When Mikhail Prokhorov becomes principal owner of the Nets--we're no longer saying if, the team’s fortunes will change. That’s a no-brainer, but how?
A lot has been written about how a Prokhorov-owned Nets team would immediately be the front runner for Lebron James’ services, perhaps even a two-fer of top free agents would be bound for Brooklyn, minor investor Jay-Z introducing them to his home borough. Prokhorov’s cash will drop like confetti or flow like champagne. Choose your extravagant metaphor.
The real story is the number of options the Nets would have with Prokhorov as owner. When you have money, you have options and when you have a LOT of money, you have a LOT of options...and Prokhorov has a LOT of money.
Assuming Prokhorov would want to spend lavishly, and that is certainly his record in Russia--where his CSKA Moscow payroll regularly exceeded $50 million, there are a number of ways things could change. In fact, the Nets’ strategies could change quite quickly because the team has set in place several building blocks of team reconstruction: expiring contracts, good young players on rookie contracts, more cap space than any other team, and more draft picks over the next three years than any other team (and with fewer and lesser protections).
Free agency is the most obvious way Prokhorov could make his mark. The Class of 2010 is the richest in NBA history, with one of the game’s all time great players, Lebron James, leading the pack. Dywane Wade, Chris Bosh, Amar'e Stoudemire, Joe Johnson, and others will be available as well. Then there’s the 2011 class as well, headed by Carmelo Anthony.
With at least $23.6 million in cap space and possibly $4 million more--depending on whether the team exercises options, the Nets will have more than any other team. (Donnie Walsh claims the Knicks hold that distinction, mainly because the Nets have two first round picks and the Knicks none. Hard to imagine the chutzpah it takes to spin a lack of picks into a positive, but we are talking Dolan’s Knicks here. What Walsh doesn’t note is that the Knicks also have cap holds for David Lee and Nate Robinson. And if they want to keep free agent Chris Duhon, that’s millions more.)
All that said, the Nets could in theory—"if we so choose" are Rod Thorn’s words—sign two maxed out contracts. That would prove Prokhorov’s value, but might not be the only or the smartest way to rebuild the team. With Prokhorov, there are other options and most of them are based on the central element of the NBA’s collective bargaining agreement: there is a priority assigned to teams building from within. Team can spend more money on their own players than on others, whether those players were previously drafted, traded for or picked up in free agency. As any one of the NBA’s richest owners know, there is a salary cap, but it is a "soft" cap with a lot of exceptions.
The essence of "Bird Rights" is that a team can sign its own players outside the collective bargaining agreement...and that goes for those currently on the roster or those acquired between now and June 30.
If for example, the Nets wanted to re-sign Jarvis Hayes or Trenton Hassell or Chris Quinn to a new contract after the Nets decide what to do with top-tier free agents, their "Bird Rights" could be exercised.
Beyond that, "Bird Rights" give the team another option.
So imagine it’s next month and as the trade deadline approaches, Prokhorov gets approved as Nets’ owner and Barclays Center is underway. (You don’t want to imagine the alternate scenario.)
Across the NBA, GM’s with expiring contracts want to get something in return for their players, knowing the player isn’t likely to re-sign with them. They may have to accept the usual pu-pu platter of expiring contracts, draft picks, young players, cash and trade exceptions in return for big names. This being February, GM’s may be a bit desperate…they want to get some value for a player who they know won’t re-sign with them, or they want to get under the luxury tax on owners’ orders. It becomes a buyer’s market. And after years of being sellers, the Nets are now in position to be buyers.
Let’s say for example that the Jazz want to dump Carlos Boozer or the Suns want to Amar'e Stoudemire, both expiring contracts, and decide they want to get some value for a player bound to leave anyway. The Nets have a ton of expiring contracts, grand total of $32 million in expiring contracts if they exercise all their options.
The advantage in any such trade is the players’ Bird Rights. The Nets can sign their newly acquired player to a contract outside the CBA come July. There is the complicating issue of cap holds but in signing your own free agents, the bottom line is that you can go over the cap if you want. You can go over the luxury tax if you want…as long as the owner agrees.
Re-signing Your Kids
The Nets have six kids on rookie contracts: Josh Boone, Yi Jianlian, Chris Douglas-Roberts, Courtney Lee, Brook Lopez and Terrence Williams. CDR's is a bit different since he was a second round choice, but he is on his first contract. So to simplify things, let's call his three-year deal, with team options, a rookie contract. There’s virtually no chance they’ll resign Boone. The rest appear to be keepers. The bill for their services starts coming due next summer, when the Nets can open negotiations with Yi's agent. Yi would start getting paid in 2011-12. CDR’s contract would have to be renewed in 2011-12 as well. Then, in 2012-13, it’s Lopez and Lee and the following year, TWill, assuming of course none of them get traded. The smart strategy, setting aside changes in a new CBA, is to get the young players’ deals done early. If you have a rich owner, it’s a lot easier to make a deal.
Again, as the CBA stands now, teams have an easier time signing their own players to big deals. You can sign them to contracts that put you over the cap or luxury tax. If the Nets are going to be successful long-term, they will want to sign at least several of those kids. Now, they would be at least competitive.
Manipulating Restricted Free Agent Limits
Rudy Gay will be a restricted free agent in July, next summer’s leading restricted free agent. He declined a Grizzlies offer last October. The message is clear: he’d like to see what he can get and then force the Grizzlies to match…if they want. Most of the best players from the 2006 Draft have already signed. Along with the Bobcats and the Pacers, the Grizzlies are in bad financial shape. The Nets, with Prokhorov, could be the team that can come up with a deal that would scare off Memphis. And word is Memphis is unlikely to match if faced with the type of contract Gay wants: $60 million over five years might do it.
While the Grizzlies can pay Gay more than any other team, there are ways around that. Ask Thorn or Kiki Vandeweghe. They were on opposite sides of the Kenyon Martin poker game five years ago. Here’s what happened and it’s instructive for the future: the Nets said they would wait for Martin to get an offer sheet, knowing only two teams, the Hawks and Nuggets, had enough cap space to sign him to the max deal, which everyone knew Martin wanted. Instead, Vandeweghe called the Nets' bluff and informed Thorn what the Nuggets were prepared to offer: a break-the-bank contract that included a $15 million bonus up front and a 12% trade bonus at the back plus another onerous add-on: Martin would get his first year salary up front rather than over the course of the year. The effect was that the Nets would have had to pay Kmart $23 million on signing…in less than two weeks. Bruce Ratner was, at the point, cash-poor and the Nuggets, i.e. Vandeweghe, knew it. Besides, he had a billionaire owner backing him in Stan Kroenke. Instead of formalizing the offer sheet, and take the risk that the Nets might match, the Nuggets decided discretion was the better part of valor: Vandeweghe proposed a sign-and-trade. The Nets would sign Martin to a more standard contract, then trade him to the Nets for three lottery-protected draft picks (two of which were the cornerstone of the Vince Carter trade five months later).
Do the math: teams that sign a restricted free agent to an offer sheet can add in a signing bonus of up to 17.5% of their contract. So in Gay’s case, if the Nets signed him to a five-year $60 million contract, he can get a bonus of $10.5 million up front upon signing. So for his first year, Gay would get $10.5 million upon signing and the first year's salary of $9.9 million throughout the season, or upfront. That's $20.4 million for the 2010-11 season. Think the Grizzlies can afford that when they will have to sign O.J. Mayo, Marc Gasol and Hasheem Thabeet over the next three years?
Cash is King on Draft Night
Straight cash deals do happen on Draft Night…and a lot of time they’re a Euro-stash deal: cash for a pick that's used to pick an international player. The player is expected to stay overseas until the NBA team is ready for him and/or he’s ready for the NBA. It’s a money-saving deal long term, but costly upfront. First round picks can cost up to $3 million, the maximum allowed in any NBA transaction.
Over the last few years, cash deals have become more common on Draft Night with things likely to get even crazier this June. Many cash-starved teams are looking to pick up spare cash and may sell their picks.
The Blazers, owned by billionaire Paul Allen, have bought first round picks on five occasions in the past six drafts, once from the Nets. In at least four of those deals, the price tag was that $3 million max.
--On Draft Night 2004, the Blazers sent $3 million and the expiring contract of Eddie Gill to the Nets and got a Nets’ first round pick (#23 – Viktor Khryapa of Russia). The Nets then cut Gill.
–On Draft Night 2006, the Blazers sent $3 million to the Suns and got a Suns’ first round pick (#27 – Sergio Rodriguez of Spain)
–On Draft Night, 2007, the Blazers sent $3 million to the Suns and got a Suns’ first round pick. (#24 – Rudy Fernandez of Spain).
--On Draft Night 2007, the Blazers sent an undetermined amount of cash and the rights to second round pick, Derrick Byars to the 76ers and got a 76ers first round pick (#30 pick Petteri Koponen of Finland). Byars was later cut by the 76ers.
–On Draft Night, 2008, the Blazers sent $3 million in cash to the Hornets and got a Hornets’ first round pick (#27 – Darrell Arthur of Kansas). Arthur was immediately sent to the Rockets, with a smaller amount of cash, in return for draft rights to Nicolas Batum of France, taken at #25.
So at least $12 million--and probably closer to $15 million--of Allen's cash hoard was used to pick up Rudy Fernandez, Nicolas Batum, Sergio Rodriguez (since traded) and a very good European point guard, Petteri Koponen, still stashed overseas. Khryapa was later used as filler in the Tyrus Thomas-LaMarcus Aldridge trade. (He then left the NBA and ironically went back to CSKA Moscow, Prokhorov’s team).
Allen isn’t the only billionaire owner who feels this way about the value of cash on Draft Night. Here’s what Mark Cuban wrote back in 2008 defending his decision to trade two first round picks to the Nets in the Jason Kidd trade: "There are almost always teams willing to sell a pick in the 20s for 3mm dollars." Translation: I got the money. Don't worry.
Beyond a straight purchase, cash can have another benefit on Draft Night. The Nets have two first round picks in 2010 and 2012. If they wanted to move up in the lottery on either of those nights, and a cash-starved team has a pick they covet, the Nets could offer not just their two first round picks, but also a cash sweetener to the deal.
Indeed, the Nets have on occasion been short on cash needed to make a deal. On Draft Night 2005, Ed Stefanski has said the Nets waned to move up from #43 in the second round to take Monta Ellis. Ellis had dropped out of the first round because of knee issues. For whatever reason, they failed, but having more cash wouldn’t have hurt in that situation. Ellis went to Golden State at #40. (Same night, the Magic sent cash to the Suns for their second round draft pick that turned into Marcin Gortat. Must be fun being a Suns fan on draft night.)
We've also heard reports that on Draft Night 2008, the Nets tried to get a third first round pick to take CDR who they had passed on at #21 and tried to get a late second round pick to take Jaycee Carroll. In both cases, they got their man, but they might not have if someone else had decided to take them.
The Cash Sweetner
As noted, the most cash that can be moved in any NBA transaction is $3 million. Greasing a lopsided deal with some green can make things happen quicker, particularly if one team is cash-starved. The Nets demanded and got $3 million from Cuban in the Kidd deal. In fact, Cuban said the Kidd deal cost him $11 million in cash, luxury taxes, and the money he had to pay Keith Van Horn to come out of retirement. If a rich owner wants someone bad enough, the Collective Bargain Agreement can become quite elastic. (Speaking of KVH, the Nets, if need be, could use their MLE to sign someone and then trade them, just the Mavs did with Van Horn. The Nets didn't use their MLE this year for the first time in the Thorn era and it's still available.)
Open Checkbook for Coaches
There are no restrictions on paying coaches or front office staff, other than David Stern's recent lament that contracts are getting out of control. If the Nets get into a bidding war in April or May, when Rod Thorn says the coaching hunt will intensity, the Nets will have an advantage...and a big one. Would Rick Pitino want to rejoin the NBA? Would Mike Krzyzewski want to finally try his hand at the NBA? Is there a way to lure Jeff Van Gundy out of the TV booth? Money conquers all, as one NBA owner said of the Nets recently.
Same holds true for the front office. Only one of the guys in suits, capologist and vice president of basketball operations Bobby Marks, has a contract extending beyond June 30. His goes for another year. Thorn, Vandeweghe, etc. and the rest are all up for renewal or replacement.
That’s welcome in Russian. Just as Jay-Z’s personality could help the Nets lure his friends to the Nets, Prokhorov’s Russian (and European) heritage could help lure international players to the Nets.
Already, Andrei Kirilenko has twice suggested that a fellow member of the Russian National Team, Timofey Mozgov, would be ideal player for Prokhorov to take a risk on. Indeed, there are worse risks than the 23-year-old Mozgov, an athletic 7’1" center who AK-47 notes has improved dramatically since not being drafted in 2009. He reportedly has a contract through 2010-11, however.
But more importantly, Prokhorov hired a lot of Europe’s top players for CSKA Moscow, among them the Greek point guard, Theo Papaloukas, known as the Jason Kidd of Europe. Same with Ramunas Siskauskas, a sharp-shooting swingman from Lithuania who some believe is the most NBA-ready player in Europe. They liked playing for him…and a lot of European players wanted to play for him. And remember, Prokhorov is not only the first Russian to own an NBA team, he is also the first European.
It’s conceivable the Nets could either take one in the second round. The Nets, in fact, worked out Zabelin in 2007 before he dropped out of the draft.
And of course, Prokhorov also hired some of Europe’s top coaches and front office professionals, most notably Ettore Messina who was rumored as a possible Lawrence Frank replacement last April, long before any Prokhorov rumors began.
There are downsides, of course. Allen and Cuban have overspent. So did Kroneke, with Vandeweghe's help. Some would suggest they got taken because of their willingness to spend so freely and because the GM on the other end of the phone knew it. Allen in particular made bets on players who turned out to be high risks. When the owner has big bucks, GM’s are more likely to take bigger risks. In Portland, those risks became known as the "Jailblazers".
And all of this is abstract until a deal is done, which it should be this month. Assuming it gets done, this wouldn't be some clichéd "worst-to-first", "rags-to-riches", "change-of-fortune" thing. It would be miraculous…going from an owner who's cut staff and forced assistant coaches out to an owner who's among the world’s richest men and has both knowledge of the game and a track record of getting what he wants.
It’s all about hope.