Wednesday, August 01, 2012

Marquis Teague is still unsigned, and you're probably not going to like why

Of the 30 first rounders drafted in June, 29 have signed their rookie scale contracts. There are to be no international draft-and-stashes in the first round this year; 29 are signed and ready to play in the NBA next year, while the other one should be.

The 30th player, the lone unsigned warrior, is Marquis Teague. He was drafted 29th overall, and while the 28 ahead of him (and Festus Ezeli behind him) have all been signed, Teague still awaits his first NBA contract. He has not been renounced, a la Travis Knight back in the day, but he also has yet to sign.

As most people are aware of in these days of increased cap transparency, first contracts for first round draft picks are (for their first three years after being drafted, at least) bound by the amounts set forth in the rookie salary scale. This is true no matter what your salary cap situation is. The 29th pick in the 2012 NBA draft has a rookie scale amount of $857,000 in the first year - the only scope for negotiation that teams, players and agents have is being able to sign for as much as 120% or as little as 80% of that.

In practice, almost everybody gets the 120%, even when drafted late. The exceptions to this are very few and far between. But there have been some. In the doing I've been doing this, there's been all of seven. Sergio Rodriguez signed for only 100% in 2006, while the next year, Ian Mahinmi got only 80% in year one, rising to 100% in later years. Donte Greene got only 100% in 2008, whilst the man drafted two picks above him, George Hill, got 120% in his first two years then only 80% in the last two (an amount which was so small that it was actually smaller than the minimum salary, and thus had to be adjusted upwards to meet that). In 2010, James Anderson got a contract that paid up to of 120% of the scale in the first year upon meeting incentives, but only 115% in the second year, and would have only paid 117% in the third year had he gotten that far (yet that option year was never exercised). Yaroslav Korolev received 100% in his rookie year and 97% in his second (so designed so as to make the two years match each other), the Clippers managing to at least save some money on their wildly ambitious and eventually unsuccessful pick. And last year, MarShon Brooks signed for only 115% in the first year, then 120% thereafter, a move that saved his team $46,255. [NB: For more ardent followers, Cory Joseph met his incentives and got 120%.]

It will be apparent that three of those six instances have been done by one team - the San Antonio Spurs. Anderson, Mahinmi and Hill was were all Spurs picks, and all exceptions to the 120% convention - the other common thread between them is that they were all drafted late in the first. Of those six, the highest selected was Anderson and #20; the other five was all the 25th pick or below. The Spurs have done it thrice. And they've done it bloody quietly.

Unmistakably, then, it is easier to squeeze a slight saving later in the draft. Indeed, the one famous attempt to do it to a lottery pick was not a success. Two years ago, Memphis tried to sign its draft picks Greivis Vasquez (#28) and Xavier Henry (#12) to contracts that paid a base compensation amount of less than 120%, but which could rise to the full 120% if they met certain performance incentives. It didn't go too well, and they eventually relented and granted the 120%, with nothing more than a PR nightmare to show for it. The move was not appreciated. Nevertheless, there is logic to their idea that rookies shouldn't get the full 120%, logic I tried to explain back in 2010:
While complaining with one arse that their expenditure outweighs their income, owners are using their second arse to wildly overpay the underdeserving, greatly increasing that expenditure level while under pressure from nothing but their own aspirations. We're looking at an impending lockout a mere 11 months after learning that Johan Petro got an 8 figure contract. Joe Johnson got the fifth highest contract in the history of the sport. Rudy Gay got the max. Chewbacca lives on Endor. It does not make sense.

Rookie scale contracts are not the biggest reason for this double-standard, yet they are a part of it. They represent one more way in which owners are giving players more than they have to. As the examination above has shown, there exists a strong precedent for doing so, yet there is not a rule. If Memphis are looking to buck a trend and start a protocol of their own, whereby a rookie earns their money, then I can't really fault them, even in light of the Gay hypocrisy. If they are offering Henry (and Vasquez) 100% of the scale guaranteed, with the maximum amount available in incentives that are slightly harder to reach than normal, then what, really, is wrong with that?

However, I also tried to express why it probably wasn't a good idea:
Teams sign players to the full 120% out of loyalty and respect for the player and their agent, yet no one has to be loyal. If another people went along with this idea, it would become a trend, and in no way the reprehensible act that it is now perceived to be.

But in making that point, Heisley misses others. The point of giving rookies the full 120% was not about rewarding them for things that have not yet done and might not ever do - the point was to avoid the fallout from not doing so. This is a risk that the Grizzlies strode confidently towards, balls-to-the-wall, yet one which has now removed said balls and attached them to a passing freight train. The methodology is legal, the logic sound, the possible outcome attractive. But the potential rewards were so comparatively tiny, the risk was not worth taking on. Put simply, there was no need to do this.

Essentially, then, while it is appreciated that you don't ever want to give money to those who haven't earned it, the consensus is so emphatic that it's not worth the fallout from possibly contradicting it. Memphis found out in a very public way that you've just got to pick your battles.

This brings us back to Teague, and why he hasn't signed.

Often times, first rounders sign rather late deliberately, as the team is trying to maximize its cap room. When unsigned, rookie scale players are charged to the team's cap as a cap hold equal to 100% of the scale amount, which is therefore less impactful on the cap than the 120% they usually then go on to sign for. This process opens up a smaller but possibly important amount of cap room, which is why players such as Anthony Davis and Jeremy Lamb didn't sign until much later than may have been expected. The Bulls, however, do not have cap space and have not done all summer. They thus gain no benefit from this, and thus it can't be the reason.

Another reason may be Teague's value as a trade asset. From the minute a first rounder signs his rookie scale contract, he can't be traded for 30 days - therefore, if you want to trade the guy in a big summer time transaction, it is often best to not sign them and let the recipient team handle it. Unsigned picks also have a salary amount for trade purposes of naught, which is usually more valuable for salary aggregation purposes. However, with the Bulls not seemingly in the running for Dwight Howard, or indeed for anyone, it doesn't appear to be the case that they are leaving Teague unsigned with the intention of trading him later.

If Teague was going to be renounced in a Knight-esque way, it would have happened by now. If the plan was always for him to not join the NBA immediately, it would have been known long before now. Instead, we have had only silence. This, then, leaves one other theory. Sources confirm the depressing truth - the reason the Bulls haven't signed Teague yet is because the Bulls don't want to give him the 120%.

Chicago has never done this before. Even when drafting late, they give their picks the 120% that standard protocol (if not the rules) demand, as evidenced by Jimmy Butler last season. Then again, they have never been luxury tax payers before, and, as things stand today, they will be next year. Seemingly, then, squeezing a few dollars out of Teague is deemed a remedy to the increased payroll bill.

If Teague signed for 100% of his rookie scale for its duration, that would mean a contract of $857,000, $895,600, $934,100 and $1,686,051, for a total of $4,372,751. If he signed for 120% of it, that would mean a contract of $1,028,400, $1,074,720, $1,120,920 and $2,023,261, for a total of $5,247,301. The difference between the two is $874,550. That is as-near-as-is the equivalent of one veteran minimum contract, but over a four year period. It is also less than a quarter of the $3,941,000 they just gave Kirk Hinrich. And the difference between Teague's 2012/13 salary between 100% and 120% of the scale amount is a rather trivial $171,400. Less than half a rookie minimum.

Nevertheless, however small the 2012/13 saving will be in the context of overall payroll expenditure, it seems to have been deemed sufficient. As mentioned above, the Bulls are over the luxury tax as of today. They have $71,837,061 committed to only 11 players, not including Nate Robinson, nor Teague. They've never been above it before, and they surely don't intend to be above it this time - it doesn't take a great deal of foresight to see the Bulls trading Rip Hamilton at the deadline, with enough cash to offset his remaining salary, at a time that Derrick Rose is able to play again, and after Rip has (theoretically) rebuilt his value as a player. This is pretty much guaranteed to happen. And it will be much easier to achieve the less they sign Teague for. The cheaper he comes, the more dead weight salary Chicago can take back for Rip, the easier he'll be to deal.

Once again, while Carlos Boozer's contract is the problem, losing others is the solution.

Chicago CAN do this, of course, both technically and morally. The Spurs have manipulated the situation to their systematic advantage for years, and it's cost them nothing; there is no real reason why the same could not be true of others teams, Chicago included. But this is the Bulls, a franchise which, whether they like it or not, already struggle to combat a reputation for thriftiness, and which (rightly or wrongly) doesn't have a flattering reputation as a place to sign.

Why poke the bear?

(EDIT: One other factor may be in play here. By giving Hinrich as much as they did of the non-tax payer mid-level exception, the Bulls have now ensured that the apron - the line $4 million above the luxury tax threshold - is now their hard cap. Put simply, they cannot go over it. Take the aforementioned $71,837,061 for 11 players, add $854,389 for Nate, and add $1,028,400 for Teague at 120%, and now you're at $73,719,850, only $597,150 short of it. With so few healthy players under contract, particularly big men, Chicago might need wiggle room in order to have the ability to sign emergency reinforcements, and scrimping on Teague can provide some of that. But this logic falters in light of the fact that Kirk Hinrich just got nearly $4 million. So the tax angle stands. And more importantly, neither reason is a great one.)

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