The Market of NBA Free Agency
The results of this past summer’s NBA Free Agency period were bizarre to say the least. With the NBA beginning a new television contract worth nearly double what it was previously, the salary cap for individual NBA teams skyrocketed. The fact that teams now could spend several million dollars more combined with the fact that the free agency pool was weak compared to previous years meant that players typically thought of as role players at best were now poised to receive max contracts. Although ludicrous contracts were to be expected, fans were still shocked when Mike Conley, a fringe all-star who is not even in the discussion for the best player at his position, signed the largest contract in NBA history at a whopping $153 millions dollars over 5 years. It became ridiculous once Timofey Mozgov, a player who averaged 1.4 point per game in the 2016 NBA Finals signed a 4 year contract making $16 million dollars a year.
We can view free agency as a market where teams and players are matched. Although how a player chooses where he signs may be complex, the process still resembles a sort of auction where players auction themselves off to teams that each value them at a certain price and that have some but not all information about other teams’ bids. Is this system fair to all parties involved? With the salary cap projected to continue to grow, the market value of players continues to rise. It is important to note that the market value doesn’t grow at the same rate for each team. Team such as the LA Lakers or New York Knicks who are big market, big money teams have no problem whatsoever spending as much as they can for good talent whereas smaller market teams such as the Sacramento Kings do not have this luxury and so have to temper their valuations on players. This was apparent this off-season as the Knicks and Lakers signed many high profile players to large contracts while the Kings stayed relatively quiet. The growing salary cap in not just the NBA but also the NFL is causing small market teams to make desperation attempts to grow by moving to better markets. This past year, the St. Louis Rams moved to Los Angeles and there are numerous reports of the Oakland Raiders and the Kings wanting to get out of their respective cities for bigger markets. Without increasing revenue, small markets teams are bound to be left in the dust as the salary cap increases, leaving them to only be able to build through the draft. It will be interesting to see if in the future league officials impose rules to prevent big market teams from dominating the new NBA markets. In conclusion, while the growing salary cap is mutually beneficial for big market teams and professional athletes, the small market teams have and will continue to be left behind.
Links
https://combatgent.com/post/nba-free-agency-2016
http://www.espn.com/nba/story/_/id/13224161/nba-salary-cap-set-70-million-2015-16-season
https://www.bloomberg.com/view/articles/2013-05-16/the-nba-is-rigged-against-small-markets
http://www.cbssports.com/nfl/news/the-nfl-salary-cap-just-got-a-huge-increase-for-the-2016-season/