Dwight Howard isn't going to walk away from an extra $30 million dollars.
Some idiot ... or some genius
There are few things that frustrate me more than the above quote as it pertains to free agency in the NBA. It is the biggest cana...
Dwight Howard isn't going to walk away from an extra $30 million dollars.
Some idiot ... or some genius
There are few things that frustrate me more than the above quote as it pertains to free agency in the NBA. It is the biggest canard in sports, the idea that the "home" team (i.e. the team that owns a player's Bird rights) in any free agency situation has a HUGE advantage in obtaining the signature of a franchise free agent. Dwight Howard's involvement in the quote is immaterial; somebody, somewhere, will make the same argument about Chris Paul. It's the same argument people made about LeBron James, and the argument will get dusted off any time a free agent becomes available who is worth more than the maximum contract they are allowed to sign under the rules of the NBA's Collective Bargaining Agreement. There's just one problem ... under normal circumstances, the argument is absolute bullshit.
If Dwight Howard decides to walk away from the Los Angeles Lakers this off-season, he will not be walking away from $30 million dollars. Yes, the Lakers can offer Dwight Howard a contract worth $119 million dollars. Every other team in the league can only offer Dwight Howard a contract worth $87 million dollars. So yes, if Dwight Howard walks away from the Lakers, his contract will be $31.4 million less than it could have been. But, the calculation of this net figure which makes it seem like the home team in free agency has such a compelling advantage is based on the length of the contract. The home team in free agency is allowed to offer a player a fifth year on his contract, and the rest of the league can only offer a four year deal. A whole extra year in a max deal is worth a whole lot of money (especially since the year in question is the last year). So what's the problem? Why is the statement above about leaving $30 million on the table so terribly misinformed?
Because that extra year doesn't just go away if a player signs somewhere else. The player doesn't die. He isn't forced to take a year off. That's what makes the $30 million number so ridiculous. The player does not lose $30 million, the player simply has to enter free agency again one year earlier than he otherwise would have if he stayed with the same team. And it just so happens that franchise players tend to stay franchise players, which means that, under most circumstances, the player's next free agent deal is likely to be a new max contract. Add in the first year of the player's new deal, and that $30 million number disappears. If you have a choice between two grocery stores, and you need dog food that one of the stores doesn't have, do you save $20 by not shopping at the store that has the dog food? Not unless you plan on starving your dog.
No, the real difference between the deal that Howard could obtain from the Lakers versus what he could get from any other team with the cap space to offer him a max contract is based entirely off of the difference in allowable raises in per year income. A "Bird rights" contract can include yearly raises of 7.5%; all other contracts are limited to yearly raises of 4.5%. The interest gets compounded over the course of the contract, so over the course of a deal, the difference is about $6.8 million. That's not nothing, but it isn't very much in comparison to the large dollar amounts being thrown around with these contracts in general. For those of you averse to "the maths", here's a handy little table that breaks down the comparison.
Bird Rights
Salary
Raise %
Raise Total
Non-Bird
Salary
Raise %
Raise Total
Current
19,536,360
19,536,360
Year 1
20,513,178
7.5
1,538,488
Year 1
20,513,178
4.5
923,093
Year 2
22,051,666
7.5
1,653,875
Year 2
21,436,271
4.5
964,632
Year 3
23,705,541
7.5
1,777,916
Year 3
22,400,903
4.5
1,008,041
Year 4
25,483,457
7.5
1,911,259
Year 4
23,408,944
Year 5
27,394,716
Year 5
24,579,
