NBA Lockout On Verge Of Deal Creating Two Salary Caps

The NBA lockout deal coming into view would create two salary caps, the higher of which would force teams to make difficult decisions that have little to do with the luxury tax itself.

We are closer than ever to seeing the end of the NBA lockout, and apparently with room to spare for an 82-game season ... whether that's in the best interest of the league and its fans or not. The deal to be had is coming into view: there are some major system changes and of course a serious cut in the players' aggregate salary, but otherwise, the NBA will not be too different from the one we know and love.

The real question that remains is whether the deal will contain clauses that will serve to create a double salary cap league.

The cap will remain the cap: it's difficult but not nearly impossible to maneuver effectively when you're above it, and getting below it is still a worthy goal. The Minnesota Timberwolves, bad as they've been, found use in being below the cap last season: they took on Michael Beasley for second-round picks and they facilitated the Carmelo Anthony trade, earning Anthony Randolph as a fee. The Miami Heat (LeBron James and Chris Bosh), Chicago Bulls (Carlos Boozer), New York Knicks (Amar'e Stoudemire, Raymond Felton) and New Jersey Nets (Travis Outlaw, Jordan Far -- oh sorry, whoops) obviously found great benefit from being under the cap in 2010. One of the teams under the cap for 2011's free agency period will find value in being able to woo Nene, David West, Tyson Chandler and maybe even Marc Gasol. There's value there.


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But the creation of a second cap at the luxury tax line opens up a whole new zone of negotiation. Should the new collective bargaining agreement contain clauses that allow teams over the actual salary cap to do certain things (like use the sign-and-trade and mid-level exception) but don't allow teams over the luxury tax line to use those tools, the luxury tax line will become a huge deal. Flexibility is king in the NBA, and by creating separate sets of rules for teams over the cap and over the tax line, you do more to tamp down payrolls than any sort of graduated tax could.

It's no wonder that the players' union is fighting the last battles of the system negotiations along these lines. Yahoo!'s Adrian Wojnarowski reported that the hang-ups on system issues at this point revolve around rules for using the mid-level and bi-annual exception, as the owners want to limit the use of those for tax-paying teams and the players want to keep the exception open to everyone. This is why the battle has settled here: threatening high-spending teams with limitations to their flexibility is more powerful than making them pay a 200 percent tax.

Consider a practical example. Imagine the new deal disallows teams over the tax line from using the mid-level exception, which settles around $5 million annually for three years. Dallas Mavericks are under the tax line by $5 million after taking care of Tyson Chandler and moving some parts around. They need a wing, and the Toronto Raptors use the amnesty clause on Linas Kleiza. Dallas wants Kleiza badly. But the Mavericks also want to keep J.J. Barea. Under the new system, they can only do one or the other without moving other players. If they sign Barea, Kleiza's off the table. To sign Kleiza to the mid-level, they have to release their cap hold on Barea, essentially forfeiting their Bird rights. Or they could move Brendan Haywood to a team that needs a center and has cap space or a traded player exception to create the room under the tax line to take care of both Barea and Kleiza.

If the Mavs sign Barea, that's one less option for Kleiza. If the Mavs sign Kleiza, Barea loses his Bird rights and has to soak up someone else's cap space or mid-level. If the Mavs trade Haywood, that takes money that could have gone to free agents off the table.

In the old system, Mark Cuban would have just paid them all and suffered the tax consequences. In the new system, he simply wouldn't be able to.

That's why this is a battle: the proposals that have surfaced would create two caps, one that simply makes deals harder to accomplish and one that makes deals almost impossible to accomplish. I tend to see the value in the league's ideas, but I understand why the union fights them.

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SIGH-AND-TRADE

The sign-and-trade is not good for any team, so it saddens me that it has survived labor negotiations. The sign-and-trade is great for players; hell, it might be more important than the mid-level exception, which is more flexible (any team over the cap can use it) but far less lucrative. Consider the Mavericks (again): they landed Shawn Marion in a sign-and-trade, used a sign-and-trade of a retired Keith Van Horn to grab Jason Kidd. Those were both expensive, expensive moves.

The biggest ramification of the sign-and-trade beyond the Maverickian stacking of salary is that by negotiating a sign-and-trade instead of a standard free agent signing, players get longer, more lucrative contracts. I mean, Rashard Lewis was ridiculous enough at five years, $100 million. The Orlando Magic negotiated with themselves to get a sign-and-trade with Seattle, which resulted in a six-year, $120 million deal for Lewis. Blech.

The only hope for a sign-and-trade hater like me is that the aforementioned "unless you're over the tax line" clause survives. 

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The Hook runs Monday through Friday. See the archives.

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