I just put this piece up, to enormous yawns.
http://www.realgm.com/src_feature_artic ... contracts/
Before I wrote part two, where I address how frontloading can help the Celtics, I woudl like feedback. I can correct errors.
Feedback strongly desired.
And thank you FGump for your help a couple of days ago.
Frontloading
Frontloading
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elrod enchilada
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Dunkenstein
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I was talking to an agent friend of mine and he brought up an interesting thing about front-loading. He pointed out that many General Managers are on relatively short contracts, much shorter than most of the high-prifced players they sign. Therefore there is an imperative to "do well now". Have a bad season or two and you're gone.
This means that the lower they can sign a player for in the initial year of his contract, the more money the GM has to add another or a better player to this year's roster, hopefully resulting in more wins this season. In general the attitude is "We'll worry about the Luxury Tax Threshold when we have to."
Why should Billy King front load contracts this year if it means not being able to sign a reliable rotation player who can help the team this year, when he may be gone next year if the team continues to do poorly?
This means that the lower they can sign a player for in the initial year of his contract, the more money the GM has to add another or a better player to this year's roster, hopefully resulting in more wins this season. In general the attitude is "We'll worry about the Luxury Tax Threshold when we have to."
Why should Billy King front load contracts this year if it means not being able to sign a reliable rotation player who can help the team this year, when he may be gone next year if the team continues to do poorly?
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Tommy Udo 6
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There is a major error in the article.
Bulls did sign 4 players to reverse contracts - Wallace, Hinrich, Nocioni & Joe Smith, For next year the Bulls have approx $48 million committed for 9 players as of today.
The Bulls started doing reverse contracts so that they can sign Gordon and Deng without going into Lux tax in the future.
So if Gordon & Deng are signed - they will get normal contracts. They will not get reverse contracts as the article states. Why??? Because if you give them reverse contracts with the top salary payable next year, it will push the team into Lux Tax. There is no way that happens.
The team's desire to avoid Lux Tax is the reason that Gasol is not a Bull.
Deng & Gordon - when signed - will get standard contracts. That is what the Bulls' financial planning the last few years was all about.
Of course if one is traded or takes the Qualifying Offer (like Gordon is reported to be considering) the Bulls could give a reverse contract to the other. But there is no way that they BOTH get reverse contracts as the article "assumes".
Bulls did sign 4 players to reverse contracts - Wallace, Hinrich, Nocioni & Joe Smith, For next year the Bulls have approx $48 million committed for 9 players as of today.
The Bulls started doing reverse contracts so that they can sign Gordon and Deng without going into Lux tax in the future.
So if Gordon & Deng are signed - they will get normal contracts. They will not get reverse contracts as the article states. Why??? Because if you give them reverse contracts with the top salary payable next year, it will push the team into Lux Tax. There is no way that happens.
The team's desire to avoid Lux Tax is the reason that Gasol is not a Bull.
Deng & Gordon - when signed - will get standard contracts. That is what the Bulls' financial planning the last few years was all about.
Of course if one is traded or takes the Qualifying Offer (like Gordon is reported to be considering) the Bulls could give a reverse contract to the other. But there is no way that they BOTH get reverse contracts as the article "assumes".
The gem cannot be polished without friction, nor man perfected without trials.
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Friend_Of_Haley
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One problem I see with this article is the way the author explains the raises and decreases in salary.
A 10.5% increase for the first year of a $10M first year contract is indeed only $1.105M. And the 10.5% decrease on a $15M first year contract is indeed 1.1575. However, as far as I understand, the increase/decrease is always from the previous season.
However the second year of the first contract will be able to increase by 1.16M the next year. The second player will only decrease his deal by 1.409M.
Basically as each previous season's gets larger or smaller, the increases or decreases will reflect that and get larger and smaller. The author's wording makes it seem as though the player on the front loaded contract will always receive significanly larger decreases, thus you are able to make the structure of their contract more extreme from start to finish, which is incorrect.
Another issue is the MLE. Most teams, by virtue of the salary cap only are working in terms of the MLE when acquiring free agents from other teams. So if a player is receiving the MLE offer from both teams, he is going to take the offer with the larger increases. You can frontload an MLE contract, but only if a traditionally formatted contract would pay said player less than the MLE in the last year of his deal.
Still, front loading is a good technique in some cases, and I'm not sure why it isn't used more often.
A 10.5% increase for the first year of a $10M first year contract is indeed only $1.105M. And the 10.5% decrease on a $15M first year contract is indeed 1.1575. However, as far as I understand, the increase/decrease is always from the previous season.
However the second year of the first contract will be able to increase by 1.16M the next year. The second player will only decrease his deal by 1.409M.
Basically as each previous season's gets larger or smaller, the increases or decreases will reflect that and get larger and smaller. The author's wording makes it seem as though the player on the front loaded contract will always receive significanly larger decreases, thus you are able to make the structure of their contract more extreme from start to finish, which is incorrect.
Another issue is the MLE. Most teams, by virtue of the salary cap only are working in terms of the MLE when acquiring free agents from other teams. So if a player is receiving the MLE offer from both teams, he is going to take the offer with the larger increases. You can frontload an MLE contract, but only if a traditionally formatted contract would pay said player less than the MLE in the last year of his deal.
Still, front loading is a good technique in some cases, and I'm not sure why it isn't used more often.
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Dunkenstein
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Friend_Of_Haley wrote:A 10.5% increase for the first year of a $10M first year contract is indeed only $1.105M. And the 10.5% decrease on a $15M first year contract is indeed 1.1575. However, as far as I understand, the increase/decrease is always from the previous season.
Your understanding is incorrect. Raises in each year of a contract, whether 8% or 10.5%, are based on the first year of the contract, not on the previous year's contract.
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johnbragg
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Your understanding is incorrect. Raises in each year of a contract, whether 8% or 10.5%, are based on the first year of the contract, not on the previous year's contract.
Does that hold true for decreases, as well? I would guess that it does, but I've never seen anything saying so. And the player would obviously rather have 10/9/8.1/7.3/6.6, for example, than 10/9/8/7/6
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bgwizarfan
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Friend_Of_Haley
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Okay, this is another related question.
Is there anything that says you can't have both increases and decreases? Like could you start high, go low towards the middle because you are trying to save a couple extra million in a year when you'll have cap space, and then increase it again. It would be a "valley" contract. It would ultimately provide maybe a million extra dollars in that specifc deal at most, but if a contract that can start at 13M as opposed to 12M, it would help, if even a little. Maybe its not that practical, but the question has come up before without a definitive yes or no.
I know Nocioni's current deal decreases throughout the contract and then increases for just the last year, but that last year is a Team Option, which has to be an increase, right?
Is there anything that says you can't have both increases and decreases? Like could you start high, go low towards the middle because you are trying to save a couple extra million in a year when you'll have cap space, and then increase it again. It would be a "valley" contract. It would ultimately provide maybe a million extra dollars in that specifc deal at most, but if a contract that can start at 13M as opposed to 12M, it would help, if even a little. Maybe its not that practical, but the question has come up before without a definitive yes or no.
I know Nocioni's current deal decreases throughout the contract and then increases for just the last year, but that last year is a Team Option, which has to be an increase, right?
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Three34
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Friend_Of_Haley wrote:Is there anything that says you can't have both increases and decreases? Like could you start high, go low towards the middle because you are trying to save a couple extra million in a year when you'll have cap space, and then increase it again. It would be a "valley" contract.
Sure it's possible. Doesn't happen often, but can happen. Tony Battie has one such deal right now.