This economy stinks…. There really is no other way to put it, virtually all industries have been hit hard by it along with families. Professional sports has been relatively safe from prior recessions because in hard times people still want their sports teams, even more so then as a distraction from the hard reality of a bad economy. But this has been no ordinary recession and most economists are openly using the “D” word now to describe it. Professional sports is rapidly beginning to feel the impact as attendance goes down along with spending on merchandise and concessions. The Arena Football League simply called off its season rather than fight through the tough times.
The NBA will survive unlike the Arena League, but owners are getting a rude awakening after seeing the stock market nearly cut in half the corporate values that allowed them to buy an NBA team in the first place. In fact most NBA teams spent the weeks before the trade deadline looking for deals to cut payrolls instead of shopping for players to improve their teams. The Magic were one of the few exceptions in trading for Rafer Alston. This off season may see an even worse blood letting on team payrolls when ticket renewals plummet and for the first time since it was instituted, the salary cap and corresponding luxury tax are likely to be lowered. Virtually every team counted on the cap continuing to increase and word from league bean counters that this number will likely go down was a rude awaking to many team owners during All-Star weekend.
A word of advice to NBA players: don’t be a free agent this summer if you can avoid it. You may find that very few teams are spending money and the ones who have budget room will be likely saving it for 2010 when Lebron James, Chris Bosh, and Dwyane Wade hit the market. Looking overseas may not help you much either as this is a global meltdown to the point that actual countries are going bankrupt. So how does all of this depressing news affect our favorite team here at TPASTBM?
The Magic will have two key contributors that are eligible for free agency this summer. Young center Marcin Gortat aka “The Warlock” or “Polish Hammer” whose rookie deal is expiring and will become a restricted free agent. The other is a member of what Otis calls his “core” in Hedo Turkoglu who can choose to opt out of the last year of his deal and test the free agent waters. Hedo has been very vocal to local media about his intentions to opt out and sign what will likely be the last major contract of his career. Most experts agree that it will take 5 years at $50 million to appease his wishes and keep him in Orlando.
However, the key question in this rapidly deteriorating economic environment is: "can the Magic afford to hand out another big contract??? "
Let’s break down the team payroll before we tackle this question. The Magic currently have five players locked up in contracts for the next four to five years (2009-2010 salaries in parentheses). Dwight Howard ($15.1), Rashard Lewis ($18.9), Jameer Nelson ($6.1), Mickael Pietrus ($5.75), Courtney Lee ($1.2) for a total of $47.0
They have committed 61% of the total payroll for this year to these five players and that percentage will only increase as the contracts escalate and what had been expected to be a growing NBA cap number is reduced. As you can see these five will take roughly $47 million of next year's cap space.
The team also has two more players in the final guaranteed years of their contracts.
Tony Battie at $6.3 and JJ Redick at $2.8
This brings us to seven players and $57 million in guaranteed contracts. If the cap is only reduced by $1 million (a moderate estimate but it could be more), this will set the luxury tax at around $70 million. The luxury tax is a number that Otis Smith and ownership have already sworn to be their payroll limit leaving roughly $13 million to fill out the roster. Let me say that again, only $13 Million to fill out six or seven roster spots!
Now let’s look at the three players with options on their contracts.
Hedo Turkoglu at $7.4 million (player option) Rafer Alston at $5.2 million (only $2.5 is guaranteed if he is waived), and Anthony Johnson at $2.1 million (non-guaranteed).
I fully expect Anthony Johnson and his non-guaranteed contract to be released. The team can bring him back at the vets minimum or bring in another free agent point guard (Tyronn Lue maybe). Keeping Rafer Alston would be wise considering Jameer Nelson generally misses games every year, although he has had no major injuries before like his current one. If the Magic keep Rafer however, they will be left with close to $8 million under the cap with only 8 players and two free agents still to re-sign in Hedo and Marcin plus add another 2 or 3 players at the vets minimum for depth.
One option would be finding another team under the cap or holding a trade exception and who is willing to take on Tony Battie, Mickael Pietrus or Rafer Alston (a difficult task made harder by the economy). Re-signing Hedo Turkoglu (at the number he wants) AND staying under the luxury tax is going to be a near impossible task for Otis Smith. Fans of the Magic and other NBA teams (most are going to be facing similar difficult decisions), need to prepare themselves to lose key players this summer and possibly next without compensation simply because their team can not afford to keep them.
If Hedo really does want to stay in Orlando he may have a better chance by NOT opting out and waiting until 2010 when the Magic have several large contracts expiring (Battie and Alston) that will allow them more space to work the deal he deserves. If he chooses to opt out he may want to remember that safe word “Spumoni” because he and the other 2009 free agents are likely to be wrestling with the worst bear market in NBA free agent history.
The NBA will survive unlike the Arena League, but owners are getting a rude awakening after seeing the stock market nearly cut in half the corporate values that allowed them to buy an NBA team in the first place. In fact most NBA teams spent the weeks before the trade deadline looking for deals to cut payrolls instead of shopping for players to improve their teams. The Magic were one of the few exceptions in trading for Rafer Alston. This off season may see an even worse blood letting on team payrolls when ticket renewals plummet and for the first time since it was instituted, the salary cap and corresponding luxury tax are likely to be lowered. Virtually every team counted on the cap continuing to increase and word from league bean counters that this number will likely go down was a rude awaking to many team owners during All-Star weekend.
A word of advice to NBA players: don’t be a free agent this summer if you can avoid it. You may find that very few teams are spending money and the ones who have budget room will be likely saving it for 2010 when Lebron James, Chris Bosh, and Dwyane Wade hit the market. Looking overseas may not help you much either as this is a global meltdown to the point that actual countries are going bankrupt. So how does all of this depressing news affect our favorite team here at TPASTBM?
The Magic will have two key contributors that are eligible for free agency this summer. Young center Marcin Gortat aka “The Warlock” or “Polish Hammer” whose rookie deal is expiring and will become a restricted free agent. The other is a member of what Otis calls his “core” in Hedo Turkoglu who can choose to opt out of the last year of his deal and test the free agent waters. Hedo has been very vocal to local media about his intentions to opt out and sign what will likely be the last major contract of his career. Most experts agree that it will take 5 years at $50 million to appease his wishes and keep him in Orlando.
However, the key question in this rapidly deteriorating economic environment is: "can the Magic afford to hand out another big contract??? "
Let’s break down the team payroll before we tackle this question. The Magic currently have five players locked up in contracts for the next four to five years (2009-2010 salaries in parentheses). Dwight Howard ($15.1), Rashard Lewis ($18.9), Jameer Nelson ($6.1), Mickael Pietrus ($5.75), Courtney Lee ($1.2) for a total of $47.0
They have committed 61% of the total payroll for this year to these five players and that percentage will only increase as the contracts escalate and what had been expected to be a growing NBA cap number is reduced. As you can see these five will take roughly $47 million of next year's cap space.
The team also has two more players in the final guaranteed years of their contracts.
Tony Battie at $6.3 and JJ Redick at $2.8
This brings us to seven players and $57 million in guaranteed contracts. If the cap is only reduced by $1 million (a moderate estimate but it could be more), this will set the luxury tax at around $70 million. The luxury tax is a number that Otis Smith and ownership have already sworn to be their payroll limit leaving roughly $13 million to fill out the roster. Let me say that again, only $13 Million to fill out six or seven roster spots!
Now let’s look at the three players with options on their contracts.
Hedo Turkoglu at $7.4 million (player option) Rafer Alston at $5.2 million (only $2.5 is guaranteed if he is waived), and Anthony Johnson at $2.1 million (non-guaranteed).
I fully expect Anthony Johnson and his non-guaranteed contract to be released. The team can bring him back at the vets minimum or bring in another free agent point guard (Tyronn Lue maybe). Keeping Rafer Alston would be wise considering Jameer Nelson generally misses games every year, although he has had no major injuries before like his current one. If the Magic keep Rafer however, they will be left with close to $8 million under the cap with only 8 players and two free agents still to re-sign in Hedo and Marcin plus add another 2 or 3 players at the vets minimum for depth.
One option would be finding another team under the cap or holding a trade exception and who is willing to take on Tony Battie, Mickael Pietrus or Rafer Alston (a difficult task made harder by the economy). Re-signing Hedo Turkoglu (at the number he wants) AND staying under the luxury tax is going to be a near impossible task for Otis Smith. Fans of the Magic and other NBA teams (most are going to be facing similar difficult decisions), need to prepare themselves to lose key players this summer and possibly next without compensation simply because their team can not afford to keep them.
If Hedo really does want to stay in Orlando he may have a better chance by NOT opting out and waiting until 2010 when the Magic have several large contracts expiring (Battie and Alston) that will allow them more space to work the deal he deserves. If he chooses to opt out he may want to remember that safe word “Spumoni” because he and the other 2009 free agents are likely to be wrestling with the worst bear market in NBA free agent history.
Honestly, I think the impending 2010 free agent market will be a bigger reason than the economy why the 2009 market won't get much in terms of offers. It's not that teams DON'T have $ to offer, it's that they don't want to because of who could be available in a year.
ReplyDeleteI do agree, however, that Hedo would be better served financially to take his player option and become a F.A. next summer.
Recession or not, moves are going to be made this offseason. A lot of teams have money coming off the books – many of them (the Pistons being the best example) are going to be on the market to buy. Not everyone is dumb enough to go all in for 2010; if Hedo does decide to leave, he’s going to find someone willing to pay for him. It would be kind of a dick move to opt out, but the Magic would be advised to pay the man if they have to.
ReplyDeleteFcuking Rashard "Softie" Lewis gets paid more than Dwight Howard? What the hell were the Magic owners thinking? Turkoglu can beat the crap out of Rashard (what kind of fcuking name is this anyway) anytime.
ReplyDeleteAs much as I love Hedo, if he does opt out there's not much the team can do.
ReplyDeleteThe cap is expected to go DOWN next year to around $70M. If Hedo stays, the Magic will have 10 players under contract for a grand total of $70.6M. Meaning they're already over the cap, and with Pietrus already taking up the MLE (which is almost certain to be done away with as soon as the current Collective Bargaining Agreement comes up in a few years), that means we'd only have the vets minimum to offer other players.
If Hedo does opt out, he's going to want MORE than what his current next year salary would be, which again means we'd only have the vets minimum to offer anyone, meaning (barring a trade of some sort), we'd be able to have a max of 11 players under contract. Let's face it, in today's league you can't go an entire season with only 11 players.
I have heard several times that Pietrus was signed in part as a back up plan in case they lose Hedo. Pietrus would step into his starting spot at SF and the club would look for a veteran FA off at a cheaper price to help the bench.
ReplyDeleteThey want to keep Hedo, but the economy may have ruined their plans unless Devos decides he is willing to pay the tax (he has done it before) to keep the team together.
Yeah, that's pretty much what I'm saying.
ReplyDeleteI would love to see Hedo come back, but if he opts out I can't see how they can afford him. Even if they were willing to go over the tax to keep him around, they'd still only have 11 guys on the roster.
Forget Hedo we need somebody who can slash to the basket and play defense. Open up the Middle for dwight. Hedo has done good but he's 29-30 years old we needs young legs like charle V from milwaukee. That's a smart pick up. Or maybe travis outlaw from portland.
ReplyDelete