Sunday, April 5, 2009

Stricter NBA Cap

The NBA Salary Cap is too loose. There is no reason that teams should be borrowing money in the semi-paritial system. It is the duty of the Commissioner and the regulating body to make sure all teams adhere by the economic regulation set forth by the league in order to secure parity and financial stability. If teams egregiously exceed budgets imposed by the league or cannot comply by their own expenditures then teams should be strictly penalized.

The NBA must be the exemplar association on a global platform. The league cannot continue to abide by ridiculous spending, which in turn has lead to debt and borrowing. Teams should not be allowed to exceed a salary cap let alone its own budget; however, the commission makes it easy to deviate from these principles by offering exception contracts, so teams can spend more money under a less profligate system. If it is in the rules then the excessive spending is supposedly justified. This should not be the case. Team should not be allowed to borrow $15 million from the NBA in order to venture spending.

Currently, the salary cap is at $58.68 million; however, teams can spend up to $71.15 million before paying any luxury taxes. This permits teams to offer risky contracts in hope that players who were one season wonder will continue to play at the caliber. The large salary range also allows more discretion on the part of free agents allowing them to demand more since teams can spend more because of these exceptions.

This system has culminated into an economic fiasco much like the American economy. By combining socialist ideals of a salary cap with capitalistic principles of exceptions and a luxury tax, teams have dug debts and signed on contracts offering players salaries of $20 million per season. This is an exorbitant amount for the NBA and its teams to handle. The MLB teams have been able to match this massive salary with its capitalist like system where teams must budget their salaries based on their own funds. The NFL has come close to this salary with its collective system where big market team flat out fund small ones in order to maintain the parity (the NFL also constrains teams with salary penalties for exceeding the cap).

News of the borrowing debacle was released earlier in the season, and no new news has been publicized of the NBA cooping with this matter. It is evident that the league should place a stronger strain on teams before it is too late. The Free Agency of the summer of 2010 is approaching quickly and there are already plenty of rumors about teams willing to pay max contracts to prized players.

This wouldn't be a problem in most year, but with the mass borrowing this season, teams will need to borrow even more when they offer bulky salaries to the NBA's premiere players. Before spiraling into an economic downfall the NBA should instill several legislations to reduce spending, so teams will not have to borrow even more money in future years.

The economic future of the NBA is tenuous since the destiny of the economy is uncertain. If fans continue to struggle with their own payments then they will not have any money to fund the salaries of NBA teams that seek to spend in excess of the salary cap because they believe that their economic projections will be meet. The league must act quickly to restrict spending before it is to late.

A simple enforcement of the solid cap or a reduction of the maximum contract will do. The league does not need to embark on a complicated loan reprisal system of some sort to avoid deficits. The league just needs to make sure that finances do not tumble out of hand.

This limit is fairly simple because the only competition for players in among the NBA teams themselves. The largest European salary belongs to Josh Childress at about $4.5 million per year. With no overseas threat the only party holding a knife would be the association itself.

Additionally, the league should moderate contracts and not allow teams to offer these ridiculous contracts (especially the New York Knicks). The league should either categorize free agents into salary ranges or partially bailout teams with encouraged buyouts or reduced loans (two or three million not fifteen). The categorization does violate the free economic principles of the NBA and Americanism, but no team will be duped into a ridiculous contract. Moreover, the most appealing option would be to strictly enforce the salary cap and reduce the maximum contract so team wisely consider contracts and do not willingly take unreasonable risky simply because they have the financial room to do so and that the NBA will bail the team out if all else fails. Also, a maximum salary reduction will also proportionally decrease contracts offered to worse players. In turn, it will be easier to meet salary requirements.

Prevention not Correction!

No comments:

Post a Comment