Mavericks: Why Max Deals and Other Price Controls are Bad for Mavs

The Dallas Mavericks and many other teams in the NBA are hurt by the NBA’s cap on max contracts and other price controls.

Price controls are hurting the Dallas Mavericks, plain and simple. If there were no price controls, at the very least no max contracts, the Mavs would be major players in free agency this summer. They sure as hell wouldn’t be embarking on the early stages of a painfully long rebuilding process like they are now.

Rules designed by the NBA to save owners from their own over-bidding, are ultimately hurting teams like the Mavs. Whether it’s capping the maximum amount you can pay an individual player or capping annual roster spending as a whole, it’s manipulating the market and doing a disservice to both player and team.

Salary Cap

Something like a salary cap would be illegal in nearly every other profession. If it weren’t for the 1922 Baltimore Federal Baseball Club v. National League case that first exempted professional sports leagues, they’d be on the hook for countless antitrust violations.

The argument for and against a salary cap are legitimate on both sides. On one side (the pro-cappers) you have the parity argument. Installing a floor and a ceiling on team’s annual roster spending inevitably levels the field and reduces the delta between the best teams and the worst teams in the NBA.

max contracts are price controls designed to favor ownership and reduce competitive bidding.

On the other side is the anti-cappers. Anti-cappers are usually those who cheer for big-market, high-revenue teams like the Lakers and Knicks. They make more so they can afford to spend more –considerably more — than small market teams.

To switch sports, think of the New York Yankees of the 90’s. At times they had a payroll 200-400 percent more than some small market teams. The result was massive success for one franchise and spirit-murdering free agency disappointment for the other.

Parity is Good

I think we can all agree parity is good. Would you honestly want to watch a game between the Washington Generals and the Harlem Globetrotters if you weren’t a Globetrotter fan? How long could that Washington franchise exist?

But then again how much parity do we really have in the NBA right now, even with the salary cap? There’s the Golden State Warriors, San Antonio Spurs, and the Cleveland Cavilers and then a vertigo-inducing cliff to the rest of the NBA.

Max contracts are helping the teams currently holding the talent and helping teams in huge markets and/or desirable locations.

What are Max Contracts?

The real problem with the NBA right now is max contracts. Everyone has heard of them and most have a basic understanding of them. Simply said, max contracts are price controls designed to favor ownership and reduce competitive bidding.

The NBA will say capping the maximum amount promised in a contract will help small market teams. But that really couldn’t be further from the truth.

Hoops Hype did a nice write-up on the different types of max deals and how a player qualifies for each one. In a nutshell, it says based on tenure, a player can earn up to a certain percentage of the team’s payroll. This means players earn more to stay with a team and re-up a contract than they do if they explore free agency and sign elsewhere.

The reality is that players get paid just as much if not more through their annual endorsement deals. So while money is always important no matter how much you have, it’s not as important as the argument in favor of max deals makes it out to be. It doesn’t take a genius to see that endorsement dollars will be more if a player leaves Milwaukee to play ball in L.A. Never mind the obvious lifestyle upgrade.

All of this makes Kevin Durant’s move from OKC to SF not so financially crazy and actually a pretty understandable move, all things considered.

Not All Max Players are Created Equal

The biggest problem with placing a cap on the highest paid players is that there’s guaranteed to be a logjam of players at the top. Last season the highest paid NBA players were LeBron James, Al Horford, DeMar DeRozan, James Harden, Kevin Durant, Russell Westbrook, and Mike Conley Jr. Half of those players are exactly the type of players you imagine would make that kind of coin. The other half are what we call WTF Max Players.

The Dallas Mavericks are set to pay Nerlens Noel a max deal despite the fact that he’s still just a role player and 90 percent unreached potential. They have no choice because there are multiple teams willing to do it if they don’t.

Teams have more space than the league has players. That’s why the Mavericks are paying Wesley Matthews what they are. That’s why they paid Dirk Nowitzki what they did last year, too.

The market is a mess right now and that’s because it’s being manipulated. If players were getting offered what they’re actually worth, LeBron would probably be offered 75% of a team’s payroll. He wouldn’t have to take it. It would be up to him. And it makes everyone a player in free agency. That’s the beauty of a free(er) market.

The cream would rise to the top and the league’s more deserving players would make more deserving salaries. The results of this are hard to predict but one would assume it would break up this “super team” thing plaguing the league and it would start building actual parity.

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A player may be willing to pass up $25 million over five years to leave town and join up with other stars elsewhere. But would he be willing to pass up $125 million? I’m not so sure.

The salary cap may be an unavoidable price control but max contracts are killing the NBA. Max contracts are helping the teams currently holding the talent and helping teams in huge markets and/or desirable locations. They are keeping the rest of the leave (Dallas Mavericks included) on the outside with absolutely zero percent chance of catching a big fish.

Next: Is Nerlens Noel Worth a Max Deal?

Note: San Antonio’s allure is the concentration of talent. But that concentration of talent would be far less attractive when a team somewhere else outbids the Spurs by over $100 million. Want parity? End max contracts.

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