The 2004 Olympics proved that the basketball world has caught up with the United States. That lesson may have been the first of many.
European teams have begun to take advantage of rules in the NBA’s Collective Bargaining Agreement and the value of the Euro over the dollar to lure NBA talent overseas.
Last week, Brandon Jennings became the first high school player to sidestep the NBA’s age limit rule by signing with a Euroleague team. Bostjan Nachbar, Jorge Garbajosa, Carlos Delfino, and Juan Carlos Navarro have agreed to sign with European teams for the opportunity to earn more than they could have made in the States.
There are several benefits to playing overseas:
1. There isn’t a rookie scale. The rookie salary scale was implemented before the 1995 season. It limits what NBA rookies can make in their first, second, third, and potentially fourth years of their contracts. The scale was meant to prevent contract holdouts and give owners leverage over NBA rookies. But times have changed. In 1995, the NBA didn’t need to worry about foreign clubs competing for NBA talent. Number one pick Derrick Rose will make $4,019,000 in 2008-2009. He would have made at least double that in Europe.
2. Gross vs. Net. Kevin Garnett will be the NBA’s highest paid player in 2008-2009. KG’s contract will pay him $24,751,934 next year. After taxes, Garnett will clear roughly half ($12,375,967) of his salary. If Garnett was signed to a similar deal in Europe, he could keep all $24,751,934.
3. The value of the Euro. The Euro to dollar exchange rate is presently 1.5852 — 24,751,934 Euros converted to U.S. Dollars is $39,296,146.63.
4. European contracts are NBA friendly. Most Euro contracts contain buyout clauses that allow players to sign with an NBA team as long as the buyout is paid for.
5. There’s no salary cap. There is an inordinate number of free agents looking for big money deals that simply aren’t available. Those deals aren’t available because teams are weary of exceeding the NBA’s dollar for dollar penalty for exceeding the luxury tax threshold. The Euroleague doesn’t operate under a salary cap.
The NBA salary cap was implemented because fans were becoming disenchanted with players from small market teams signing with teams that had greater financial resources. So the NBA limited the competitive balance by instituting a salary cap and allowing teams to exceed the cap number in order to retain the rights to a player who has already been on that team. Wouldn’t it be ironic if the salary cap eventually drove players to foreign countries rather than opposing teams?
Two widely publicized downsides to playing overseas are less than luxury conditions and the level of competition. But those two variables are largely dependent upon the league and team a player signs with. The best European clubs could compete in today’s NBA and sport state of the art venues and fanatical fanbases.
NBA Commissioner David Stern’s stated goal is to globalize the game and tap into foreign markets. If Stern isn’t careful, those markets could tap into the NBA.
