ShamSports on the Bulls 'Creative Financing'

Memphis is setting up a losing proposition for themselves, Henry and Tellem

If they aren’t offering a standard incentive based contract, as Sham guesses is likely, the agent and the player have every incentive to hold out long as possible. The incentive is greatest for the agent, because whatever money he may lose in not getting Henry to sign a standard contract or even any contract at all, dwarfs in comparison to the money he will lose competing for future draft picks when he has to explain to each of them why he couldn’t get a standard contract for the #8 pick in the draft. In fact, I think Arn Tellem has every reason to push this hold out as far as possible. This just makes him look too bad for potential clients. There is nothing wrong with Henry that you can point to, to explain his inability to garner a full contract – the blame will fall to Tellem.

As for Henry – why sign a contract you will never meet? Lets face it, he probably wasn’t too excited to be going to Memphis in the first place. He is playing behind 2 young players with All-star aspirations who came off seasons where they played 38 minutes a game. He has free agent signing Tony Allen sitting next to him on the bench. He starts the season as the 4th swingman, and that isn’t counting any competition from Demare Carroll who played 11 minutes a game last season. The James Anderson comparison isn’t apt, because we are talking about 3-5% differences for a guy picked 20. Henry was a lottery pick and we don’t know how steep those incentives are. I think the higher you go the more leverage you probably have. Yeah, Henry pockets will hurt. But Memphis’ image around the league will hurt, and when it comes to a player’s league, that matters.

Finally, yeah, Memphis is perceived differently than San Antonio. And while unfortunate, it is the reality. Memphis annually picks in the lottery. How damaging would it be if agents refused to work out their clients there? How much did it hurt the franchise when Steve Francis refused to sign? San Antonio is looking at guys who are being picked in the late 1st round and who have real danger to fall into the 2nd round. Who knows whether as a condition of a 1st round promise, San Antonio makes a player take a less than full contract. The risk of falling into the 2nd round is incentive to agree. Henry did not have anywhere near the same risk. Is Memphis really willing to damage their reputation over less than 1% of their total payroll? Apparently yes.

Because of the 2010 free agency bonanza, there’s considerably more teams with cap relief than there are teams that need it. This is a far cry from the usual fare, where many teams have to bite the bullet and pay some tax, because there aren’t enough teams able to take on their excess salary (nor enough dead salary to dump). Oklahoma City were the beneficiaries of this system last year when they took on Matt Harpring’s dead weight contract from Utah, receiving Eric Maynor as the sweetening incentive for doing so. Oklahoma City did a similar deal on draft night when they agreed to take on Mo Peterson’s deadweight salary from New Orleans as a vehicle for obtaining Cole Aldrich’s draft rights; in return, they sent the #21 and #26 picks the other way.

In making that trade, the Thunder took themselves out of the free agency running. Their cap space, which could have otherwise been significant, was bludgeoned to a dollop by the presence of Peterson’s redundant post-trade kicker salary of $6,665,000, money which could otherwise have been spent on free agents. Of course, the Thunder knew this in advance, and did the deal anyway. They clearly felt that Aldrich was a better player and a better fit than anyone they could realistically land in free agency.

Based on what transpired, they were right. Three of the biggest free agents landed in Miami. Three more re-signed. David Lee went to a team without cap space. New York and Chicago bagged only one each; New Jersey, L.A. Clippers, Sacramento and Minnesota came away with none. There remain very few decent free agents now – Louis Amundson excepted – and yet some teams out there still have money to spend without anyone to spend it on.

Since so many teams had so much cap space, only to strike out, some of that cap space still remains. There also exist some TPE’s, a list of which can be found on this website. (It’s slow to update, however.) With the market largely bereft of multi-year contract candidates,, teams might now have to use that cap space via trade. Just like Oklahoma City did.

There’s not a whole lot of luxury tax-paying teams out there. Or rather, to rephrase that; there’s not a whole lot of teams out there who are threatened by the luxury tax and looking to make moves to get under it (like New Orleans were with the Aldrich deal). Most of the tax paying teams are there on purpose. Yet there exist some teas that both want and need to dump salary in ways which, if you think about them enough, are entirely predictable. Maybe not the specifics, but the general idea.

I have been trying to make this point on here, but it is put much better here than I could.