Thursday, May 08, 2014

Why NBA Teams Sign Players They Don’t Want

[Originally posted on Hoopsworld, 29th October 2013.]

The vast majority of players signed for training camp are signed to contracts without any guaranteed compensation on them.

This, certainly, is no surprise, as it has long been known that most players signed for training camp are not expected to make the team. A few players have fairly nominal guaranteed portions – for example, Dee Bost received $50,000 from Portland, Dewayne Dedmon $25,000 from Golden State, and Trent Lockett $35,000 from Sacramento. Most, however, do not. Teams are not involved in bidding wars for the Trey McKinney-Jones and Carlos Morais types, and thus there is no incentive to give any guaranteed money away.

Not all unguaranteed contracts are the same, however. Some utilize a contract provision called Exhibit 9. Unless you’re an agent, it is a little known device of potentially huge importance.

Exhibit 9 of the Uniform Player Contract is applicable only to those summer contracts fully unguaranteed and for only one season in length. Its purpose is to reduce a team’s liability in event of injury to a player it intended to sign only for training camp. It states thusly:

if the player is injured as a direct result of playing for the team and, accordingly, would have been entitled but for this Exhibit 9 to compensation, the team’s sole liability shall be to pay the Player $6,000 upon termination of the Player’s Contract.

The operator ‘sole liability’ is vital here. Without an Exhibit 9, the Uniform Player Contract normally calls for teams to pay any ‘reasonable hospitalization and medical expenses’ for players injured whilst directly participating in team activity, whilst also guaranteeing the payment of their compensation, however unguaranteed it was, until such time as they are fit to return to play, up to a maximum of the end of that season.

Put more simply – if you’re injured in training camp without an exhibit 9, you’re paid until you are healthy again, unless your contract incorporates exhibit 9, in which case you only get $6,000.

That financial disparity can be enormous, and the effects palpable. Players injured in training camp in recent seasons who ended up being paid money their teams didn’t wish them to be included Jason Richards, signed by the Miami Heat after the 2008/09 draft and who suffered what was ultimately a career ending injury that paid him $442,114, enough to put the Heat into luxury tax territory and force them to trade Shaun Livingston to Memphis to get under it again. Such can be the repercussions of an otherwise innocuous deal.

Long time fringe NBA player Brian Butch has somehow been in this situation twice. Butch was signed for the final few years of the 2009/10 situation with an unguaranteed deal through 2010/11 – because the deal was signed mid-season and thus called for guaranteed compensation at that time, it could not utilise Exhibit 9. Butch subsequently appeared for the Nuggets in the 2010 summer league, but suffered a serious injury in the second game and was ruled out indefinitely. Without an exhibit 9, he therefore had his contract of $762,195 guaranteed until he was healthy, which in the end proved to be the whole season. The following season, he signed a fully unguaranteed deal with the New Orleans Hornets, but one with a second option season (thereby making an Exhibit 9 impossible), yet again got injured and received a further $436,418 until he was healthy. That is over a million dollars received for zero time on the court. On Exhibit 9 deals, he would have earned $12,000 combined.

Exhibit 9′s, then, are self-evidently a useful means for a team to protect itself against the unwanted problem of players they never wanted to guarantee getting multiple paychecks whilst not being able to help on the court. It follows logically therefore that teams would wish to protect themselves as much as possible with Exhibit 9s.

One of the few provisos on Exhibit 9′s is that a team must have at least 14 non-summer contracts on its roster before any new deals incorporating Exhibit 9′s can be signed. This is rarely a problem in practice. This summer, however, has seen an instead occur where it was.

After signing Erik Murphy to a $250,000 guaranteed deal and waiving Richard Hamilton and Malcolm Thomas, the Chicago Bulls had only 12 players under contract. They wanted to bring in veterans Mike James, Dexter Pittman, D.J. White and Dahntay Jones to fight for roster spots. They did not, however, want to pay them anything to do so.

The Bulls thus sought to sign those four to deals incorporating Exhibit 9. But they could not do so until they had 14 contracts. They thus signed undrafted rookie guards Kalin Lucas and Patrick Christopher to unguaranteed yet exhibit 9-less deals before signing those four veterans, thereby meeting the threshold for being able to give out exhibit 9′s, and subsequently signed the vet quartet to four deals containing them.

Lucas and Christopher were waived on the second day of camp. They never stood a chance of making it. An unconfirmed report further suggests that the duo did not even partake in practice – had they done so, they might have gotten hurt. And had they done so, the taxpaying Bulls might have been liable for a hefty bill. As cutthroat as it is, this is business – if someone was going to get hurt in camp, the Bulls wanted it to happen as cheaply as possible. So they protected themselves.

In the end, it has mattered not. White, Pittman and Jones have all been waived – the only surviving unguaranteed contracts are the partially guaranteed deal of Murphy and the Exhibit 9 of James. James seems to have made the team, even without a trade of Marquis Teaque, due in part to the Bulls’s need to meet the minimum roster requirement of 13 players. (They may waive James later when Kurt Thomas is fit to play again, yet he survives for now.)

Nonetheless, even though the finagling ultimately didn’t save the Bulls anything, it was engineered in such a way that it could have done. This is either shrewd asset management and smart business savvy, or an overly callous piece of manipulation by a habitually cheap franchise, depending on your perspective.

Either way, it further confirms a long-established principle – many training camp signings do not have a chance of making the team. They are there to do a job, and that’s not it.

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