We mentioned it briefly last week, but it’s worth noting again: this is the absolute worst year to enter the NBA as a first-round draft pick.
You may have heard that the NBA’s absurd new TV contract is about to kick in, and that just every team in the league is about to be flush with cash and cap space. The salary cap this year was $70 million, but next season it is projected to rise to $94 million. That’s great news for every person trying to make a buck as a professional basketball player, unless that person is about to be selected in the first round of Thursday’s NBA draft.
The problem is in the league’s CBA, which does not tie the pay scale for first-round picks to the salary cap. Unlike max salaries, which are defined as a specific percentage of the salary cap and therefore balloon at the same pace the cap does, incoming rookies drafted in the first round have their salaries hard-capped by a rookie wage scale. Each pick slot is assigned a concrete yearly salary—$2,253,300 for the ninth overall pick, for example—and teams can sign drafted players for no less than 80 percent and no more than 120 percent of the number assigned to their slot. These first-round picks will get a two-year contract that comes with a slight pay increase in the second year and team options for years three and four.
What that means is that for the next four years, most of the 2016 first-round draft picks will be locked into truly awful deals. A large number of teams are going to have more money and cap space than they know what to do with this summer, and even the stingiest owners in the league won’t really have a choice but to throw it at players who enjoy the freedom to negotiate the terms of their contract. These first-round picks are walking into a gold rush and being told that they can’t take home more than what fits in one hand; meanwhile, 10th men and the undead will be striking it rich, simply because the money has to go somewhere.
The economics are so out of whack that it may actually be more lucrative to be selected in the second round of this year’s draft than the first. Players who are taken in the second round are free to negotiate whatever contract they’d like with the team that selects them, which means that they will be free to take advantage of the league’s massive influx of cash. Dan Feldman at NBC Sports has a great breakdown of how this could all play out:
Previous contracts inform future contracts. If numerous second-rounders previously received starting salaries greater than 1.20% of the cap, agents will demand similar amounts this year. Those amounts will just happen to be worth more than first-rounders can receive.
A couple related factors beyond simply a higher cap conspire to boost second-round salary even further this year:
1. Nearly every team will have cap space. Because teams don’t receive an exception for second-round picks, many teams just didn’t have the ability to pay a second-rounder more even if they wanted to. That will rarely be an excuse now.
2. Many players are locked into contracts signed before the new TV money kicked in. That leaves more money for everyone else.
Well, almost everyone else. The rookie scale prevents first-rounders from enjoying the windfall.
Meanwhile, second-rounders will cash in.
This is nuts! The issue isn’t that first-round picks are necessarily worth more than second-round picks in every case—every first-rounder taken after Brandon Ingram could very well end up washed out of the league in three years—but that this drags out the economically and competitively distorting effects of amateur drafts to the point of logical absurdity, highlighting the real issue here: The NBA has a baroque system in place so that it can deny one segment of its labor force the right to negotiate a fair wage so that owners (and veterans) can profit. That’s wrong in every instance; the rising salary cap has just made the bullshit much easier to smell.