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Age & NBA (2004)

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2004 presentation about the age of NBA players

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Age & NBA (2004)

  1. 1. Age & NBAAge & NBA
  2. 2. Drafts before 1996Drafts before 1996  A total of 7 college freshmen and highA total of 7 college freshmen and high school seniors declared themselvesschool seniors declared themselves eligible for the NBAeligible for the NBA  2000% increase since 19962000% increase since 1996  College is no longer viewed as aCollege is no longer viewed as a prerequisite for playing in the NBAprerequisite for playing in the NBA
  3. 3. Why the increaseWhy the increase  Kevin GarnettKevin Garnett  Kobe BryantKobe Bryant
  4. 4. Rookies Salaries Re-examinedRookies Salaries Re-examined  Glenn Robinson: $80Glenn Robinson: $80 million over 11 yearsmillion over 11 years  Jason Kidd ($65 millionJason Kidd ($65 million over 8 years)over 8 years)  Caused a consensusCaused a consensus among owners thatamong owners that salaries were out ofsalaries were out of controlcontrol  ’’95 & ’99 Collective95 & ’99 Collective Bargaining AgreementBargaining Agreement
  5. 5. ’’95 & ’99 Collective Bargaining95 & ’99 Collective Bargaining AgreementAgreement  Players who benefit the most from CBA’sPlayers who benefit the most from CBA’s are the players most heavily representedare the players most heavily represented in the NBPAin the NBPA  Players drafted in the 1Players drafted in the 1stst round haveround have restrictions on their rights to negotiate theirrestrictions on their rights to negotiate their initial contractsinitial contracts
  6. 6. ““Soft” Salary CapSoft” Salary Cap  NBA was the first to introduce a salary capNBA was the first to introduce a salary cap  Restricts teams from spending over a certainRestricts teams from spending over a certain specified amount (usually a function of projectedspecified amount (usually a function of projected league revenue)league revenue)  ““Soft Cap” allows for exceptionsSoft Cap” allows for exceptions  Teams can re-sign their own players at any salaryTeams can re-sign their own players at any salary (the “Bird” exception)(the “Bird” exception)  Various exceptions for middle and lower salaryVarious exceptions for middle and lower salary playersplayers  Exceptions have caused average salaries to increaseExceptions have caused average salaries to increase by 250%by 250%
  7. 7. Post 1995 Agreement-PositivesPost 1995 Agreement-Positives  Veteran players gained greater freeVeteran players gained greater free agency rightsagency rights  Increase of the total share of revenue thatIncrease of the total share of revenue that goes to playersgoes to players
  8. 8. Post 1995 Agreement &Post 1995 Agreement & RookiesRookies  Rookies drafted in 1Rookies drafted in 1stst round were restricted toround were restricted to signing 3-year guaranteed “rookie scale”signing 3-year guaranteed “rookie scale” contracts with below market maximum salariescontracts with below market maximum salaries  New “rookie scale” contracts resulted in:New “rookie scale” contracts resulted in:  Draft picks being paid 15% less than year before inDraft picks being paid 15% less than year before in rookie yearrookie year  23% less in their 223% less in their 2ndnd seasonseason  39% less in their 339% less in their 3rdrd seasonseason  Eligible for restricted free agency after 3Eligible for restricted free agency after 3rdrd season withseason with right of first refusal ruleright of first refusal rule
  9. 9. Post 1999 Agreement-PositivesPost 1999 Agreement-Positives  Low and middle income veteransLow and middle income veterans benefited in salarybenefited in salary  New salary cap exceptions for mid-levelNew salary cap exceptions for mid-level playersplayers
  10. 10. 1999 Agreement & Rookies1999 Agreement & Rookies  Rules that affected future playersRules that affected future players  Maximum salary for individual players (a first inMaximum salary for individual players (a first in professional sports)professional sports)  Maximum contract length and salary increasesMaximum contract length and salary increases  4-year rookie scale contract: 14-year rookie scale contract: 1stst round players wereround players were restricted to signing 3-year guaranteed “rookie scale”restricted to signing 3-year guaranteed “rookie scale” contracts with below market maximum salaries with acontracts with below market maximum salaries with a fourth year team option and 5fourth year team option and 5thth year restricted freeyear restricted free agencyagency  Once rookies complete their contracts, they willOnce rookies complete their contracts, they will still have restraints with salarystill have restraints with salary
  11. 11. Team Incentive for Drafting YoungTeam Incentive for Drafting Young PlayersPlayers  Player’s salary is determined by the draftPlayer’s salary is determined by the draft for first 4 yearsfor first 4 years  Player’s often will be worth more than theirPlayer’s often will be worth more than their salaries- their productivity usually exceedssalaries- their productivity usually exceeds the “rookie scale” maximum salarythe “rookie scale” maximum salary
  12. 12. Salary Cap & Labor MarketSalary Cap & Labor Market  Only a couple of teams usually can offer a highOnly a couple of teams usually can offer a high productivity or “star” player a contract worthproductivity or “star” player a contract worth more than the average salarymore than the average salary  Teams are not prohibited from offering below averageTeams are not prohibited from offering below average salary contractssalary contracts  2002-03 season, every team was above the salary2002-03 season, every team was above the salary cap which makes it hard for “stars” to movecap which makes it hard for “stars” to move  Largest profit opportunities come from drafting orLargest profit opportunities come from drafting or trading players before they are starstrading players before they are stars  Want a player whose future productivity exceedsWant a player whose future productivity exceeds the post-rookie scale maximum salarythe post-rookie scale maximum salary
  13. 13. The OddsThe Odds  Higher probability of a high school playerHigher probability of a high school player becoming a superstar, even if they are lessbecoming a superstar, even if they are less productive than more experience college playersproductive than more experience college players  Rookie scale contracts have eliminated theRookie scale contracts have eliminated the downside risk of selecting a player with little ordownside risk of selecting a player with little or no college experienceno college experience  Hopeful they are drafting a future superstarHopeful they are drafting a future superstar
  14. 14. High School v. College PlayersHigh School v. College Players  Players who stay in school are at risk ofPlayers who stay in school are at risk of revealing they won’t become a potentialrevealing they won’t become a potential starstar  College players are:College players are:  The safe pick (Shane Battier)The safe pick (Shane Battier)  Nice additions to established teamsNice additions to established teams  Know upfront if they are a “home run” playerKnow upfront if they are a “home run” player
  15. 15. Player PerspectivesPlayer Perspectives  School may reduce the projected probabilitiesSchool may reduce the projected probabilities resulting hurting their draft statusresulting hurting their draft status  Risk injury or poor play, hurting their draftRisk injury or poor play, hurting their draft chanceschances  Lower picks, affects rookie scale contractLower picks, affects rookie scale contract  Delay’s when players are eligible for salaryDelay’s when players are eligible for salary increasesincreases  Staying in school could cost some $66 million andStaying in school could cost some $66 million and 28% of their NBA earnings28% of their NBA earnings  Staying in school could result in at least $2 millionStaying in school could result in at least $2 million lower salary every year up until the age of 35lower salary every year up until the age of 35

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