Wednesday, July 11, 2018

What explains the rise of NBA superteams?

The NBA is in a strange place, undeniably fun but also undeniably kind of screwed up. The Golden State Warriors added Kevin Durant to a 73-win team, and then DeMarcus Cousins to the Durant-led champions, and now the league is separated into two tiers: Warriors and worriers. ...

MJ was in LeBron’s position once. Twice, actually. In the summers of 1996 and 1997, Jordan was the best player in the world on a championship team, with free agency looming. The difference then: there was never any doubt that Jordan would stay in Chicago. ...

Jordan stayed largely because of money. By NBA rule, the Bulls could offer him more than anybody else. They paid him $30.1 million in 1996–97—more than the entire payroll of most NBA teams—and then gave him a 10% bump the next year.

The entire NBA financial system was built to ensure that stars stayed put. The salary cap was instituted so small-market teams could compete. “Larry Bird rights” were created so teams could exceed the salary cap to re-sign their own player. In that environment, the only reason a star would leave is if the team either got cheap or decided to trade him. ...

So why are we here? Well, it started with maximum salaries for players, which were instituted after the 1998–99 lockout. Yes, a team can still offer more to retain players than other teams can offer—but the difference, while significant, is limited. It wasn’t enough to keep Kevin Durant in Oklahoma City or James in Cleveland. And because individual salaries are artificially capped (instead of determined by the free market), teams can wedge three or even four stars onto one payroll.

If the NBA had a relatively hard cap (with the Bird exception) but no maximum salaries, the league would look radically different today. The Cavs could have offered James $75 million a year to stay instead of the $41 million that the NBA allowed. It would have been similar to the deals Jordan signed at the end of his Bulls career, and it probably would have been enough. The Thunder could have offered Durant twice as much as the Warriors did. He would have been worth it. Stars would be spread around the league, because teams could not afford more than two.

Instead, stars are clustered together. That’s how they maximize their free agency, by joining other stars, because they can’t use free agency to make the most possible money. In fact, today’s rules actually encourage players to leave before their contract is up. The rules are complicated and I’m not going to get into super-maxes and all that today. But basically: if stars want to leave as free agents, they might as well try to force a trade to their preferred destination first. Then they can re-sign for the bigger salary. This helps explain (though does not entirely explain) why Carmelo Anthony, Kyrie Irving, Paul George and Kawhi Leonard all requested trades with free agency looming, rather than just wait to hit the market.
--Michael Rosenberg, Sports Illustrated, on how economics explains everything