Tuesday, May 17, 2011
Burning Questions: How does the potential lockout impact the Lakers?
The Lakers have a lot on their plate this summer. There's a new coach to be hired, and a roster requiring targeted upgrades in the wake of their unceremonious exit in the second round of the playoffs.
Important stuff all, and all stuff we'll explore at length in the weeks and months ahead.
Andrew D. Bernstein/NBAE/Getty Images
For the time being, as president of the Player's Association, Derek Fisher's new uniform will be a business suit.
Unfortunately, this offseason seems likely to be like none in recent memory, both in length and significance, thanks to what seems like the overwhelming probability of a lockout. Certainly Derek Fisher, president of the NBPA, didn't sound all that optimistic at his exit interview last week. The uncertainty of the labor situation means the Lakers can do little to effectively prepare for a normal summer's work. Challenges abound. Once the stoppage is official, there is no contact between players and teams. Even if they could talk, planning for next season or subsequent ones, whether through trades or free agency, without knowing what rules will govern the league is next to impossible. The uncertainty bleeds into the coaching search as well, since any doubt about how they can reshape the roster impacts who the Lakers could choose to replace Phil Jackson.
Plus, there are financial considerations. The Lakers, like many teams around the Association, may not want to pay a guy to coach during a work stoppage. This along with big picture fears the new CBA might hamper large payroll teams like the Lakers.
To get a better feel for how the labor issues could impact the Lakers, I hit up ESPN.com's Larry Coon, a guy who knows more about the current salary cap structure and what could come than anybody you'll find. He's keeping a close eye on the situation, and answered some questions for us:
1. Setting aside the likelihood of the labor problems and new rules, how much flexibility do the Lakers have this off-season to make changes?
Larry Coon: The phrase that comes to mind regarding the Lakers is “pot committed.” The Lakers have constructed a championship roster, and locked it in for the next few seasons (essentially the lifetime of Kobe’s prime). This comes at the expense of an enormous payroll and little flexibility. Their most valuable players are guys they won’t trade (a possible Andrew Bynum for Dwight Howard deal notwithstanding), and their peripheral guys don’t have a lot of trade value -- guys like Ron Artest and Derek Fisher. Older vets help you win championships, but you can’t use them to tweak your roster on the fly.
If the new agreement resembles the current agreement, then the Lakers will have only the mid-level exception to work with. Their draft picks aren’t very valuable because they’ll be drafting entirely in the second round. By and large, they’re committed to the current roster.
2. What are the best and worst case scenarios for the Lakers with a new CBA, in terms of keeping a winning roster together for the next couple years?
L.C.: The owners’ proposal calls for a hard cap -- a salary cap that can’t be exceeded for any reason. As a big-market team, the Lakers thrive on the current soft cap -- one that allows teams to keep spending above the cap, albeit with certain restrictions.
A hard cap vs. soft cap isn’t a black/white issue. A cap is soft due to the presence of exceptions, which are mechanisms that allow teams to spend above the cap. If they eliminate exceptions or tighten them up, then the cap gets “harder.” The harder the cap gets, the harder it’ll be for the Lakers to maneuver. They won’t be able to take advantage of their market size or spending ability any longer -- they’ll be in the same boat with the small-market teams.
For the Lakers to continue to compete with the current group, the cap needs to stay soft to a certain extent. It has to allow teams to be over the cap, so they can keep their current roster together. The worst-case scenario for the Lakers (player personnel-wise) is a true hard cap.
3. If there is a hard cap, would that mean they'd have to start unloading dudes right away?
AP Photo/Joe Cavaretta
We'll all be seeing way too much of these guys this summer.
L.C.: Maybe and maybe not. First, how hard will the cap be? If it’s a little soft -- i.e., if it allows teams to be over the cap but restricts their spending ability, then the Lakers can keep their roster intact. They may not be able to augment it much, but at least they won’t have to jettison guys they’d like to keep.
Second, even with a hard cap, it may not be a true hard cap right away. The owners’ latest proposal calls for the current system to continue for two years, and for the hard cap to kick-in in year three. The Lakers would have two years -- both to win with the current roster, and to prepare for the upcoming hard cap.
Third, when the league changes the rules, they always accommodate teams in some way -- remember, teams make their roster decisions well in advance, and may have done things differently had they known how the rules would change. In 2005 they changed how the luxury tax works, and they accommodated teams via the amnesty provision, which allowed teams to waive one player and have that player excluded from the luxury tax.
In 2011 they’re changing not just the tax rules, but the fundamental way the salary cap works. They’re going to have to accommodate teams by providing mechanisms (such as another amnesty provision) to deal with the cap consequences.
The last thing I expect to see happening is for teams to be forced to gut their rosters on short notice to be under a hard cap.
4. How do you think the length of negotiations impacts the team?
L.C.: The Lakers have been riding the NBA gravy train for some time. They are a profitable franchise, and have a large stream of local TV revenue. Local TV revenue stays local -- it’s not shared with the other teams. This all means that the Lakers are profitable.
This is all about to change. The players’ proposal calls for the problem of financial inequity in the league to be (at least partly) addressed through increased revenue sharing. Even David Stern says increased revenue sharing will happen (“two parallel discussions” is how I think he worded it at the All-Star Game, one between owners and players, the other among the owners themselves). So the Lakers will be giving a lot of their income to the league, who will distribute it to the small market teams.
So a new agreement is a mixed blessing for the Lakers. On the one hand, they’ll be giving away more of their revenue. On the other, the league will have a new economic system which should help ensure that all 30 teams are profitable. So they’re profitable now, and they’ll be profitable in the future -- and it’s too early to say which system benefits them more.
But in the meantime, if the league ceases all business, then the Lakers aren’t making as much money. Granted, they aren’t paying the players either, but the Lakers are one of the teams with a net profit every year, so a lockout hurts them. (Teams that lose money are better off NOT playing the season than playing it.) And the longer the lockout lasts, the more potential income they forfeit.
Then there’s the general damage caused by a lockout -- the P.R. hit, the lost fans, the lost corporate sponsorships, the unfulfilled TV deals, etc. The longer the lockout lasts, the more damaging it will be.
And if it costs the entire season, then the Lakers will have lost their best opportunity to win another title.