NBA Free Agency: Is It Really Free?

I recently wrote an article about how it is bad for the NBA to have its star players conspiring with one another to join the same team. I still stand by that premise because having one team loaded with talent throws the league’s competitive balance out of whack. Now let’s examine the flip side of this issue as the league conspires to financially discourage players from signing with different teams, which also affects the competitive balance of the league as a whole.

At any given time during the NBA free-agent period which began on July 1st, sports fans have become accustomed to news updates that explain how player X is meeting with team A today, team B tomorrow, and team C the next day. It has also become widely accepted as part of NBA free-agent vernacular that player X can earn the highest dollar amount if he re-signs with his original team.

With all the news reports of various free-agents who have met with multiple teams thus far, I still have two fundamental questions that have remained un-answered throughout this entire process: 1) Why has the NBA instituted a “max-contract” system to control the amount of money its teams can spend on one player? 2) Why does player X’s original team have a built-in financial advantage to retain his services?

In my opinion, these are two major flaws of the NBA free-agency system. First of all, I find the very term “max-contract” to be completely invalid because this entire country was founded upon the practice of free enterprise. Players should be able to earn whatever the market dictates that they should earn, and that clearly isn’t happening under this business model. If the Sacramento Kings for example, have the financial means to outbid the New York Knicks for the rights to Carmelo Anthony, why are they prevented from pursuing him?

The NBA has effectively eliminated all bidding competition by giving player X’s original team the power to exceed the salary cap when negotiating a new contract, a blatantly un-fair advantage over other suitors. By allowing one team to bend the rules to control the free-agent market, the NBA does not have a true open-market system in place. As a result, the NBA is trying to restrict free-agent player movement which will make it very difficult for lesser teams to acquire top-level talent. Under this current system, there is no other way to improve a bad team besides getting lucky in the NBA Draft. In other words, the rich will get richer and the poor will get poorer.

Fans complain when players sign mega-contracts, but those deals pail in comparison to the deals of greedy NBA owners who have set up this very slanted business model. Limiting player spending by controlling the open-market results in higher profit margins for owners, which is likely the reason why this system was adopted in the first place.

I am not throwing a pity party for elite-level free-agents who will make a king’s ransom no matter how flawed the NBA’s collective bargaining agreement is. But it is worth noting that players like Dwight Howard, LeBron James, Chris Bosh, and Ray Allen among others, were automatically punished financially simply for signing with different teams. As America celebrates its 238th birthday this weekend, I find the business practice of curtailing free-enterprise opportunities in the NBA to be highly un-American.