A couple facts you might want to remember about Chris Bosh and his salary

There has been quite a bit of yapping by some people about how Bosh's desire to get the full 6-year maximum contract and not accept less than that to play with Wade/James show's he "greedy" and "not about winning." People who do this needs to understand a couple of things:




Thing #1: With guys like Bosh, James and Wade, what teams are bidding for is not just their services, but also the ability to MASSIVELY UNDERPAY these guys for their services, even if they get paid at the full six year max salary

More specifically, the so-called "max" contract is a very much artificial limit on the earning ability of star players built into the current collective bargaining agreement largely, I believe, because of the structure of the NBA player's union. In other words, because each NBA player only gets one vote in the union, and there are far more role players than stars, the NBA collective bargaining agreement is designed to give role players the opportunity to get overpaid while forcing the star players to get underpaid. As agent David Falk said (and I paraphrase), "In what universe is Lebron James only worth 3 times as much as Jerome James?" Or, as Daryl Morey said at the Sports Analytics Conference this year (and again, I paraphrase)"How is it fair that a team can get Lebron James for just the max scale when he's worth 3-5 times that money?"

So, if the NBA players market is less restricted-- either a more or less laissez faire free market like baseball or European soccer, or even the CBA provides for a cap for team salary but not one for individual player salary, it is almost certain that the real "top 10"-type guys in the league will earn more than what amounts to no more than 25-30% of a team's salary. For a comparison, look to what the top players earn as a percentage of team salary in MLB, European soccer, and NFL-- and keep in mind that basketball teams only have 12-15 players on the roster, and 5 players on the floor at a time.

For the baseball comparison, further keep in mind that Barry Bonds/ARod only get to bat once every 9 times while Kobe is not restricted to have the ball no more than 1/5 of the time. Also remember the reason for the 1998-1990 lock out being KG's large contract making everyone worry about growth of the largest contracts (and, as I said, essentially, the owners and the scrubs teamed up to get a deal done on the back of the top star players).

What does this mean? While Chris Bosh may not be worth as much as Lebron James, if he's a top 10 player, he's certainly worth significantly more than the aritificial "max." So, what Chris Bosh will be doing in "taking less than the max" to play with James/Wade, is to agree to be even more underpaid than he already should be, with the value created by his underpayment being redistributed to, frankly, the team owner. Essentially, he's being asked to give away more cash to a team owner than he's already doing.

Think about this: If you have a lease for a building set at $1,000,000 a year, with 10 years left on the lease term, but the market for entering into a 10-year lease for such a building right now is $1,500,000 a year and you have the right to freely assign the lease to anyone you like, what can you do? Answer: Sell/assign the lease to a somebody for $5,000,000 ($500,000 X 10).

So, lets say Chris Bosh is really worth, say, $165 mil for the next 5 years, and $175 mil for the next 6 (i.e., he's not quite as underpaid as James, but still quite underpaid-- my guess is Morey did the math on this kind of stuff. Also, note that year 6 is set at a lower figure due to age and future injury risks), and he signs a contract at $20 mil a year for 6 years, this would mean that the owner is essentially getting a $55 million gift from Bosh. This means that if the owner could sell the Bosh contract for cash immediately (or as soon as the rules allow), the owner can get $55 million from the sale. Of course, NBA trades can only include $3 million cash, but an owner can still turn around and trade Bosh for $55 million worth of assorted "goodies." Typically, however, there aren't this amount of goodies available (and certainly not the amount of goodies available to cover the amount that an even more elite player like Lebron James would be giving up when making the "max"), so, that's why true top stars rarely get traded.


If Bosh is to sign for 5 years at $95 mil, or a even lessor figure, this just means that the owner is receiving even more of a "gift" at Bosh's expense.

Don't believe me? Bulls and Heat are already threatening fans with ticket price increases if they land a max guy:

http://twitter.com/darrenrovell1

These teams have done the math and the risk assessment. They think they can get every cent of the $120 million back + more. WAY more.


Thing #2: Daryl Morey understands Thing #1 very well, Chris Bosh most likely does, too.

As we all know, Daryl Morey is all about value-- whether in buying 2nd rounder for cash, playing "hardball" with Carl Landry, getting Artest on the "headcase discount", signing Ariza on the "pissed off at the Lakers" discount, or giving up on Gortat when the price went higher than his liking. And Daryl knows, and said it at the explicitly, that the "max" guys provide way more bang for the "max bucks."

This is why he's after Chris Bosh, if the Rockets get Bosh, it's basically getting not only a great player, but a free cash gift. Now, there's the matter of what the Rockets has to pay Toronto. If Toronto already has Bosh under contract, I doubt the Rockets have enough to pay them without depleteing the team, but given that it will be a S&T, with the threat that Bosh walks away to MIA or CHI or NY or NJ for nothing, the Rockets can get a substantial discount on the "transfer fee." And yes, giving up player among Ariza, Scola, Battier, Hill, NY picks, etc. is worth it. Just remember this: a good front office can get more quality guys and pieces like these with competent management, but they can't guarantee lucking out into a superstar, especially when they don't have high lotto picks.

Anyhow, Morey understands all this stuff. He's never willing to pay one cent more than he has to, so why would he expect someone else to take one cent less than he can get? I'm sure a good player agent like Henry Thomas understands this perfectly, too. Bosh has a reputation of being a smart, so he probably "gets" the silly nature of the request that he, James and Wade agreed to get even more underpaid to satisfy the sensibility of some naive commentators and "old school" front office types.


Conclusion: Stop hating. Players like Bosh are doing anything other than being rational. Just like the teams are (or should be if they are not stupid).

 

And it's not by any means certain that Lebron and Wade will be leaving anything on the table. Very much possible (and frankly, even likely) that these two would return to their original team at the full 6 year max.

 

Acutally:

1. The CBA didn't protect Wizards from signing the Arenas contract, which was, I think, 6 years at $10 mil under the max. I also doubt that Gilbert's market price would have exceeded what he signed for. In fact Wizards bid against themselves on that one.

2. For players who are out substantial amounts of time in a season (see McGrady), there is geneally insurance coverage.

3. The Wizards just got sold, probably for hundreds of millions of dollars, they are not being bankruptcy by Arenas. Even some of the worst run teams can be sold for hundreds of millions of dollars in the current market. Owners simply choosing not to sale. They are not nearly "bankrupt." Most likely a lot of the poor crying has to to with upcoming CBA negotiations.

4. You don't need to be Daryl Morey to have some common sense. If too many teams are stupd, they'll get bought out by people who can run it better. Happens in other business. Actually happens in the NBA, too.

 

So, if your argument is that a CBA is needed and benefitial to the league. Good. It probably is. That's not what I am arguing-- though there can be an argument that on how to structure the CBA-- perhaps an NFL-style CBA, which I think has a team max salary, allows for unguaranteed contracts, and, as far as I know, doesn't have an individual yearly max (but I may be wrong) is better but that would probably be better for the "Stars" but worse for the "role players."

Anyway, the point isn't whether there should be a CBA or a cap or not, but that under the current CBA, the so-called max guys are underpaid and are a great bargain. We can have a separate argument as to what the next CBA should look like.

What if a guy wants more than security and creature comfort? What if a guy wants to, for example, try his hands at being an entrepreneur and would thus like to maximize what he can get from his basketball salaries for needed start-up capital.

Tens of millions of dollars can evaporate pretty fast in the world of decent sized businesses. Yao Ming, for example, is running his own Chinese basketball team and the annual budget for that venture is reported to be more than $2 million a year.

 

What if a guy wants more than security and creature comfort? What if a guy wants to, for example, try his hands at being an entrepreneur and would thus like to maximize what he can get from his basketball salaries for needed start-up capital.

Tens of millions of dollars can evaporate pretty fast in the world of decent sized businesses. Yao Ming, for example, is running his own Chinese basketball team and the annual budget for that venture is reported to be more than $2 million a year.