More Proof That Salary Caps are Just Bizarre
Imagine you just graduated from college top of your class with a degree in AI wizardry (I don't know what a degree for an expert in AI is really called and I'm too lazy to ask AI to look it up). Basically every Fortune 500 company wants to hire you. You go to several job interviews and they tell you, "You're the best! We want to hire you more than anyone else on earth wants to hire you. We are willing to pay you $1 million per year... but some entity has capped the max we can offer you. We want to give you $1 million, but we are only allowed to offer you $100,000." You go to 29 other companies and they all say the same thing except some say "I am willing to pay you $6 million... but I'm only allowed to offer you $100,000". If that happened you'd lose your mind and start looking for a lawyer to sue this jerkstores for collusion.
And yet, just about everyone thinks it is completely fine to do that to basketball, football, and hockey players even though they are the owners of one of the most scarcest resources on earth: elite athletic talent. It is a talent that consumers pay hundreds of BILLIONS of dollars to enjoy. We don't cap Tom Crusie from making $100 million on a single movie. We don't cap Judge Judy from making $47 million for her syndicated show.
Well today, news broke about how absurd salary caps are and how easy they are to circumvent. In case you haven't heard, The L.A. Clippers are being investigated for circumventing the salary cap by giving Kawhi Leonard a $28 million "no show job". The only other time I've heard of a "No show job" is when mobsters get them on The Wire or one of the 1 billion Law And Orders. But to me, this seems like a victimless crime and one that I'd imagine many other teams are doing.
The owners of these teams are BILLIONAIRES. They throw around millions the way I throw around pennies... well quarters now after inflation but still. They have the money. They want to hire an employee. But they can't? That is simply bizarre. So of course they are going to come up with ways to work around that system. I mean these are billionaires who are well trained in circumventing tax laws so working around the NBA office should be child's play. In 2018, the owner of the Clippers REPORTEDLY made $656 million. He paid $78 million in taxes. Sounds huge until you realize that is a 12% tax rate. I wish I could pay a 12% tax rate. So if he wanted to give Kawhi Leonard $28 million, why would I care. I'd prefer he donate that to a charity, but it is not my business.
I think Ballmer will survive without that $28 million.
It was so easy to do. According to ESPN, all Ballmer had to do is partner with a company named Aspire. Then Aspire gave Leonard $28 million as an endorsement deal.
Do you think Ballmer is the only Billionaire who has other companies under him? Do you think these companies may want to hire NBA players as spokespeople?
Honestly the only shocking thing about this whole story is that the NBA thinks only 1 team and player is doing this. The league made $11.3 BILLION dollars in 2023-2024. They just signed an 11 year $76 BILLION TV contract. The players should get as much of that as possible. If they need a job at the "docks" to give them what they deserve, who cares?
Did you watch that dramatized docuseries that was on about the Clippers a bit ago? I didn't, but I heard it was really good. I get the heart behind salary caps, but you know everyone is circumventing them, just like they do their taxes. In a separate note, I've been expecting a Geeky Guide to Graham Greene from you given his recent passing.
I watched the lakers one (winning time) and the clippers one about the crazy racist ex clippers owner. I liked the clippers one and loved the lakers one.
Yeah, I think that was the one I saw. Was it called "Clipped" or something like that?
Oh and Graham Greene was excellent in everything I’ve ever seen him in. Weirdly one of the things I remember him best from was die hard with a vengeance.
Haha yeah, that was a good movie.
I agree that high-performance athletes who are one or two steps above the average have the right to earn whatever they're willing to pay to have them on their team. Of course, owners will find a way to pay a little more to secure their stars.
Great write up and very well explained. The salary cap issue really seems very unusual, and your examples make the whole thing clearer.
Personally, I like the salary cap because the idea is to try to make it so that small markets can share against the big ones, but if we put it into reality, as you well explain in the post, they will always find a way to break that cap to attract the best players to those teams. I would be extremely upset if I wasn't paid well for my work, so in the end, and being honest, that salary cap doesn't prevent anything, since they pay the luxury tax when I think a more complex fine would be taking away first-round picks or not being able to sign free agents.
I definitely get what you are saying but I think proper revenue sharing is a better answer.
Adequate distribution of income sounds good on paper, but the best players will always want to be in the cities with the most media exposure: New York, Los Angeles, Boston, as well as some others, such as Chicago, which is a good place to be because the greatest, His Majesty MJ, played there.
In the UK, football (the real kind played with your feet) has no salary cap. I’ve long heard it said that the league would attract even more investment from across the pond if it imposed one so it’s interesting to hear that when push comes to shove US franchise owners are happy to circumvent the rules they are supposedly keen to have. Or is it that they just like to have their cake and eat it?
I guess there will always need to be some kind of rule to stop the teams with the most resources simply hovering up all that finite talent. Otherwise capitalism will do what capitalism always does and you’re left with a sport that lacks competition and by definition entertainment value.
I'm sure some owners who don't care about winning, love the salary cap. But those who value winning over money, are screwed unless they can find a way around it.
I find the obsession with money more bizarre. It's a tool and that is all. Beyond a certain point you can't spend any more and everyone is only your friend because of that money. Any possessions you have become like chains - you don't own them - they own you. Meanwhile the hospitals and drug companies love you because you are almost certain to get a chronic illness so you get to be their favorite cash cow they never cure. As for the person you are married to and your children you are a bank.
It is really unfair to limit the income of the players. Every player entertains the fans with his talent and hard work, so they should be given the respect they deserve. The owners use the players to earn a lot of dollars, but they do not pay the players properly, do not increase their salaries, which is exploitation from my point of view.
I totally agree with this take. Salary caps really don’t make sense when players are the ones bringing in the fans and creating the real value, yet their earnings are restricted while owners keep finding loopholes. The Clippers situation with Kawhi just shows how broken the system is. Players should be paid fairly for the impact they make.
The only kind of salary caps we have in Europe is that Spanish football clubs aren't allowed to spend beyond their means. They used to risk going broke in order to buy the best players. This means that Real Madrid is still allowed to spend more than smaller clubs. Barcelona had difficulty staying within the budget during the transfer period that just closed.
In the Netherlands, Vitesse from Arnhem was excluded due to a history of shady owners and lenders. This week, an appeal judge allowed them to join the competition anyway, after 4 rounds had already been played without them, and their best players had left.
4 rounds late? That seems really crazy.
It is absolutely true that due to high salary, we see that people leave the company where they have worked hard and invested their entire life. We are not saying that new opportunities should not be tried or opportunities should not be taken because they are obtained after a lot of hard work. But when a company comes along in our difficult times and the company is facing difficult times, then those people start talking about leaving that company. This is very wrong. If the same people want to stand the company by working hard again, they can definitely do it. And the greed of a human being can never end. If a good job with a good salary is available in one place, then he will definitely leave the previous one and go there. Here in our city, if a person hires another person, he demands that he will give some money from his salary every month to the person who hired him. This is how money comes to him without any effort.
We have the same kind of loopholes in sport over this side of the water. For example Chelsea Football Club sold its hotel to itself and also sold its womens team in order to come in on FFP regulations. The billionaires find a way.
Yep they will always find a way.
When you don't get a reward after working hard, no one wants to work hard like that again, even if they are players. If they are paid less, they won't perform well
The shoes look very nice I need to buy from the shoe
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