After the end of a lockout that was supposedly about “competitive balance”, the NBA’s superstar carousel is spinning as if nothing changed. The owners achieved their real goal of clawing back a lot of money from the players in the new CBA, but they didn’t change the underlying dynamic that sent LeBron James and Chris Bosh to Miami and Amar'e Stoudemire and Carmelo Anthony to New York City.
The maximum salary Chris Paul, Dwight Howard and Deron Williams can sign for is somewhere around $20 million annually, but NBA superstars would be worth far more on the open market. The imbalance between their take-home pay and their actual value gives them a lot of leverage, and unless the maximum salary is repealed, small-market franchises will always be at the mercy of their All-NBA players.
Without a free market system like the MLB’s, it’s impossible to know exactly how much a superstar is worth. Here’s what we do know: the Cleveland Cavaliers franchise lost $120 million in value when LeBron left, while the city of Orlando paid the staggering sum of $420 million for a state-of-the-art stadium that would generate the revenue streams necessary to put an elite team around Dwight Howard and convince him to stay in Central Florida.
Of course, there would have been an easier way to convince him: cut out the middle-man and give him the cash. Taxpayers can give the front office of the Magic the money to build a title team, but they can’t build it themselves. Orlando GM Otis Smith was unable to do that, and now the entire area is going to suffer.
For Howard, who knows that his legacy will be determined by the number of championships he wins, the decision to leave Orlando is pretty easy. His basketball salary is essentially a loss-leader for Dwight Howard Incorporated, and playing on a championship contender in Brooklyn or Los Angeles will make him far more money in endorsements than playing for a mediocre team in Orlando.
If the NBA was serious about keeping superstars in the cities that drafted them, they would let a franchise pay whatever it wants to keep its star in town. LeBron turned down around $20 million over the life of the contract to sign with Miami last summer, but what if that number was $100 or $200 million? The Heat and the Knicks certainly couldn’t clear enough cap space to sign three players at over $30 million annually.
While that may seem like an obscene sum to play a game involving throwing a ball through a goal raised ten feet in the air, soccer superstars Leo Messi and Cristiano Ronaldo make over $40 million a season while Alex Rodriguez is in the middle of a ten-year $275 million contract.
For cities like Orlando or Cleveland, it’s hard to put a monetary price on the only two NBA players whose presence guarantees a near-elite team. Basketball is one of the fastest growing-sports in the world, and over the last few years, fans in Asia, Europe and South America have watched the Orlando Magic and the Cleveland Cavaliers in the playoffs while getting an infomercial for the cities they play in.
In the Philippines, where the NBA is a national religion, the average young male knows about Cleveland and Orlando. In contrast, they have probably never even heard of Cincinnati or Tampa Bay. Employing an NBA superstar is one of the easiest ways for a mid-tier American city to generate positive international publicity.
And while the people of Orlando will understandably feel betrayed if Howard leaves, they have to understand what they would be asking him to do if he stays. They’d be asking him to give up the prime of his short career, at a time when the league is wide open for him to dominate, while the Magic rebuilt the team around him.
It can be done, as the Heat and Mavericks showed by re-staging the 2006 NBA Finals with entirely different supporting casts around Dwyane Wade and Dirk Nowitzki in 2011. And while Wade and Dirk re-signed last off-season, both paid a huge price for the five-year dip their franchises took as they re-tooled: Wade slipped out of the national consciousness while Kobe and LeBron became the faces of the NBA and Dirk became a laughing-stock for coming up short in the playoffs from 2007-2010.
They stayed because they believed in their front offices. Dirk had already seen Marc Cuban and Donnie Nelson build two elite teams around him, while Pat Riley had a glittering array of jewelry to convince Wade he knew what he was doing. If Howard re-signed with Orlando, he’d be doing so without any such reassurances.
And if the Magic did go on to win titles with Howard, the NBA would be as big a deal in Central Florida as it is in Central Texas, where the San Antonio Spurs have won four championships, making their owners absurdly wealthy in the process.
Peter Holt led an ownership group that bought the Spurs for $75 million in 1993; they are now worth $404 million. He has more than quadrupled his initial investment, primarily by reaping the value of paying Tim Duncan a salary far below what he was generating in revenue. The Spurs franchise may not have been profitable in the last few years, but it’s certainly no charity.
Instead, because the owners won’t allow Howard to benefit financially from all the extra money he would generate by staying, he will likely be traded at some point in the next year while Orlando will be left to fill a state-of-the-art arena with a mediocre team.
If the NBA lockout was really about competitive balance, and not making the people who benefit from a fundamentally immoral business model whole, the citizens of Orlando would have been allowed to keep Howard in town by giving him an offer he couldn’t refuse.