A misconception about the poison pill contract

I haven't seen anybody suggest that he CREATED the rule. Only that he created a way to exploit the current rules. Which he did.

 

I have never heard this was a league rule. That seems kind of silly. Can anyone confirm this?

 

I've been hearing about Gilbert Arenas Rule for a while now and just decided to look it up, FYI:

Citations 17 and 18 are both from July 2012... first from a Chicago writer on Asik's contract, and second a writer on Lin's contract

 

That is the correct rule, the OP has it right.

 

always glad to learn something new. thanks OP and Ace

 

for future reference, here is the link to the actual CBA faq so you dont have to use wikipedia. http://www.cbafaq.com/salarycap.htm

the direct link to the gilbert arenas provision is here http://www.cbafaq.com/salarycap.htm#Q44

 

What strikes me as peculiar is how the salaries are paid out equally on an annual basis for both the team that signs the RFA and the team that has a chance to match, but as far as salary cap implications go, the one that signs gets to spread out the hit evenly while the original team has to abide by the terms of the contract. It just sounds like a system that is begging to be abused. Factor in the new scaling penalties on luxury tax that will kick in around 2014, and you've got a perfect storm for a RFA to be stolen from his original team for financial reasons.

 

Which is exactly what a small market team needs to be able to bring in talent.

 

It's actually set up that way to ENABLE the player's former team to be able to re-sign him in the first place.

The CBA expressly limits the starting salary to which a Non-Bird or Early Bird free agent's former team can re-sign him. If the cap hit wasn't structured this way (5/5.2/14.9), then the team simply would be unable to match the offer sheet by CBA rules.

The alternative would be to do away with the Arenas rule, allow other teams to pay whatever starting salary they can afford under the cap to these free agents, and have the free agent's former team watch powerlessly as they lose their player for nothing.

 

This rule will drastically increase parity between big and small market teams. Team's that have managed cap space well will be in a better position than ever before to take away restricted free agents from other teams.

 

I'm sorry, I still don't get it.
Is the intent of the rule to make it easier for RFA's team to re-sign him, or is the intent to make it easier for non-luxury-tax teams (i.e. smaller markets) to take them away?

Actually, I guess I want to ask two things:
1) what was the intent of the Arenas rule?
2) are the 'poison pill' contracts being offered actually following the intent of the rule, or are they using unexpected loopholes whose ramifications the league didn't expect?

 

it won't.
How many future solid players go in the 2nd round/undrafted AND sign a 1 or 2 year deal?
Very few.

 

Re the whole Chicago and NY fans whining thing....
The Bulls could've easily avoided this nonsense if they had more trust in Asik's talent to begin with, and offered him a 3 year contract.

And Lin... 1 year only half guaranteed + 1 team option year?

If you don't invest into player and don't want to bother developing him...
then sorry, there's no reason to whine when the Arenas rule hits you on the head.
you aren't willing to take risks, you get lesser rewards. Only fair. You already get the right to match, but there's no need for special treatment.

 

Read the link to Larry Coon's FAQs to get full information on the Arenas rule. It's located in a post a few above mine.

The intent of the Arenas rule was to provide a way for a team that is over the salary cap to be able to retain its own Non-Bird or Early Bird free agent with only one or two years of NBA experience (Jeremy Lin and Omer Asik being two notable examples of such players).

In the current Lin situation, the Arenas rule is designed to enable New York to be able to match any offer sheet that Lin receives. Because the Knicks are over the cap, and because Lin is an Early Bird free agent who made very little last season, the Knicks CANNOT offer Lin a starting salary above the average player salary (~$5.38M).

Without the Arenas rule in place, the Rockets could have simply made an offer for Lin with a starting salary of $6 million, and there would literally be NOTHING the Knicks could do about it. They would be incapable of matching Houston's offer sheet, since $6 million is more than they would be allowed to pay Lin themselves.

The reason for the massive balloon payment in Year 3 of an Arenas contract is to make it so that the player (Lin) could not start making REAL money any sooner than had he just re-signed with his former team (the Knicks), yet--in a big win for the players union--still allowing the player to maximize his earnings over the life of his contract.

The "poison pill" contracts were not the INTENT of the Arenas rule. They are simply the result of smarter teams being able to exploit the rule to their advantage. Still, the alternative (the Knicks simply being DISALLOWED from matching an offer sheet for Lin above a certain amount) is far less equitable than the current ramifications facing New York if they match.

 

You're right OP, this was already existing, hence the first guy who broke it on the forums (Carl Herrera way way wayy back) called it the Gilbert Arenas rule.


Where DM got innovative isn't with the rule, its how he used it now, when the new CBA turns it into a poison pill contract. Let's remember, the original offer he made to both Asik and Lin was only around 5/5/10. That's not exactly cap breaking, the only reason Ford orgasmed all over it was because in the new CBA, that 5/5/10 contract was already deadly. When he janked it up all the way to 5/5/15, then that's when SAS's head exploded.

So really, the new luxury tax rates and repeater tax rates are what made it into a true poison pill. By itself the Gilbert Arenas rule isn't anything to worry about, which is why it wasn't used on coveted RFAs till now.

 

Very informative post Bima, but to me the question here is why have the cap rules be different between the original team and the matchers? If the original intent of the rule is to allow the team to hold on to its own RFA, then why is it that Houston is allowed to average the offer over 3 years when they are also making the balloon payments in real life? If the Rox are allowed to average the contract by 3 shouldn't be NY be allowed the same?

 

It's called the Gilbert Arenas rule around the NBA because it came about in its initial form because Arenas wasn't able to re-sign with Golden State (and they got screwed before it existed). Carl Herrera is a great poster, but he didn't name the rule..

 

Just my guess:

1) I think the intent of the rule is for teams to be able to resign the surprisingly good player (Arenas, Lin, etc.) after his chump change contract is up, without the team having a spike in their salary structure AND without overly impeding the player from getting what he's worth the market value.

2) I think the poison pill is a loophole because in the sense that while the 3rd year jump was designed for letting the player get his market worth, not for making hitting the team hard.

I think the Knicks have only themselves to blame for having such a high payroll. It is basically the same with all rules that give advantage to the under-the-cap/under-the-LT/under-the-apron teams.

 

Carl Herrara did not coin the phrase "Gilbert Arenas rule". It was widely called that from the very moment it was negotiated into the 2005 Collective Bargaining Agreement.

Also, not that I disagree with your point about the lack of "Arenas Rule contracts" in the league, I will point out that Wes Matthews, who went undrafted in 2009 and played on a one-year contract for the Utah Jazz in 2009-10, was extended an offer sheet by Portland in 2010 that was subject to the Arenas rule. The Blazers offered the full MLE (the maximum permitted starting salary for Matthews under the Arenas rule), but did not make it a "poison pill" contract on the cap; they instead chose to give Matthews the standard permitted 8% annual raises, but they gave Matthews the maximum permitted "signing bonus", which was too painful for the Jazz to match. Hence, Matthews is a Blazer.