Taking Your Toys and Going Home? Really?

January, 29, 2009
1/29/09
4:14
PM ET

The financial crisis is real, and has ramifications for NBA teams.

Attendance and TV ratings appear to be good, but nevertheless the most plugged in sources I ever talk to all agree that teams -- just about all teams -- are actively seeking ways to slash payroll.

Certainly some owners will take this opportunity to buy low, but in general I think teams are pinch every penny possible.

The Power of an Expiring Contract
In a league with guaranteed contracts, however, there just aren't that many ways to cut salary. 

And really, the only way to reduce salary a lot is to have a guy on your roster when his contract expires. 

In theory, you can also trade a highly paid player to a team under the cap, in exchange for nothing, or someone who makes a lot less. But in this market, those cheap owners who are under the cap are less eager than ever to dig into their pockets.

That's why expiring contracts are the key. Thanks to ESPN's Marc Stein's list from November, we have a handy list of the biggest expiring contracts of 2009. 

  • Jason Kidd $21,372,000
  • Allen Iverson$20,840,625
  • Stephon Marbury $20,840,625
  • Shawn Marion $17,810,000
  • Mike Bibby $14,983,603
  • Lamar Odom $14,148,596
  • Rasheed Wallace $13,930,000
  • Wally Szczerbiak $13,275,000
  • Raef LaFrentz $12,722,500
  • Andre Miller $10,333,334

If you want to cut salary in a big way, you almost have to get one of these guys. And as Stein explains, only two of them -- Szczerbiak and LaFrentz -- are considered likely to be traded. 

Pretty valuable guys, right? All those general managers trying to shed all that salary, and just a handful of players in the mix who can help you do that quickly, in big numbers.

Certainly no general manager likes to get the call from the owner saying that he is to reduce salary. General managers want to create expensive dream teams, not cheap nightmare teams!

But you have to do what you have to do. Sometimes you have to cut salary. And of all times in history to cut salary, this is one of the best. Not only is the competition scaling back too, but there is that 2010 free agent class. If you could get enough cap room, you have a shot at a franchise savior when the economy has had some time to recover. Or at the very least, you can tell the public you're gearing up for 2010.

So, you pick up that phone, and you dial, trying to see which of your overpaid players you can trade for Wally Szczerbiak, Raef LaFrentz, or somebody like them. Your team's financial health, and future rebuilding might depend on it.

The Best Expiring Contract Raef LaFrentz
ESPN's Chad Ford has just been reviewing the big men
who are on the market this trade season. This is what he had to say about the injured LaFrentz:

LaFrentz has what NBA GMs are calling a "super-expiring contract." Not only does his $12.7 million salary come off the books this summer, but insurance is paying 80 percent of it. Add in that the Blazers have other young players like Sergio Rodriguez, Channing Frye and Travis Outlaw whom they could throw in a deal, and a team looking to clear some cap space and develop young talent would have to take a hard look at a deal with Portland.

Wow. Good deal huh?

OK, OK, OK ... so you are a hypothetical GM, running a company with cash worries. What are your options? You can start firing office staff (it has been happening), you can sell draft picks for cash (it has been happening), you can piss off vendors and the like by haggling over every little detail (this has been happening too) and all of that will save you a few beans here and there.

Or you can make a deal for Raef LaFrentz, pay him just 20% of his remaining salary, and then kiss goodbye to a large canned ham's worth of player salary now and forever more. And you might get some cap space, young talent, and luxury tax protection out of the deal. What could be better?

Cranky General Managers
Ford continues:

The biggest question surrounding a Blazers deal at the moment: Does any GM in the league really want to do Blazers GM Kevin Pritchard any favors after his team threatened to sue all the owners in the league over the Darius Miles fiasco? More than one GM has told me no.

Oh. No. Nope. Not you. You're not that kind of GM. You're not going to help your team by getting Raef LaFrentz ... because that Kevin Pritchard makes you feel icky, and that Larry Miller sent you a nasty e-mail. 

So no franchise-saving cost-cutting for you. You'll just make your trade somewhere else.

Even though you only compete against Portland a few times a season, to punish them, you'll hurt your own franchise 365 days a year.

Those thing they say about business and pleasure ... they apply to enmity too.

Meanwhile, in Portland, I'm not sure they'll actually be learning their lesson. Keeping LaFrentz would put the team that much more under the cap this summer, and they'll still have the deep-pocketed owner, the nice city, the roster headed for great things, and the ability to sign free agents or make lop-sided trades. 

I don't know a ton about the Collective Bargaining Agreement, and I'm not a professional talent evaluator. But sometimes I wish somebody would give me an NBA team to run.

You know how you win as a GM? You win by making the best draft picks and the best trades, again and again and again over time. If LaFrentz is a good trade for you, you make that trade. Period.

Two Confessions
I have two confessions to make here. The first is that my view of this is wholly colored by my being a Blazer fan. It doesn't make me think they can do no wrong and I have been critical of the team throughout the Darius Miles affair. But I think about Raef LaFrentz differently than a lot of people do, probably.

The other confession is that I love to play a pretty dorky board game called Settlers of Cataan. It's not the kind of thing I would normally want to put on TrueHoop, but dammit, I'm making a point here.

Settlers of Cataan has a load of haggling. Basically, every turn every player can flat out barter some or all of her cards. I used to play with my neighbor a lot. And more than a few times, I would be just killing it in that game, and then he would shut down trade with me. Just flat stop listening to all of my offers. Even when I was offering him three good cards for the one lousy I one I happened to need.

And I crushed him every time he did that. 

One key to winning that game means exploiting other people who need something you have, and getting them to overpay for it. But my neighbor was saying "Oh, no you don't. You don't overpay me, Bucko."

And so he lost. 

He doesn't do that anymore.

People generally only agree to trades that help both parties. And I can see you saying that you can't stand to help this or that party. But you simply have to be in the business of helping yourself, and sometimes there's no other way.

In Which I Recruit a Ringer
Just to make sure I wasn't totally off-base here, I called noted economist Justin Wolfers. I was sure that he'd have some killer way of explaining why you, hypothetical
GM, hurt yourself as you try to punish the Blazers.

There are various different ways to look at it. But it was hundreds of years ago, he explains, when economist David Ricardo and others established that you hurt yourself by limiting your trading partners. The argument for trading with Portland is, essentially, the argument for free trade anywhere.

"If the number of possible players my team can get goes down," he explains, "that hurts me, full stop." (Wolfers is Australian, he says stuff like that.)

"If I really wanted to hurt one particular team, the only way to do that would be to get them to agree to a trade that was bad for them. But not trading with them won't do it," he says. "When two people trade, that means you have something that I value more, and I have something that you value more. When you shut that down, it makes us both worse off."

At best, you might be able to work something out where it doesn't hurt you much. Wolfers says that years ago the U.S. and China didn't trade much with each other, for instance. But, thanks to the fact that they both traded with Hong Kong, nobody was hurt much. This is the kind of case where you can decide not to trade with someone, and not suffer.

But that's probably not what's happening with GMs in the NBA. The idea, I guess, is that nobody will want to trade with Portland. As in 29 teams acting in cranky concert.

In terms of economic theory, Wolfers says that's more like a cartel: "That's anti-competitive stuff. And the problem with being in a cartel is that there's tremendous value in being the one to leave the cartel. Everybody wants to be the one who cheats, because he can get a great deal. So the cartel only works if we all stay in, and you can never know if everyone will stay in."

This is what I suspect will happen. If the Blazers do want to trade Raef LaFrentz, despite the bluster, I'm quite sure there will be offers -- because NBA teams tend to be fairly rational in the end. The trade deadline is approaching. The economic crisis is looming. This expiring contract is looking better and better.

But if I'm wrong, if Portland is desperate to trade LaFrentz, and teams want him but won't make the deal out of pride, or principle, or something, then at least those other 29 general managers can console themselves with this: "There is one way that cutting off trade with a partner could help you," Wolfers explains. "And that's if you're an idiot. If you used to trade a lot with one partner, and they always got the better of you because you don't know what you're doing, then you're right, you would be better off not trading with them any more."

UPDATE: Fascinating research about why people punish each other.

(Photo by Sam Forencich/NBAE via Getty Images) 

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