When the news broke that the NBA and NBPA were submitting themselves to an independent mediator, we collectively perked our ears up because such a move seems to be an admission that the negotiations are too broken to move forward without outside assistance. NBA.com's David Aldridge wrote an in-depth report on the developments, and one of the things offered as almost a throwaway was this information he extracted from NBPA head Billy Hunter:
- Roster reduction in averages - the examination of what happens when the average NBA salary is used as the basis of roster reduction.
- LIFO roster reduction - Borrowed from the LIFO accounting method, the examination of what happens when the lowest marginal NBA salaries are removed from the overall salary structure.
1. Roster Reduction in Averages
2. LIFO Roster Reduction
Let us put aside all of these charts and calculations because we know they're not actually based on reality. We know that the league is not made up of 450 players who each make $5 million dollars; rather, there are a handful of "max contract" players, a hundred or so players still on their rookie contracts, and then a bevy of players who fall somewhere in between.
Instead, let us consider a more realistic method which I shall refer to as the LIFO method. LIFO is a method of cost accounting that means, "Last In, First Out." Or in other words, the last men on the totem pole are the first ones to get the ax (please go easy on me accounting geeks; just grant me the use of this pneumonic for a spell to make my point). In other words, if the Thunder had to reduce their roster from 15 players to 12, it is likely that the kind of guy who would get cut is a player like Byron Mullens ($1.3 million), not Russell Westbrook ($5.1 million). Using an average salary reduction likely overstates the impact of roster reduction and potential savings. A more useful way to consider it is to look at the cheapest players and see what the savings floor might be.
If we apply some of the statistics from the great ShamSports' site and do some back of the envelop math calculations, we can figure out how much money would be saved if we simply took off the bottom 90 players.
- 30 spots removed: Savings = $6.1 million
- 60 spots removed: Savings = $20.1 million
- 90 spots removed: Savings = $46.7 million
- If the NBPA is really considering conceding roster spots, I think this should be a big negotiating point in the CBA talks. If Hunter can go to the bargaining table and tell teams that he's willing to make a concession that could save the league somewhere between $50 million and $450 million per year AND the players would be willing to take a smaller cut of the pie in the process, they should be able to fight for much larger concessions on the NBA's side. The elimination of a hard cap, for example.
- While the former calculation probably overstates the effect of eliminated roster spots, you could also argue that the latter calculation understates it. I think that the elimination of the bottom rung players would not just clear out cheap salaries, but could also add some downward pressure on the NBA's middle class, thereby dragging down the middle players' salaries as well.
- Along with salary savings, there would undoubtedly be ancillary savings as well. With fewer players, teams would spend less on things like hotels, travel expense, per diem expense, health insurance, and all the other benefits that get tacked onto employing high net worth individuals.
- While the money for the remaining 12 players goes up proportionately, it also makes each one of those roster spots even more valuable. Therefore, you could see teams even more willing to avoid strapping themselves with ill-advised signings, a reduction in contract terms, and even the removal of guarantees all together.