The NBA’s New Deal: How it Impacts the Lakers

When friends argue, the resolution to the problem is usually swift as the issue is typically trivial in hindsight.

When millionaires and billionaires argue over how wealth within a $4 billion dollar company is distributed, those negotiations tend to take a little bit longer. In the case of the NBA lockout, it took more than 50 negotiating sessions before the players’ union and the owners agreed upon a deal on the 149th day of the work stoppage.

With the anticipation of marquee games being played on Christmas day, fans may forget why the league was locked out in the first place.

The NBA is a top-heavy league. The last five champions have spent deep into the luxury tax in exchange for their success (the Lakers twice, the Celtics, the Mavericks and the Spurs). According to commissioner David Stern, 22 of the 30 teams were bleeding in the red. Small market teams, besides Oklahoma City and San Antonio, didn’t have a chance to compete with the big markets as their stars continually jettisoned them for the bright lights of bigger cities. Stern wanted to create parity within the NBA.

Before we begin to celebrate the league’s tip-off on Christmas, let’s first dissect the reason why the first month and a half of the regular season was lost: the new collective bargaining agreement (CBA).

A week ago, ESPN’s Larry Coon reported on the differences between the tentative agreement in place and the old one that can be found here.

Here’s how the adjustments in the CBA will affect the team that had the most success under the previous agreement, the Los Angeles Lakers.

1.) The Amnesty Clause: “One player can be waived prior to the start of any season (only one player can be amnestied during the agreement, and contracts signed under the new CBA are not eligible). The salary of the waived player will not count toward the salary cap or luxury tax. Teams with cap room can submit competing offers to acquire an amnestied player (at a reduced rate) before he hits free agency and can sign with any team.” (via L. Coon)

My Take: This has been the most publicized of all the issues, and for good reason. It’s a game changer. It means teams can cut the contract of players who under-perform and/or management doesn’t feel the player’s role with the team justifies his contract any longer. The two names that many reporters and fans feel the Lakers should amnesty are Metta World Peace and Luke Walton. I don’t feel like either player deserves to be axed yet seeing as the heftier punishments on overspending teams don’t kick in until the  2012-2013 season (more on this later).

Plus, it’s too early to give up on Peace; and Walton’s potential retirement may lift his salary off Dr. Buss’ books anyways. It will be difficult for the Lakers to compete for the services of players who do get cut by their current teams (Vince Carter, Baron Davis, etc.) as teams with cap room get a crack at them first. However, the amnesty clause favors the Lakers and other big teams in the future. They could sign rental players for a championship run or two, afford to overpay them, then amnesty them after their role has been served.

2.) Minimum Salary: “Teams must spend at least 85 percent of the cap in 2011-12 and 2012-13, and at least 90 percent of the cap in later years of the agreement.”

My Take:  The salary cap for the upcoming season is approximately $58 million, and the Lakers’ payroll was $91 million. I have a hunch spending won’t be a problem for the storied franchise. This issue is the equivalent to telling a CEO’s spoiled children that they can go Christmas shopping at the Apple Store but they have to spend at least $50. It’s a non-issue. On to the next one please.

Next Page: Luxury Tax, MLE and Trade Situations

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