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LeBron James, Carmelo Anthony, and the San Antonio Spurs: The Birth of the Relative Max Contract

Feb 1, 2014; New York, NY, USA; New York Knicks small forward Carmelo Anthony (7) and Miami Heat small forward LeBron James (6) stand side by side during the fourth quarter of a game at Madison Square Garden. The Heat defeated the Knicks 106-91. Mandatory Credit: Brad Penner-USA TODAY Sports

The NBA offseason is an exciting time for fans. The draft signals rebirth, free agency signals new fortunes, and training camp signals the beginning of cultivating a new year that could be dramatically different from the years preceding it.

This offseason is particularly exciting, obviously, because of the top-tier free agent class. In 2010, we saw the formation of the super-team Miami Heat, and we also saw other big names flock to big places and get big contracts. We’re seeing a lot of big names on the market again this season; with LeBron James, Dwyane Wade, and Chris Bosh all free agents again, this time we add Carmelo Anthony to the fold. Four stellar players by any measure; any team would want any or all of them. But as Zach Lowe states, with the realities of the NBA salary cap and the maximum contract, getting four stars in their primes onto one team moves from improbable to damn-near impossible:

[Commissioner Adam] Silver is sincere in his desire for greater parity, and the easiest path to achieving it is to prevent in-their-prime superstars from teaming up. The new CBA attempted to do that by installing a super-harsh luxury tax. Spend a lot on players, and you’re going to face a crippling tax penalty that gets more severe as you add payroll. Superstars are expensive to sign and even more expensive to keep; the tax was crafted to make the “keeping” part prohibitive.

With individual and team salaries capped at certain levels, something has to give: if you want to bring in four super stars at max salaries, you need to work some cap magic, bring 11 other players in at minimum salaries, and get taxed into oblivion. Or, one or more of the stars can take a paycut, allowing more wiggle room for the rest of the roster.

As Matt notes in the tweet above, San Antonio showed Miami and the rest of the NBA-watching world in the Finals just how valuable solid role players are. And if that means taking a bit of a paycut to preserve cap space, then so be it.

As it stands now, the Big 3 on the Heat did take paycuts to join forces, and if they want to continue to do that, they’ll need to again. Early indications in the free agency period were that they were going to do just that–take paycuts, re-join forces, bolster their team depth, and make another go at it. The Spurs have done the same thing, and the core consistency + quality role player model has been one of substantial success over the lifespan of the NBA.

This type of continued success–two championships and four conference titles by the Heat; never missing the playoffs in the entire Duncan era for the Spurs–has created an irregularity in the market: it’s increasingly improbable to win with a max contract. But based on what we’ve seen from the Heat and particularly the Spurs in recent years, should Melo–or any of the Heat Big 3–get a max contract?

Now, that depends what we mean by max contract.

There’s a definition of the max contracts in the NBA CBA. There’s also long-been discussion of removing these player-max salaries and moving towards systems like the NFL (no player max; hard team salary cap) or MLB (no player max; no team cap). That, it’s argued, would reveal the “true” max salary of players. In this system, LeBron James would likely command a bajillion dollars, give or take a few zeroes. The rest of those guys would be worth something close but probably not quite that high.

But thanks to the Heat’s recent actions (and maybe future ones) and the Spurs recent actions, there’s a new type of max salary on the market: the relative max.

Based on the Miami and San Antonio models for multi-year salary structure for your core players, to keep your team intact, you need to pay them all less than the max. This way, you can have an equitable distribution of importance to the team, plus you have a good amount of money left over for filling out the remainder of the roster. Obviously, you can scale the the core salaries and the remaining salaries however you want depending on the strength of both and the individual player buy-in into the strength of the system.

There’s talk now that suggests that the Big Three are less fond of paycuts, that their paycuts wouldn’t be enough to replenish the team with role players, and that they could fare better elsewhere. This could certainly be true, and it’s not a wild theory in the least. And this is where the Big 3 intersect with Carmelo Anthony. Early indications for him were that he was in favor of moving to a contending team that could offer him a max or near-max contract.

LeBron is obviously worth a lot of money–far more than the CBA-dictated max, but he has taken less to ensure he has the right tools around him to compete for a championship. LeBron is most certainly worth more than Melo, in an absolute sense. If there were no CBA max salaries, he’d be worth more than Melo in a relative sense as well. However, if we’re playing within the confines of the system, Melo and LeBron are both max-level players.

When the LeBrons, Wades, Duncans, Parkers, and Dirks of the league all take money for less than the max, in the relative max system, you are also saying that Melo–since he’s on par with these other players–is worth less than the max, because it’s worth it to your team to save money and bring in other similar caliber plays. It’s a self-regulation in the market wherein the players value winning over salary. Players like Melo and Kobe–it’s not that they aren’t worth the money they’re making, it’s just that they don’t appear to be worth that dollar amount (+ any incurred taxes for going over the cap) when you look at other similar caliber players that make far less and allow their franchises flexibility to do more.

What we’re left with is two value systems, both within the confines of the NBA CBA and salary cap structure: a relative max, compared to other players of similar caliber; and an absolute max, which is defined as the max level contract in the CBA, based upon a player’s production. Both of these will play a large role in the rest of this free agency period, and both will likely play a role in any future negotiations between the NBA and the NBPA.

 

Amin Vafa

Amin grew up in Cleveland, lives in DC, and somehow still manages to love watching professional basketball.