Why a hard salary cap would benefit the Phoenix Suns

Posted by on October 3rd, 1:19 am

The best-case scenario concerning the lockout for any NBA fan is just for it to end.

But with the business of the NBA potentially set to undergo a seismic change once a deal (hopefully) is hammered out in the coming weeks or months, it’s quite clear that fans of the Suns should be rooting for a much different outcome than fans of the Lakers.

The most divisive issue between players and owners for good reason centers around the concept of a hard cap versus a soft cap. The two sides will eventually agree on the percentage of basketball related income the players will be guaranteed, but players vehemently oppose a hard cap because it will end the days of guaranteed contracts and further restrict salaries.

As most NBA fans know, the league currently operates with a soft cap that provides a variety of exceptions through which teams can go over the salary cap. That’s how a team like the Lakers could go more than 50 percent over last season’s $58 million salary with a roster owed over $90 million, according to ShamSports.com.

Of course, there is a luxury tax that requires teams to pay a dollar to the league for every dollar they exceed the luxury limit, which last year was set at $70.307 million.

According to Larry Coon’s NBA Salary Cap FAQ, the Suns paid a $3.9 million luxury tax in 2007-08, a $4.9 tax in 2008-09 and a $5.0 tax in 2009-10. However, during those years the Suns made moves to lower their luxury tax number (think Kurt Thomas trade) that a team like the Lakers never would consider.

Overall, the ability of teams like the Knicks and Lakers to completely ignore the fiscal constraints imposed on teams like the Kings (whose payroll was half the Lakers’ total last season) is plain unfair. How can Sacramento compete with that kind of financial disadvantage?

Although the players would likely point to revenue sharing among owners as a solution to bridge this gap, it’s clear something must be done.

For a team like the Phoenix Suns that can’t compete on the same financial field as the Lakers, a hard salary cap would be in their best interests both short term and long term.

First off, it’s unfair for teams to be playing by different rules, which is essentially what the luxury tax and plethora of cap exceptions create.

When the Suns’ luxury cap figure starts creeping into double digits they have to dump Kurt Thomas at a king’s ransom. When the same thing happens to Los Angeles, they re-sign Lamar Odom to a sizable extension.

A hard cap prevents a team like the Lakers from loading up on talent or a squad like Miami from being able to supplement its Big Three with any free agent looking for even a mid-level payday. It allows teams like Milwaukee and Charlotte to become relevant if they find the right star and manage their cap well. Markets like that will never have the inherent advantages a Los Angeles or New York does, but at least they will be able to spend the same amount of greenbacks for their roster.

If big market teams can no longer ignore the soft salary cap with their multitude of cap exceptions, the onus will be placed on which markets players want to play in. Although it may not be the same with Sarver signing the checks rather than Jerry Colangelo, the warm weather of Phoenix has always been a desirable destination for free agent basketball players over the years.

In the short term, the Suns’ future salary situation puts them in position to take advantage of a hard salary cap. If they let Steve Nash walk and decline Robin Lopez’s $4 million option they would only have $24 million of commitments entering the summer of 2012 (plus unknown rookie commitments).

In addition, if The Oregonian’s John Canzano is to be believed, there will be an amnesty clause in the new CBA “that would give NBA teams the ability to release one player, pay his salary, take no luxury tax liability, and also, not have that player count against the season salary cap.”

The two candidates for the Suns would be the four years and $27 million Josh Childress has left and the two years and $8 million (plus a team option) Hakim Warrick has on his deal. If Sarver is willing to bite the bullet on $27 million, Childress is the obvious play since losing Warrick would only provide an additional $4 million of cap space post-2012 whereas the team would save $21 million from 2012-15 without Childress.

Such a move would mean Phoenix would have just four current players on the books for $17.5 million (Gortat, Dudley, Frye and Warrick) with cheap deals for Markieff Morris and next year’s rookie likely added to that mix.

The Suns would thus be well-positioned to make a splash next offseason with a loaded free agent class that could be augmented by amnesty victims who take one-year deals in 2011-12 to prepare themselves for the 2012 deluge.

Phoenix could also find a taker for Vince Carter’s contract (which, of course, has an $18.3 million cap figure with only $4 million guaranteed) for a quality player with a long-term deal if a desirable option opens in that realm. That future flexibility could be more valuable (or necessary to get under a certain threshold) in a new CBA world.

The kicker for Phoenix is that Lon Babby was hired as president of basketball operations in part due to his proficiency at reading contracts and finding loopholes after a long career as a lawyer and an agent. In theory at least, any system that dramatically alters the current landscape could put the Suns in an advantageous position because of Babby’s legal smarts.

It’s impossible for Babby and his team to plot a future course for this Phoenix Suns franchise before they can dissect the rules they will be playing by, but to me a hard cap would give the Suns their best chance to succeed in the short-term and long-term because it would level the financial playing field and allow the Suns to take advantage of their low 2012-13 cap number.

Michael Schwartz founded ValleyoftheSuns in October 2008 and is the owner/editor emeritus of the site. He is currently working toward his MBA in sports business at San Diego State University.

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Tags: Lockout · Phoenix Suns · Phoenix Suns Analysis

17 responses so far ↓

  • 1 sun-arc // Oct 3, 2011 at 6:05 pm

    Agree completely.

    I think the unknowns are why Babby & co have played things so conservatively (hanging onto Carter, not signing Hill yet, etc.).

    They may yet get rid of Hakim instead of Josh just because Childress is probably a more needed asset- but still may let him go in an amnesty.

    It would be great if the Suns could get Pau Gasol for Carter’s contract to give LA room. He’s getting up there- but still so valuable. Imagine a front line with him and Gortat with Nash passing them the ball. If they were able to swing Aflalo- they’d really be in business.

    Though, I think they are waiting until 2012- meaning Nash and Hill will fairly likely be gone and it’ll be a whole new team again.

    And, currently, there are only about 5 other teams besides PHX with the money room to make a splash in a year. So, I like how they are positioned for the future, if not the present.

    And I hope Babby is as smart as you suggest. Here’s hoping.

  • 2 Lloyd I. Cadle // Oct 3, 2011 at 7:17 pm

    Great article Michael -

    As I have stated numerous times before, notice the NFL with a hard cap. The teams that dominate in the NFL are small market teams. (I don’t need to name them all, just look at the standings the last few years.) With the NFL hard cap, free agents aren’t even attracted to the big markets.

    You bring up a good point about the great weather in Phoenix (much better than Los Angeles during the winter) being a big lure in bringing free agents here.

    With a hard cap, teams that have the best ownership, general managers and scouting will dominate, not the teams with the most money. That is way it should be!

    The NBA owners MUST hold out for a hard cap, no matter how long it takes. It is best for the fans and the NBA.

  • 3 Dre // Oct 4, 2011 at 9:20 am

    Michael,
    I agree with your point that a hard cap would help out Phoenix (and pretty much destroy New York) I don’t think your points on fairness are on.

    The NBA is imbalanced because there is a shortage of top players. The hard cap in the NHL and NFL has nothing to do with the parity in those leagues (shortened schedule, player pool closer in talent and each player has less impact)

    Second Coase Theorem (I link it on the bottom) shows that big market teams have an advantage without incentive. Players will end up in markets that help the league. This is true with or without cap rules (look at old school NBA and MLB, the Yankees got talent with crazy trade rules and the Lakers + Sixers got Kareem and Moses)

    http://en.wikipedia.org/wiki/Coase_theorem

  • 4 Lloyd I. Cadle // Oct 4, 2011 at 3:13 pm

    A system that allows the Lakers to go 50 million over a soft cap and simply pay a luxary tax is a poor system. It is bad for the fans and the NBA.

    Outside of the fans in Los Angeles and maybe Boston, most of the fans are sick of it.

    With a hard cap, I don’t think that it would “pretty much destroy New York.” New York would have to get competent management in order to compete in a hard cap system just like all of the other teams.

    I propose a hard cap (non negotiable) for all teams in the NBA. Any team that cannot get under the cap should be forced to forfeit any games that they attempt to play while over the cap. That is what is fair for all of the teams!

    For the record here are some of the markets that have dominated during the hard cap era in the NFL the last few seasons: Baltimore, Pittsburgh, Houston (this season), Indianapolis, San Diego, Stinking Oakland, Denver, Washington, Detroit (this year), Green Bay (the smallest sports city of all!), New Orleans. All considered small to medium markets.

    Big market L.A. doesn’t even have a team. New York has two teams that do not have any advantage because they are “big market.” In the NFL, both the New York teams are currently pretty good because they have competent coaches, G.M.’s and scouts, not because they pay 50 million dollars more than the other teams.

    Basketball is a great game. It can be much better with a hard salary cap.

  • 5 Arthur // Oct 4, 2011 at 7:23 pm

    I know the Suns and Lakers have had some recent playoff battles, but let’s not let all those Laker trophies cloud good judgement. The Suns have had good teams under the current system. There have been plenty of All Stars wearing orange jerseys and lots of playoff games under the current system.

    A hard cap won’t fix some of the bad luck and bad officiating Phoenix has endured the last few years. A hard cap won’t fix the problem that the Suns ownership, front office, and coaching staff have often been on separate pages, even before the Steve Kerr era. A hard cap won’t change that Sarver ran off Brian Colangelo, who was respected around the league. A hard cap won’t fix Amare Stoudemire’s bad knees that Robert Sarver didn’t want to invest big money in. Maybe a hard cap would have kept Joe Johnson, but it’s more likely a hard cap would have kept him from being traded to Phoenix in the first place, since Boston would have had a greater incentive to be more patient and let Johnson develop.

    The Suns have the advantages of weather and of Steve Nash and of an athletic training staff that is recognized as being among the best in the business. The Suns used to be the team everyone wanted to play for. The soft cap didn’t kill that reputation. Robert Sarver killed that reputation. How does a hard cap fix or replace a hard-headed owner? The Suns have failed to take full advantage of the competitive advantages the team already has enjoyed. Now the same team, the engine that almost could but didn’t, wants to have everyone else miss games so that Phoenix can get a CBA sweetheart deal to make the league Sarver-proof? “Change the rules so that we can finally win!” That would be embarassing. That’s more than asking for a no hand check rule, or a three second count in the painted area. This is professional sports, not summer camp. Everyone does not get to be a winner. Phoenix has come closer than many other franchises. Don’t blame the salary cap. Sarver calls the shots, so let the blame rest with him.

  • 6 Nba critic // Oct 4, 2011 at 8:03 pm

    Hard cap please the league needs it desperately! The league it’s not fair without it!

  • 7 GoSuns // Oct 4, 2011 at 8:36 pm

    @Arthur, you’re missing the point that everybody is hammering on. A Hard cap fixes everything you called out besides the wear and tear on Amare. How? Gm’s, owners and staff have to be comepetent enough to make the right moves for their fans and teams under a hard or else money doesn’t matter cause you’re waisting it

  • 8 Lloyd I. Cadle // Oct 4, 2011 at 10:24 pm

    Arthur -

    The hard cap is not about the Suns. It is about the NBA and having competitive balance throughout the league which rewards teams that know how to put the proper personnel on the floor by having astute management, coaching and scouting.

    If Sarver is a poor owner with the soft cap, he will also be a poor owner with the hard cap.

    The hard cap is for the good of the NBA, the fans and the cities that have teams. Not only now, but also to have a strong NBA for the long term future.

    Can’t we learn by looking at how the NFL does it? Are they not the model of success that should be emulated?

    NBA basketball is a great game. It just needs more competitive balance that only a hard cap can guarantee.

    The NBA owners should settle for nothing less. Give the players most of the other things that they want. But, insist on the hard cap for the long term health of the game.

  • 9 Lloyd I. Cadle // Oct 4, 2011 at 10:25 pm

    Go Diamondbacks!

  • 10 Steve // Oct 6, 2011 at 9:09 am

    Go Dbacks indeed.

    Arthur, Brian Colangelo is destroying Toronto (and was also the GM when we let JJ go). You can’t release him from all blame of the Suns’ plight.

    Btw, Sarver has signed all of Steve Nash’s checks for his second Suns tenure. Translation: Sarver is the reason Nash is here. Jerry helped orchestrate the deal, as well, but it was Sarver who had the authority to take his finger off the trigger or fire away. He fired away.

    Would I pick a different owner if I could? Yes. Even before this past Finals, I would have picked Cuban any day of the week as my owner of choice. He’s a stat nerd and he has deeper pockets than nearly anyone in the league. But even deep pockets aren’t everything. Dan Gilbert is FILTHY rich, but he’s got an even worse rep than Sarver.

    A hard cap would benefit the league greatly, and it would also benefit every team not named Los Angeles, Boston, or wherever LeBron James is playing. I would MUCH rather watch a league where the Arizona Cardinals of the world can be a play away from winning a world championship than watch a league where two teams have won more than half the championships.

  • 11 Arthur // Oct 10, 2011 at 11:01 am

    Colangelo has largely laid an egg in Toronto, but Toronto is a town where everybody goes to lay eggs. Folks can’t call Brian Colangelo the Scott Layden or Isiah Thomas of Canadian basketball, because the team was bad long before Colangelo got there.

    I’m not a huge fan, but I’ll take Colangelo and the Phoenix team he helped build over what Lon Babby and Sarver has done.

    I give Steve Nash credit for loyalty, but I really doubt he stays “because of Robert Sarver”. The man is not the NFL’s Robert Kraft or even a Mark Cuban, the type of owner who helps create a culture that might entice a star to stay, other things being equal.

    I’d say Nash stays inspite of Robert Sarver because Nash is loyal to the team and the city that helped him reach MVP status and he wants to finish his contract. That’s the kind of guy he is in Phoenix and the kind of guy he would have been in Dallas had Cuban paid up.

  • 12 Arthur // Oct 10, 2011 at 11:21 am

    A good owner hires and listens to a good GM.

    What’s a good GM?

    Someone who can spot talent, often before most other teams have come to the same realization.

    And a good GM signs that talent either at or below fair market value.

    Sarver didn’t want that. He put the idea of price before the idea of talent. Lon Babby is a former agent, a price and negotiation guy. He’s not a talent evaluator. Hell, he’s not even coming at fair market prices for guys like Hakim and Childress and Hedo.

    How does a hard cap prevent those kind of whiffs? It really doesn’t. A hard cap just enables bad owners and bad management to make more bad choices, maybe for contracts that last four years instead of six.

    Hard caps don’t magically provide competitive balance by themselves. The NFL started it’s hard cap in 1994. There were dominant football teams before and after the hard cap. Plenty of smaller market teams like Denver and Buffalo and Cincinnati made superbowls before the cap.

    Is a hard cap going to make the Clippers into NBA champs? Would a hard cap have made George Shinn or Chris Cohan or Robert Johnson good NBA owners? Would a hard cap have made the TWolves into a dynasty or even asterisk year champions?

    The hard cap is not a magic bullet or a panacea for bad decision making. The Bucks went over the cap this year and still didn’t make the playoffs. The Pistons stayed under the cap and made six Eastern Conference Finals in a row and two NBA Finals.

    With or without a hard cap, smart, successful franchises are going to do a better job of finding less obvious talent, finding better coaches, and finding better ways to manage and renew rosters.

  • 13 Arthur // Oct 10, 2011 at 11:28 am

    @ Steve,

    Letting JJ go happened on Colangelo’s watch, but that was Sarver’s call. He didn’t want to right the check. Colangelo was forced to make a trade with the Hawks for Diaw that worked in the short run, but left a hole in the starting SG spot and supporting ball handler spot that the Suns never really resolved.

    Not wanting to pay Amare do to health concerns, but then spending close to the same amount on on Childress, Warrick, and Hedo? That was Lon Babby doing his best to resolve Sarver’s choice to let Amare walk. That meant deciding not to pay to return to the Western Conference Finals, and instead having to pay almost as much to lose and not make the playoffs.

    It’s the “pay almost as much to not make the playoffs” that is the hallmark of bad ownership and bad management.

    Dallas won the title this year. They got past the Lakers and the Thunder. Isn’t that something that most Suns fans had to watch and wonder and think that maybe the 2009-2010 Phoenix Suns team that made the WCF could have pulled off if they’d been allowed to play together in 2011?

  • 14 Steve // Oct 10, 2011 at 1:50 pm

    Not sure why you needed three separate posts… but I’ll address a few things:

    1. ‘I give Steve Nash credit for loyalty, but I really doubt he stays “because of Robert Sarver”.’

    I’ll address this a little more later, but I wasn’t saying Nash stayed because of Sarver. I’m saying he’s here because of Sarver. Sarver has signed every single one of Steve Nash’s checks in his second tenure with the Suns. If it weren’t for Sarver, Nash wouldn’t be here at all.

    ‘I’d say Nash stays inspite of Robert Sarver because Nash is loyal to the team and the city that helped him reach MVP status and he wants to finish his contract.’

    Nash’s contract has Sarver’s signature, does it not? Again, if it weren’t for Sarver, Nash wouldn’t be here in the first place. Sarver inked the initial deal, and he also inked the extension. Regardless of whether or not Nash signed the extension “in spite” of Sarver, the primary reason Nash is here at all is because Sarver paid him to be here.

    2. ‘Hard caps don’t magically provide competitive balance by themselves.’

    You’re right about this in part. If you handed a team of first-graders $100M to invest and gave Warren Buffet $100M to invest, who would you bet on to have a better return? Your point is that good ownership makes a good team, and while you are partially right, are you going to tell me it was “good ownership” that got the Cavs to best record in basketball and made them a perennial 60-game winner? No. It was one man. LeBron James.

    I’m getting side-tracked. Point here is this: Good management certainly helps. No one would deny that. I’d take Warren over first-graders any day of the week. But in the NBA, it really only takes one truly dynamic guy (think MJ, Kareem, Russell, Dr J, or for today’s crowd prime KG, Prime Shaq, Prime Duncan, Prime Wade) to bring a team to glory. A lot of times, teams luck into that one guy, or don’t truly see the talent they’re getting. Did everyone in the NBA think Steve Nash soon be known as “Two-Time” when he left Dallas? Heck no. If they did, Steve Nash wouldn’t be making a paltry $11M per (paltry for someone who has accomplished so much). The Suns lucked out with Nash, and it took just ONE player to go from 25 wins to 55 wins.

    Another thing you’re missing about the hard cap is that it won’t reward the Frye’s and Dudleys of the world so heavily. It will reward the superstars. Making the wrong bet on a superstar won’t hurt so badly if you’ve made the right bet on your pawns. Think Patriots with Cassell vs Colts with Collins/Painter. This is really the most important thing. A hard cap will bring DRASTIC change to the current structure of salaries for guys who are middling talents.

    With a hard cap, it’s not guaranteed the Suns will be good. If we are led by a bunch of first-graders, you can expect us to be a bad team still. Without a hard cap, it is guaranteed that the same two teams will continue to win the majority of the NBA’s championships.

    3. ‘Letting JJ go happened on Colangelo’s watch, but that was Sarver’s call.’

    So, you can take credit away from Sarver for signing Nash, and then hand him all the blame for letting go of a player who has proven to be nothing more than overrated and overpaid since he left the organization?

    4. ‘Not wanting to pay Amare do to health concerns, but then spending close to the same amount on on Childress, Warrick, and Hedo?’

    This is defenseless, and I agree with you here. We didn’t need to spend just because we had the ability, especially since Sarver is now the owner getting the most heat calling for “cut-backs” in the lockout negotiations that everyone and their mom saw coming. Very stupid, indeed.

    5. ‘They got past the Lakers and the Thunder. Isn’t that something that most Suns fans had to watch and wonder and think that maybe the 2009-2010 Phoenix Suns team that made the WCF could have pulled off if they’d been allowed to play together in 2011?’

    No, I don’t wonder that at all. They had a chance to beat the Lakers, and they lost to a better team. That team wasn’t going to beat LA. We were very clearly outmatched. No team that plays zero defense and fails to box out will ever win an NBA championship. That’s not news to anyone.

  • 15 Peter M. Arel // Oct 28, 2011 at 8:34 pm

    I favor a hard cap, even if you have to force it down players’ throats and say: THIS IS NOT A DEMOCRACY;THIS IS A DICTATORSHIP! Without a hard cap THERE CAN BE NO LEVEL PLAYING FIELD!I also favor contraction of teams,rather than expansion because expansion isn’t done carefully with a well thought out plan, the NBA can find itself in BIG TROUBLE!

  • 16 Peter M. Arel // Oct 28, 2011 at 8:40 pm

    If there is no NBA I won’t mourn its demise. If the NBAPA is eliminated, I won’t be the least bit sorry. IN FACT THAT IS WHAT NEEDS TO BE DONE NEXT! There should be NOBODY holding the NBA owners’ feet to the fire. Let these overpaid players become UNDERPAID OR UNEMPLOYED players!

  • 17 Peter M. Arel // Oct 28, 2011 at 8:44 pm

    I favor contraction of teams, rather than expansion because if expansion isn’t done carefully with a well-thought-out plan, the NBA(and NOT JUST THE NBA BUT OTHER SPORTS LEAGUES TOO) IS headed for DISASTER! Also let LeBron James, Kobe Bryant et al go to Europe or wherever. I won’t miss them either!

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