Should NBA Contracts Be Shorter?

With NBA salary growth outpacing NBA revenue growth, it has become increasingly apparent that team owners will try to save themselves from themselves by putting more strict limits on payroll. Owners argue that players get too large a slice of the pie, even though owners are the ones signing players to these occasionally overstuffed contracts. But, as is generally the case, the owners have the strategic advantage in the P.R. game, and it's expected the league will get its way -- after a lot of bruising battles, many to be played out in the public sphere -- during upcoming collective bargaining.

But is contract size the real problem strapping teams? Or is it contract length? You'll notice that most of the contracts murdering teams' ability to quickly improve aren't maximum contracts -- they are large by conventional standards, yes, but not excessive by normal NBA/professional sports standards. The most common thread tying bad contracts together is their length. With the way the NBA's salary cap, luxury tax and trade rules are structured, a 1-year, $20 million mistake is far less painful than a 2-year, $20 million mistake.

As such, owners ought to focus on getting a reduction in maximum contract length rather than fight a bloody battle over contract size.

To wit, here's a survey of the NBA's top 10 highest paid players this season, with their contract details so we can suss whether there's a problem, and if so what can be blamed.

Tracy McGrady, Houston: $23 million. McGrady signed a seven-year max contract with Orlando in 2000. He became eligible for a three-year extension in 2004, when he also happened to be traded to Houston. Before signing that extension, he had won two straight scoring titles.

Kobe Bryant, L.A. Lakers: $23 million. Twenty-nine teams would love to pay Kobe $23 million right now.

Jermaine O'Neal, Miami, $23 million. O'Neal signed a max seven-year deal as a 24-year-old free agent coming off two All NBA third team selections in 2003. Indiana wasn't the only team who would have offered that contract.

Tim Duncan, San Antonio, $22 million. Twenty-nine teams would love to pay Timmy $22 million right now.

Shaquille O'Neal, Cleveland, $21 million. Shaq signed a five-year, $100 million extension after his first season in Miami (in which the Heat nearly made it to the Finals). The Heat won a championship the following year.

Dirk Nowitzki, Dallas, $20 million. Dirk is worth every penny.

Paul Pierce, Boston, $20 million. At least a dozen teams would pay Pierce this salary for this season on the open market. He could be seen as overpaid next season, though.

Ray Allen, Boston, $19 million. No one writes columns ripping Ray's pay like they do with McGrady. Perhaps the five-year, $85 million deal Seattle gave Allen in 2005 was a bit too rich, but recent good health has kept it from appearing gaudy (again, unlike McGrady), and the contract expires this summer with Ray still cooking at age 34.

Rashard Lewis, Orlando, $19 million. Everyone knew it was a ridiculous contract at the time, and it will only get more repulsive with age. The Magic bid against invisible aggressors to add a sixth year on the $117 million contract, signed in 2007. In 2012, this contract will be the argument for shorter contract terms.

Michael Redd, Milwaukee, $17 million. Redd signed a six-year, $91 million contract in 2006 as a free agent; the Bucks were the only team which could offer that sixth season. To that point, Redd had played at least 75 games in four straight seasons. By the end of this year, he will have played in less than 54 percent of Milwaukee's games since signing the contract.

Of the 10 most highly paid players of this season, three (McGrady, J.O., Redd) are clearly anchors and two (Shaq, Lewis) are clearly overpaid. Redd's contract was probably too rich to start with, but the length of the deal -- considering his injuries -- are the serious problem. J.O. signed, as noted, a seven-year deal as a 24-year-old. A six-year deal at that point would have left him as a free agent in 2009, meaning he wouldn't be on this list, and a five-year deal would have ended up even earlier, as O'Neal's body began to break down.

McGrady, again, is a length issue. As recently as two seasons ago, Mac was a valued member of a good team -- it's leader and second best player, even a dark horse MVP candidate. Maybe he wasn't worth $20 million. But he would have fetched a huge salary on the open market at that season's end. An injury-plagued 2008-09 complicates how he would have been valued entering this season, but of course injuries are a serious reason contract length can be so debilitating in a league with guaranteed contracts.

At the same time, because of injuries, guaranteed contracts are important. You don't want stars playing more carefully, trying to avoid injury at all costs so that they can keep their contracts. One of the least attractive concepts the NFL has introduced is the quick churn of talent: if you're not a Brady-level player and you get seriously injured on the field of play, and you're probably getting cut at your team's first opportunity. That's just not fair, and I think -- to a point -- guaranteed contracts are a vital characteristic of the NBA.

But given that contract length is such an issue, there could be sensible tweaks that might weaken contract guarantees and prevent situations like the one which McGrady currently finds himself in. Perhaps shrinking the current maximum length by one year -- free agents could sign deals of up to four seasons, or five seasons if they stay with the same team -- would work the diminish these problems. Or the league could attempt to get the union to buy into a uniform mutual opt-out after the fourth season of any five- or six-year contract. Under such a scheme, all contracts would effectively be guaranteed for only four seasons, after which either the player (looking for a bigger payday) or team (looking to cut or redirect salary) could opt out. If neither do, the contract continues as planned. If either pulls the trigger, the player becomes a free agent. This wouldn't necessarily erase current option and early termination clauses -- a player could, for example, keep an ETO for the sixth season of a long extension.