Put Up or Shut Up Time for Jerry Reinsdorf

How does the new CBA impact Reinsdorf and Da Bulls?

Did you hear?? The NBA lockout is over. Time for The Bulls to continue building the core around Derrick Rose. How does the new Collective Bargaining Agreement affect the Chicago Bulls?

Ramblings by JL

And we’re back! Rejoice NBA fans! We will have basketball this year! The NBA and the players have reached a tentative agreement on a new 10-year CBA with a mutual opt-out after 6 years. There are still details and logistics to work out, but by all accounts a 66-game season will start on Christmas Day with training camp starting on Dec. 9th. Finally! It’s about time! And there I was, just the day before, giving thanks to the small things I’ve been able to enjoy without basketball! Freck the small things! I am now thankful for not having to care about the NBA finances for a long time. I am now thankful for having NBA basketball this holiday season. Most of all, I’m now thankful for not having to miss a season of Derrick Rose’s sure-to-be illustrious career.

Before we drop the subject of collective bargaining agreement for good for the next 6 years, let’s take a quick look at some of the interesting developments with this new tentative CBA and how they will affect the Chicago Bulls. We’ll also discuss how, with these CBA changes; the spotlight is on Jerry Reinsdorf more than ever to prove his willingness to pay for a NBA title winner. Per SI.com, here are the details of the new tentative CBA:

http://sportsillustrated.cnn.com/2011/writers/sam_amick/11/26/tentative.deal/index.html

Some of the main points as they relate to the Bulls:

Salary Cap and Luxury Tax threshold expected to remain close to the 2010-11 level

This doesn’t affect the Bulls as they will be over the cap for the foreseeable future.

Luxury Tax penalties (currently $1 for $1) will remain the same for the next 2 years. Starting in year 3, however, tax penalties will become more punitive. For team salaries $0 to $5 million over the luxury tax threshold, the penalty rate will be $1.5 for every $1 of salary. For team salaries $5 to $10 million over the threshold, the penalty rate will be $1.75 for every $1 of salary. For salaries $10 to $15 mil over, the rate will be $2.5 for $1. For salaries $15-$20 over, the rate will be $3.25 for $1. Rate increases $0.5 for every additional $5 mil of salary from there. To put it into perspective, the luxury tax threshold in 2011 was $70 million.

The Mavericks, the 2011 champs, had an $85 million payroll. They paid $15 million in luxury tax penalties. With the new CBA agreement, the Mavs would have paid $28.75 million in luxury tax.

This one impacts the Chicago Bulls greatly. Since the luxury tax system was instituted, Bulls chairman Jerry Reinsdorf has NEVER signed off on a payroll that would put him in luxury tax paying territory. Reinsdorf has been on record saying that he will pay the tax for a championship contender, but that proclamation was based on the old luxury tax system. Will it stand up under the new, much more punitive system? We will have to hold our breath on that one. I will come back to this later because I believe this is imperative to the Bulls title chances as they will be competing against the Heat, Lakers, and Celtics. Best believe that those teams will have no qualms about paying the tax.

Similar to previous CBA, teams will have the option of an amnesty clause that would allow them to clear one current contract off their payroll at any point during the new CBA. To be clear, only current contracts can be amnestied. Contracts that take effect going forward will not be eligible for this clause. In addition, teams will still have to pay the amnestied player, but that player’s salary will not count against the cap.

The Bulls don’t have any amnesty candidates for the upcoming season, although Boozer’s contract is worth monitoring going forward. The amnesty market may be the team’s main source of roster improvements for the upcoming season. Names like Rip Hamilton, Ben Gordon, Brandon Roy, etc. are all worth monitoring. However, in an effort to level the playing field, the new amnesty clause includes a modified waiver process in which teams with cap space can submit bids to assume a portion of the amnestied player’s contract. For example, Ben Gordon has about $33 million left on his contract. If he is waived, a team with cap space can bid on him for, say, $20 million. The bidding team would then assume $20 million of Gordon’s contract while the Pistons pick up the other $13 million. This waiver process would likely preclude the Bulls, who are over the cap, from getting involved should high level players like Joe Johnson, Monta Ellis and the aforementioned Ben Gordon come on the market. Even if a player makes it through the waiver process, the Bulls will also be in direct competition with teams like the Heat, Lakers, and Celtics for these players. It’s not a given that we will have our pick of the field for the league minimum.

Can The Bulls afford to give Rose his version of Pippen??

Maximum salary rule is being updated as follows, and I quote: “….. any player following his rookie contract is eligible to receive from his own team a max salary contract starting at up to 30% of salary cap, provided he has met one of the following criteria: (i) named to the All NBA first, second or third team two times, (ii) voted in as an All-Star starter two times, or (iii) named NBA MVP one time ….”

If you’re wondering, this rule is already widely being referred to as the “Derrick Rose rule”. That makes sense, since NO OTHER PLAYER IN THE NBA QUALIFIES FOR THIS RULE!!! I mean, did Reinsdorf fall asleep during a meeting and every other owner just decided to conspire and screw over the Bulls?!! Why didn’t they institute a “If your team signs LeBron James you automatically lose 5 first round draft picks” rule?!! WTF?!! In the end, the ramification of this rule is that, instead of having a starting salary of around $14 million for his next contract, Derrick Rose will have a starting salary of around $17 million. So, as long as Reinsdorf is willing to open the check book, this doesn’t affect the Bulls too much. If not, that difference of 3 million could mean a solid ring-chasing shooting guard or Keith Bogans.

So there ya go. The new CBA certainly will not help the Bulls. However, the overall NBA salary structure remains unchanged. It’s just that the cost of doing business went up, a lot. As I mentioned previously, Reinsdorf’s proclaimed willingness to pay the luxury tax was based on the previous penalty system. I can’t begin to speculate whether that willingness will be tempered by the new penalty system. But I can tell you with absolute confidence that, if Reinsdorf cares about owning a perennial title contender in the same conference as the Miami Heat, he needs to pay the tax. Take a look at the conference final teams over the past 4 NBA seasons and their salary info.

2011 ($58 million cap, $70 million luxury tax cap)

Dallas Mavericks – $85 million
Miami Heat – $64 millions
OKC Thunder – $56 millions
Chicago Bulls – $54 millions

2010 ($57.7 million cap, $70 million luxury tax cap)

LA Lakers – $91 millions
Boston Celtics – $84 millions
Phoenix Suns – $65 millions
Orlando Magic – $81 millions

2009($58.7 million cap, $71 million luxury tax cap)

LA Lakers – $79 million
Orlando Magic – $70 millions
Cleveland Cavaliers – $91 millions
Denver Nuggets – $69 millions

2008(55.6 million cap, $68 million luxury tax cap)

Boston Celtics – $75 million
LA Lakers – $73 million
Cleveland Cavaliers – $81 million
San Antonio Spurs – $70 million

So out of the 16 conference final teams over the past 4 seasons, 10 paid the luxury tax. In addition, 3 of the teams under the luxury tax threshold are the Heat, Thunder and the Bulls from the 2011 season. I think we can all agree that this is an anomaly caused by the unprecedented 2010 free agency. Best believe that all three teams will soon be in the taxpaying territory if they want to keep it together. That leaves 3 more teams: the 2010 Phoenix Suns, the 2009 Orlando Magic and Denver Nuggets. The only team in that group that can be argued as a perennial contender is Orlando. The Bulls average payroll during that same span? $63 million. That’s not going to get it done, not when the Rose-Noah-Deng-Boozer core will be making around $56 million as soon as the Rose extension kicks in.

In all his years of owning the Bulls, Jerry Reinsdorf has never had to put his money where his mouth was. During the Jordan years, there was no luxury tax system in place and all of the Bulls stars were woefully underpaid (except Jordan in his last two years). Then when the luxury tax system was instituted, the Bulls haven’t been in a contending position where paying the luxury tax was justified. Well, times have changed now. The Bulls are full-fledged contenders. We’ll finally be able to find out once and for all whether our beloved Bulls is a legitimate big market team and flag ship NBA franchise, or just a middling organization run by a penny-pinching small time owner. Jerry Reinsdorf, it’s time to put up or shut up.

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