The Pending CBA And The Phoenix Suns: What Does One Do For The Other?

Stories popped up last night regarding some parts of the new CBA that have been agreed upon, and the details are quite juicy. While the same in terms of basic structure (players get contracts, teams are encouraged not to overspend) the new CBA will likely serve to level the playing field a bit while stemming the tide of bigger and bigger player contracts.

Real reporters with real sources, which means it's good enough to chew on. Sam Amick of SI.com has the scoop, as does Howard Beck of the NY Times*. Both are in line with each other, which bodes well.

Agreed or mostly agreed:

1. Shorter contract lengths (by 1 year for each qualifier, "bird" or "non-bird")
2. One-time amnesty per team on existing contracts (ie. signed before 2011)
3. More-punitive luxury tax (example: the Lakers would have paid $43 million in luxury tax rather than $20 million this past year)
4. Lower mid-level exception contracts: (about $1 less per year, and only 3 years in length)
5. New "Stretch" exception (to be available at least once a season: when a player is waived, the team can stretch out the remaining contract - including the cap hit - over more than twice the years)
6. Lower annual raises (no more 10.5% raises for "bird" contracts, or 8% for everything else; still no agreement on HOW low the raises though)
7. 10-year length of new CBA
8. Relaxed rules on restricted free agents (unclear on details here, but some mention of relaxing "base year" rules which made it hard to trade young players who got extensions from their original team)
9. Easing of trade rules (unclear on this as well, but it was mentioned by Alan Hahn)
10. Assumption: all other terms will remain unchanged since they haven't been negotiated, including the max contract amount (roughly $16 million to start), "bird" rights in general, draft rules/contracts, etc.

As you can see, there's not much left to discuss. A new CBA should be in place within weeks.

In the meantime, let's discuss the agreed-upon changes with regard to the Suns. Will Josh Childress get amnestied, stretched or kept? How about Hakim Warrick? And how does the new CBA bode for Robert Sarver?

Shorter, smaller new contracts:

First, let's debunk a myth. The players are not actually "giving back" a dime of money they've already contracted to earn. Jared Dudley is going to get his $20+ million. Steve Nash will make his $11+ million next season. Josh Childress will get all $34 million. And Amare Stoudemire will make every penny of that fully-guaranteed $100 million. No one is giving back anything.

What IS happening, though, is that future contracts will be smaller. Fewer years = less money.

Smaller mid-level exception contracts:

For example: Under the new rules, Josh Childress' mid-level contract would have been maxed out at 3 years for $16.07 million (assuming they agree to 7% raises). This is just slightly more than Hakim Warrick got last summer, which sounds about right given their roughly similar contributions.

Let's digress on Warrick for a moment, because his contract is a good case study. The contract he signed last year is 4 years/18 million. That's a flat income ($4.25 million per year, no raises), with the 4th year not guaranteed. The CBA allowed owners this flexibility all along, and they sometimes used it. The new CBA will have those same rules. However, owners are competitive too, and if another team had offered Hakim the 4th year guaranteed, or annual raises, the Suns may have capitulated. This is why salary caps and contract limits are important - to save themselves from their own competitive spirit.

Shorter contract lengths:

• 3 years: max length of mid-level exception to sign any player, available only to teams over the initial cap (most teams last season, including the Suns)
• 4 years: max length to sign another team's player, only available to teams under the initial cap (rarely a good team)
• 5 years: max length to sign team's own "bird rights" player, with possible limits on teams over the tax line

See why the players are fighting so hard to keep the sign-and-trade option? The sign-and-trade is the only way for a player to make good money and go to a brand-new better team. Without it, players like Kevin Love would most likely have to stay in Minnesota his entire career, unless he was willing to slash his future contract by TWO-THIRDS.

The league initially wanted to abolish sign-and-trades entirely. If that happened, players would have basically 3 options when their rookie contract expired: (a) a 3-year up-to-max deal with a team under the initial cap (very few teams, mostly bad ones), (b) a 3-year, $16 million deal with a team over the cap (90% of teams), or (c) 5-year, $91 million deal with their current team. That seems counter-intuitive to a free market, doesn't it?

So, the players have fought hard to keep sign-and-trades, and the league has reportedly dropped its abolishment demands to merely limiting sign-and-trades on repeat tax-payers. This way, the player can still negotiate a sign-and-trade to all but a handful of the biggest spenders like the Lakers and Mavericks.

What does this mean to the Suns?

A guy like SG Aaron Afflalo is pretty much off the table for anyone but Denver. Denver can offer a bunch more money to Afflalo than anyone else can (meaning, anything over 3-yr/16 million), and is very unlikely to sign-and-trade him since 3 other rotation players are in China till March and there's no one better on the market for the money.

However, a guy like SG Marcus Thornton, who isn't worth more than 3-yr/16 mill anyway might be interested in trading up to a better team, which includes about 29 other teams besides the Suns. If the Suns offer the new full mid-level and a starting job, he might bite on it. And if he's a bust, it's only 3 years.

Seems like a lot less player movement to me, overall. Plan on keeping Aaron Brooks, folks. In the long run, the better you draft, the better your future.

"Amnesty" vs. "stretch" clause:

"Amnesty" would apply only to already-signed contracts, and could only be used once during the length of the entire CBA. For example, the Blazers could decide to wait-out Brandon Roy's rehab another year just in case he fully recovers, before deciding to cut bait and move on. For another example, the Knicks now have a "get out of jail free" card on Amare Stoudemire. If and when he goes back under the microfracture knife in 1 or 2 or 3 years, the Knicks could amnesty him at that time and go in another direction.

"Stretch" on the other hand is a permanent new fixture. In this clause, if a team wants to cut a player they can stretch his payments and cap hit over more than twice the remaining years of the contract, lessening the contract's impact on the team's future.

Let's apply this to the Suns.

If the Suns use "amnesty" on Childress, they get to wipe $6 million off their cap this season and an increasing amount in future seasons. A LOT more flexibility. However, Sarver has to pay Childress $27 million in the next 4 years ($7 million per year) regardless of the cap break. And then the amnesty option is gone. Might want to wait out Childress one more season to see if he will live up to that contract. But then again, now that mid-level contracts are cheaper, there are many many players who will be a better value than Chill.

However, if the Suns "stretch" Childress, they can cut him and spread his remaining $27 million out over 9 years (twice the remaining years, plus 1). That equates to a $3 million cap hit each season for 9 years. That's an easier pay schedule to a guy no longer playing for the team, but it's NINE years of cap holds. This now introduces the "dead money" concept that weighs down NFL and MLB teams.

Hakim Warrick is a more reasonable option for the "stretch" clause. He has 2 years, $8.5 million guaranteed right now, and three players the Suns likely would rather play at PF instead (Frye, Morris and even Lawal). The Suns could "stretch" his payouts over 5 seasons and only absorb a cap hit of $1.7 million per year in that time. Is it worth it? Maybe. $1.7 million is not much of a "dead" hit.

It will be interesting to see what the Suns do here.

Other random thoughts, regarding new contract rules

• Grant Hill's future is likely unaffected. He wasn't going to get more than 3 years from anyone
• Expect Aaron Brooks to stay, for something barely better than a mid-level offer. That's a good package.
• The team has no other egregious contracts, and no other free agents

 

And what does all this mean to Robert Sarver's ownership?

I spent a while thinking about this one, and decided it deserves a whole article on it's own. Sarver originally said he only wanted the team for 10 years, and this is year 8 coming up. Nash recently commented that "Sarver wants to sell the team" in reference to how little the hawk/dove talk matters, which may or may not refer to some newer information than the original plan we'd all heard.

Will the new CBA help Sarver in his bid to sell the team for a profit? His problem till now is that he bought at the top of the bubble ($450 million), and since then NBA teams have plateaued in value while generating annual operating losses. Maybe a new CBA would promise a better future, with very likely profits each season?

As I said before, this topic should be a whole article on it's own. I'll tackle that soon.

*apologies to Howard Beck. Mistakenly gave credit to wrong reporter and paper earlier today.