Creative Financing In The NBA

If you Google the term '"creative financing" otis smith', you'll find quite a few hits. It's long been a favoured phrase for Orlando Magic general manager Otis Smith, and his most famous usage of the phrase came in the run-up to the 2007 offseason. Smith used the term "creative financing" to describe how the Magic were going to handle having maximum cap room, juggling signing other team's free agents with retaining Darko Milicic. It was a fairly generic term that said something without really saying anything. And it only gained its resonance after Smith used all his money to give Rashard Lewis a ridiculously, amazingly, biblically terrible contract

You'll also, slightly depressingly, find this website fourth in those search results. There's a reason for that. "Creative financing" is something that I've harped on about for a while. The financial side of the NBA gives me a jolly; watching and learning how the NBA teams manage (or mismanage) their salary cap space, the luxury tax threshold and all their exceptions gets me off in ways that it really shouldn't. I don't know why it's fun, I only know that it is. I think you agree.

Therefore, there follows a list of some of the better examples of creative financing in the NBA today, some of the ways in which executives and cap experts have manipulated the system, staved off the shackles of oppression, and beaten the terrorists.


- The Bulls set a precedent by signing four players to descending contracts at the same time. At one point, the contracts of all four of Kirk Hinrich, Andres Nocioni, Smiling Joe and Sulking Ben had contracts that shrunk on a year-by-year basis. The idea of this was to maintain future salary flexibility to allow them to retain Ben Gordon, Luol Deng and Tyrus Thomas down the road as well. It didn't work, though; even though they paid them backwards, the Bulls overpaid all four, then overpaid Deng as well, and those combined with a staggeringly powerful fear of the luxury tax unbecoming of a team with such hefty profits (and an irrational hatred of the man) led to Gordon leaving as an unrestricted free agent this summer. Which sucked. Still, it could be worse. They may well have maximum cap room in 2010. (Yay! Because cap space went so well for us last time.)

- The Hawks are currently trying something similar. In the last six weeks, they've re-signed all three of Marvin Williams, Mike Bibby and Zaza Pachulia, all to pretty decent value contracts. All three also have contracts that dip in value in the 2010/11 season, a crucial offseason for the Hawks if they are to be able to pay to keep their star player, Joe Johnson. Knowing this to be true, GM Rick Sund has tried to set himself up to be able to pay all four players without going into the luxury tax. It's a good idea, in a way. But the downside of it is that this means the Hawks are going to be grazing their balls against the powerful stone grinding wheel that is the luxury tax threshold, and all they'll have done is retaining a good yet inadequate core. Of course, they would have had some financial flexibility, but they decided to use it all on Jamal Crawford, instead of re-signing the thoroughly comparable Ronald Murray for a third of the price. It's a strange decision.

- Quite a few players have taken second year dips in multi year contracts. The Magic (the creative financing GENIUSES that they are) once did it with Tony Battie, a move which enabled them to give Lewis even more completely unnecessary money than before. The Raptors have done it with Jarrett Jack, as they'll be struggling to stay under the tax next season. Others to have signed contracts that either descend or that have the occasional dip in them include Kris Humphries, Devin Harris, Speedy Claxton, Jarron Collins and Marcus Camby. But it's not common.

- Contract guarantees can be fun, too. There's way more leeway to them than there is often considered to be. Most unguaranteed or partially guaranteed contracts are guaranteed against lack of skill; that is to say, 'if we don't think you're good enough, we're cutting you.' Furthermore, any of those include dates on which the contract will become guaranteed if the player is still on the roster. But you can get way more creative than that if you want to. One such example is that of Matt Harpring; the Jazz re-signed Harpring to an oversized 4 year $25 million contract, but with conditional guarantees on the fourth year. Harpring were to only be guaranteed $4.5 million if he either:

a) missed 47 games combined during the 2006-07, 2007-08 and 2008-09 seasons due to injuries to his right knee, or
b) missed 35 games in the 2008-09 season only due to injuries to his right knee.

Neither of these happened. Harpring gutted out the injury, as well as a concurrent serious injury to his ankle, and saw through all three seasons. It came at a cost, though; he's now about to retire. What a trooper, though.

- Leon Powe had something similar but different going on with his first contract from the Boston Celtics. Powe signed a three year minimum salary deal with the first year guaranteed, but with performance-related guarantees on the other two years. His second year salary became guaranteed if Powe either made the 2006/07 rookie team, or if his point, rebound and assist averages added together to total more than 14.0 in more than 41 games played. His third year had a similar guarantee, but with the threshold raised to 16.0. It turns out that this was quite a good idea, as Powe became a valued contributor while playing for the cheapest possible price. Shame about the latest knee injury.

- There's not much flexibility for creativity with rookie scale contracts. They follow a strict formula - two guaranteed years, two option years - and even though players and teams can negotiate the contract's value to between 80% and 120% of the scale amount, almost everyone gets the 120%. (The only ones I can think of that haven't are Ian Mahinmi, George Hill and Sergio Rodriguez.) However, this season, the Indiana Pacers found a new way to make things interesting. When signing Tyler Hansbrough, they gave him the customary 120%, but with an interesting caveat; all four seasons of the contract are only 80% guaranteed. (Note: that's all that rookie scale contracts have to be guaranteed.) The purpose of this isn't entirely obvious; if Hansbrough really sucks or dies or something, the option years won't be exercised anyway, so having a partial guarantee on them doesn't make much of a difference. But it's interesting because it's creative. And, dammit, that's what we're after.

- Speaking of creative, check out Brandon Roy's guarantee conditions. Intense.

- It might be the Mavericks, not the Magic, that are the kings of creative financing. (A cynic would say that they need to be, considering that they overpay almost everyone. That cynic would have a point.) Particular favourites of Donnie Nelson and friends include conditional guarantees based on championship wins (given to Jerry Stackhouse and Greg Buckner) and team based performance incentives (see this). Having unguaranteed final seasons in contracts is a good ploy of theirs; Erick Dampier has an unguaranteed 8 figure final season in 2010/11, with conditions that he's never going to meet, giving the Mavericks a massive trade chip to play with. Buckner's contract - which they initially signed, then gave away, but have now brought back - has only a small percentage of his final two years guaranteed. You probably already know about the last year of Stackhouse's deal, and the uses that had. And you may also have known that the last year of Jason Terry's contract is only $5 million guaranteed as well.

But the Mavericks have saved their best unguaranteed contract trick for last. After the Magic matched the offer sheet that Dallas gave to Marcin Gortat, the Mavericks found themselves with a full MLE again. Rather than use on an MLE calibre player, they instead decided to spend $4.5 million of it on Drew Gooden, a poor player with the worst defense in the NBA and an increasingly bad understanding of offensive continuity. The contract, though, has a caveat; only $1.9 million of the $4.5 million is guaranteed. And there's no guarantee date.

It's fairly normal for players to sign partially guaranteed one year contracts. If it wasn't common practice, training camp would suck. But it's rare for players earning more than the minimum to do it, and it's the first time I've ever seen it on a contract this size. It's actually quite a clever ploy, because it gives the Mavericks quite a trade chip. In a year when so many teams are over the tax, and so many teams need to make instant salary savings, unguaranteed contracts have to be considered even hotter shit than usual. And by signing Gooden to one, the Mavericks give themselves a pretty mean trade chip between December 15th (the first date Drew can be traded) and January 10th (the date all contracts become guaranteed). He was, without a shadow of a doubt, signed with this intent in mind. So expect it to happen.

As for what's in it for Gooden.......well, not a lot. $2 million for three months work is never bad, but for this to have been the best he could get, his other offers must have really sucked.

- And finally, here's an example of how not to creatively finance. Naturally, it involves Otis Smith. And it also involves the man in the opening picture, James Augustine.

Augustine was drafted by the Magic in the 2006 draft, and signed a two year rookie minimum contract with the team. He stayed with the team for the whole two years, barely playing, and was became a restricted free agent. The second year of his first contract was only 25% guaranteed until July 30th, and the rule with qualifying offers is that they have to be at least the same amount of guaranteed money and the same guarantee dates as the final season of the previous contract. So when Orlando tendered him a qualifying offer, Augustine accepted it immediately, and was thus under contract for the 2008/09 season for $972,581 (the amount of the QO = minimum salary + $175,000), of which $243,145 (25%) was guaranteed, with a guarantee date of July 30th 2008. Orlando then waived him before that date, meaning that they essentially paid Augustine a quarter of a million dollars to have him under contract for two weeks in mid-July.

It's definitely financing, no question about it. And it's definitely creative. But it was also really, really thilly.

Otis Smith's job became far easier and far more secure when the Magic's NBA Finals appearance prompted the aptly named Rich DeVos to start stumping up luxury tax dollars. Imagine what would have happened, though, if that hadn't happened. There'd be no Marcin Gortat. There'd be no Brandon Bass. There might not have been any Vince Carter trade, and there might not have been any Matt Barnes signing. The Magic would be relying on the man who coined the term "creative financing" to do that exact thing. And it's hardly something he's renowned for.

I commend the Magic's offseason. They've done pretty much everything right. Even the little things, such as the inclusion of Ryan Anderson into the Carter trade, were done correctly. Otis Smith has had a good summer. But Magic fans should be very, very grateful to ownership. Spending is easier without a budget.

Kirk Hinrich's Singing Voice

Some potentially insightful and vaguely articulate basketball commentary will be coming your way shortly. But first, here's something far more important: the Chicago Bulls players singing.

God invented the internet so that we could feel more closely acquainted to professional athletes. It's the reason they have online chats, it's the reason they have their own websites, it's the reason we try and become their Facebook friends, and it's the reason that their team contractually obligates them to humiliate themselves for the sake of a few Youtube videos. For this, we must give our eternal thanks, because God never fails to satisfy us. And nor does Joakim Noah.

During a Bulls game last week, a halftime segment aired that showed Noah, Derrick Rose, Tyrus Thomas and Luol Deng participating in a 'Name That Tune' style challenge. The four players paired up, and one player had to sing whatever tune was playing in his headphones, with the other player charged with guessing which song it was that they were butchering. The hot blonde's job was to guess which team won.

The whole debacle was caught on camera.





A closer inspection reveals that this isn't the first Bulls players karaoke segment of the season. Three other officially licensed videos exist, showing the same players (as well as Kirk Hinrich, Aaron Gray, and the now-departed Drew Gooden and Thabo Sefolosha) taking part in a singalong to various TV theme tunes. The tunes range from seminal to forgettable, yet they are, to a man, bludgeoned.







If anyone emerges from this with any pride, it might be Drew Gooden. Gooden - whom we already know to be always up for a tinkle - demonstrates, if nothing else, a semblance of a sense of rhythm, humility and personality, although he does appear to struggle with the difference between a saxophone and a piccolo. Hinrich continues his galvanising makeover from the shy and retiring elfin-like creature of his rookie year to the matured and forthcoming comedy god that he is today. Tyrus Thomas sings like he plays (with plenty of effort yet little to show for it), as does Luol Deng (who is bloody awful). Most worryingly of all, Derrick Rose seems to sing in the same way that he talks - in a monotoned unrelenting B flat that never shows any signs of breaking out into a fit of inflection or interest. Give me another half hour of Gooden, instead. Thanks.

However, if you thought that other Bulls starlet Ben Gordon had gotten lucky and avoided it all, then despair not. Despite the fact that those videos were probably made during Gordon's entirely awkward contract negotiations, Ben has been seen to have brought the noise before. In this first video, Ben is caught chiming in with a vital contribution to the seminal Chicago Bears theme song, "Bear Down Chicago Bears". (Note: a version with Hinrich in it is out there somewhere, but apparently I've lost it.)





And in this second video, Ben does what 85% of ballers feel obligated to do eventually; he stars in a rap video.



(Note: That last video appears to have been an advert for a product called Mioplex. A quick Google search reveals that Mioplex is a "male orgasm intensifier." This would explain why he felt fifty feet tall. My work here is done.)

Preview Sort Of Thing: Chicago Bulls

The Bulls are, quite possibly, the hardest team in the league to gauge right now. Every one of their significant players is a massive question mark. Other than predicting Larry Hughes will shoot a pull-up 18 footer on 85% of the fast breaks that he's involved in, there's nothing that you can say with any conviction about this current Bulls roster. It's a poser.

Theoretically, they could be great. This is still, essentially, the same 49 win second round team of the 2006/07 season, with only a few changes. The corpse of P.J. Brown has been replaced by Joakim Noah. The corpse of Ben Wallace has been replaced by Drew Gooden. And Chris Duhon has been replaced by Derrick Rose, which may or may not be an upgrade. (Sarcasm!) So, with those three upgrades, plus the return of Ben Gordon, Luol Deng, Andres Nocioni and Kirk Hinrich, plus the overdue-but-genuinely-forthcoming breakout of Tyrus Thomas, the Bulls should easily be able to usurp that 2007 team. Shouldn't they?

Well, no. The other change between then and now is the entire coaching staff. As outlined in the Milwaukee Bucks preview, Scott Skiles's coaching jobs have a shelf-life, but until it goes horribly wrong, he can make teams overachieve. The Bulls achieved what they did in 2007 despite having only the NBA's 20 best offense, purely because they had the best defense in the league. Skiles was directly responsible for that. However, after he lost the team last year - and after his replacement Jim Boylan proved to be about as much use as a surfboard with handlebars - the Bulls defense regressed to being middle of the road, and the offense was no better.

It's not known what Del Negro will try to do, and it's futile to guess. But it's a safe assumption to say that he won't bring the level of defense that Scott Skiles did, because almost no one does. The hiring of Vinny The Black, and the new assistant coach lineup of Bernie Bickerstaff, Bob Ociepka and Del Harris, shows a clear intent to focus on the long term, and to concentrate on player development, something badly mismanaged during the Skiles era. It's the right approach, and winning the lottery gives General Manager John Paxson a second chance to clear up the collateral from the Ben Wallace disaster. Yet, for all horny long term projections, the Bulls are currently awash in highly paid underachievers.

Additionally, those players have regressed. Players were paid in accordance of what they were expected to go on and achieve, but after last year's diarrhoea of a season, no one did what they were supposed to. Nocioni used to play with a clean form of aggression, one where willpower and effort overcame his inability to dribble and penchant for leaving jumpshooters often. But these days, he chucks, and he pouts. Ben Gordon briefly became a near-All Star 20 ppg scorer, with good scoring efficiency, and an improved ability to dribble without falling over. But this desire to fit in with the offense seems to have left him. Luol Deng's jumpshot was infallible, but only for one year. And Kirk Hinrich has managed to get worse at every single facet of the game. This isn't the team it once was, despite it still being the same core.

The talent is still there. The Bulls still have a 20 point scorer at shooting guard, a potential 21/8 small forward with fine defense, and a combo guard with elite defense and a good jumpshot. Added to that, they now have a young Stephon Marbury at point guard, plus whatever you think of Tyrus Thomas and Joakim Noah. Furthermore, only one of those players is over 25. As young cores go, this one is still good.

As of right now, though, the roster is a clusterfuck. All the pieces that used to fit seamlessly, no longer do. And they're not as cheap as they used to be, either.

It's turnaroundable, if that's a word. The players that broke themselves can mend themselves. But it will take dramatic improvement from a unit that spent all of last year going backwards. Hinrich needs to find his footspeed again. Gordon needs to develop some humility. Deng needs to get his jumpshot back, and add four feet of range to it. Nocioni needs to pretend he's playing for Argentina every night. Thomas needs to learn how to make layups. Noah needs to learn how to make layups. Thabo Sefolosha needs to learn how to shoot. Hughes needs to learn how to play. And Drew Gooden needs to stop pratting about with his facial hair. (This won't help his performance any. It's just a general point.)

If this was another team, we'd probably be watching them intently, fawning openly, dicks in hand, doused in our own pre-ejaculate at the exciting and potential-laden duo of Rose and Thomas, despite them sounding more like the compelling protagonists in a Baroque-era love story. But that's not going to happen here. This is the Bulls. It's been nothing but false dawns for ten years. No one's leading them anything. This time, they're going to have to win our trust, by winning something.

Quite right too.

Assorted Terrible Plays For No Real Reason

This play is currently doing the rounds:



It provides a somewhat fitting conclusion to the Timberwolves dire season, and particularly that of Corey Brewer, who fouled and clanked his way to a 5.8 PPG, 3.7 RPG and 2.4 FPG rookie season, on 38% shooting. All a bit shite, really.

Still, for the hell of it, here are 5 other "Really Stupid Plays", in no particular order.


1: J.J. Redick in garbage time




2: David Wesley is garbage all the time




3: Derek Fisher to Yao Ming




4: Channing Frye does something reasonably manly for a change




5: Zach Randolph is a flat-out disgrace





Not pictured: One of any number of plays in which Drew Gooden rotates completely the wrong way on defense. People don't make highlights of those things, y'know? They should.