The under-reported "Stretch" provision

[TowelBoy]

For years it has seemed like casual fans in forums like this have had one big complaint about what ails the NBA: guaranteed contracts. If it was like the NFL, the reasoning goes, we would eliminate the problem of overpaid players loafing around.

As we all know, guaranteed contracts are sacrosanct in the NBA -- non-negotiable. I don't even think the owners in this dispute TRIED to go after them. From the perspective of players' pocketbooks, contracts are still very much guaranteed. Once they sign on the dotted line, there is nothing that can keep them from getting their money.

But for us forum-goers and player-movement enthusiasts, the Stretch Provision could become big, big news as the new CBA gradually becomes a reality. Remember when we waived Shawn Kemp and Steve Francis? Paul Allen was able to negotiate some minimal savings, but we fans didn't really care because their albatross contracts affected our cap number for YEARS.

The new CBA allows teams to unilaterally (without the player's consent, as was required under the 2005 CBA for modified payment schedules of waived players) waive a player and stretch the cap hit over more than double the length of the contract (double plus one year). To borrow Coon's example, an underperforming player making $12M in the last year of his contract could be summarily waived and his cap number suddenly reduced to [12 / (2+1) = ] $4M for three seasons.

This decision obviously requires some balancing. Is it worth gaining $8M in cap space now at the expense of that extra $4M next year that wouldn't be there if we simply let this guy stick around for now? But under the 2011 CBA, we are gradually going to see more and more teams operating closer and closer to the Cap thresholds; the minimum team salary is moving from 75% of the Cap to 90%; Luxury Tax penalties are getting much stiffer.

It's hard to predict all the possible scenarios in which this could arise, but with so many teams ultimately operating within striking distance on either side of the Cap, I think we could see several teams throughout every season facing tempting decisions for waiving players making 8-figure salaries.

For an illustration, consider one more example. Imagine there is no amnesty clause. Roy STILL might be a candidate to get the axe in Portland. His $68M in salary could be stretch into 9 years of cap hits instead of 4. That's a risky commitment that would hamper flexibility in years 7, 8, 9... but if there was suddenly a move we wanted to make NOW, the stretch can instantly turn a $17M cap hit into less than $8M. That's $9M instant cap space, and under the old CBA, there was never a way for teams to gain this kind of immediate flexibility by simply waiving a player.

 

[jlprk]

This complicate the calculations. At trade deadlines, this will cause sudden waivers of players who looked like they were part of the firmament.

 

[TowelBoy]

This complicate the calculations. At trade deadlines, this will cause sudden waivers of players who looked like they were part of the firmament.

My thoughts exactly. And while the most casual of fans may never care, for many of us, deciding which players might be stretch candidates will become very much part of the thought process. I can't wait to see if the Trade Machine guys can figure out a way to get this into the software.

I should note that this provision is most useful to deep-pocketed owners. They are the ones who will see the opportunity to make room for more salary while still being on the hook for the old salary as a "good" thing.

 

[jlprk]

Einstein said that time is relativistic. In our new time-shifting system, a player's value is relative to how his financial existence can be stretched into the virtual future after he's shockingly poofed out of roster existence by a trade in which he's not even part of the trade.

Okay, now say, "Those were my thoughts exactly."

 

[craigehlo]

Roy STILL might be a candidate to get the axe in Portland. His $68M in salary could be stretch into 9 years of cap hits instead of 4. That's a risky commitment that would hamper flexibility in years 7, 8, 9... but if there was suddenly a move we wanted to make NOW, the stretch can instantly turn a $17M cap hit into less than $8M. That's $9M instant cap space, and under the old CBA, there was never a way for teams to gain this kind of immediate flexibility by simply waiving a player.

The stretch provision only applies to contracts signed under the new 2011 CBA so Roy is ineligible.

It could however be a way to reduce the risk of signing Oden and then be stuck with him if he suffers another devastating injury. Knowing that he could be waived and the cap hit would be far less than under the old CBA would be huge.

 

[TowelBoy]

The stretch provision only applies to contracts signed under the new 2011 CBA so Roy is ineligible.

It could however be a way to reduce the risk of signing Oden and then be stuck with him if he suffers another devastating injury. Knowing that he could be waived and the cap hit would be far less than under the old CBA would be huge.

Ahh, good point. And there was no reason for me to use Roy as an example; I simply thought it would be illustrative for numbers purposes. Making myself look stupid, smh.

 

[Blazinaway]

Ahh, good point. And there was no reason for me to use Roy as an example; I simply thought it would be illustrative for numbers purposes. Making myself look stupid, smh.

you law school college boys all the same! (j/k)

 

[craigehlo]

This provision really makes the resigning of Oden a lot more palatable by reducing the risk on the future cap. Seems like signing him to a long-term deal is a no-brainer under the new CBA.

 

[Draco]

This provision really makes the resigning of Oden a lot more palatable by reducing the risk on the future cap. Seems like signing him to a long-term deal is a no-brainer under the new CBA.

I don't know, I suppose. Oden would still take up the same dollar amount of cap room in total, its just more years at smaller amounts. Would we really be that much better off if we cut Oden before next season and he's taking up cap space in 2021?