyone else, whom, due to the suddenness of his tragic downfall, we view through a revisionist lens and romanticize as greater than what was reality.  To be clear, Shawn Kemp was incredible – elite defensively and the quintessential athletic specimen of his era.  But he’s spoken of today, in reminiscence, as the premiere forward of that age, and in truth, he was far from it.  Just check the numbers, hovering around 18ppg on a fast-paced Sonics bunch.