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The Money Fallacy

Okay, the Nets are expectes to lose $30 million or more this year...but unlike the Maloof family in Sacramento, Bruce Ratner didn't lose tens, maybe hundreds, of millions of dollars to Bernie Madoff's Ponzi scheme.

And yeah, the Nets' debt-to-equity ratio is the highest in professional sports, but it doesn't have a feuding, fractured ownership like they do in Atlanta. $62.67 million, the Nets' payroll is, according to the authoritative Storytellers salary site, already the third lowest in the NBA, nearly $10 million below the luxury tax threshold. We're not talking about the Sacramento Kings, whose payroll before the trade deadline was nearly $70 million and whose win total that afternoon was 11. Nets may look like a small market team playing at the IZOD but its TV contract and concessions, etc., are helped by its position in the New York area.

The Nets' payroll this year is $3.9 million over the cap and with the simple subtraction of two expiring contracts, those of Stromile Swift and Mo Ager next season, the Nets will be at or just below it. The only teams with smaller payrolls this year are the Clippers and Grizzlies. The Bucks, with whom they are currently fighting for playoff position, are $11.4 million over the cap and near the luxury tax. It's why they were looking to trade Richard Jefferson. They can't afford to pay him, Michael Redd, Andrew Bogut and re-sign Charlie Villaneuva and Ramon Sessions in the off-season. Others with similar records--the Raptors, Pacers and Bulls--were all $10 million or more above at the deadline. The Knicks? Oh yeah...they're STILL $39.1 million over!

Even without trading Vince Carter, the Nets will be way down the NBA's financial totem pole next year. The Wolves might drop below them, but not by much. The Clippers are so unstable no one knows where they'll be, but it's possible they too will be paying out more than the Nets. Only the Grizzlies and Kings, with their deadline cost-cutting, are a sure thing to be down below the Nets. (Yes, the Pistons will drop to around $41 million, but with only 10 players. It's not likely Joe Dumars is going to scrimp on rebuilding the Pistons. So count them among the teams who will be just above the Nets.)

So it is entirely possible without moving anyone, the Nets could have the third lowest team payroll in the NBA again next year. How'd that happen? Salary management. The Nets didn't bring in Kiki Vandeweghe as a payback for taking Kenyon Martin. His reputation is as a sane cost-cutter. So far, so good.

Of the 15 players currently under contract, seven of them are on their rookie deals--Josh Boone, Mo Ager, Sean Williams, Yi Jianlian, Brook Lopez, Ryan Anderson and Chris Douglas Roberts. Assuming only Ager leaves by year's end, and the Nets add a draft choice, that number will remain stable, at seven, next year. Combined, the seven of them won't break $14 million next year, unless that draft pick is in the top five.

Jarvis Hayes's deal is also expiring, although the Nets can pick up a team option on Hayes for $2 million in July. It's possible they wait to see who they can get in the 2009 Draft, or in a Draft Day deal, before deciding. It's not a big deal, salary-wise, either way.

Of the rest, most are on multi-year deals, some more reasonable than others. Devin Harris is just starting a five year deal at $43 million, the final year reportedly less than the fourth year! And none of those five years cost the Nets $10 million. It's one of the most overlooked aspects of the Jason Kidd trade. The Nets didn't just get a potential superstar. They got one with a bargain basement deal. Carter is owed $37 million, including a $4 million buyout in 2011-12 at the team's option. Bobby Simmons' contract is the worst in terms of production per dollar, being owed more than $22 million, but it's over after next season.

That makes 12 contracts. The rest are below MLE-level deals, with either team or player options. Trenton Hassell makes $4.35 million next year. He actually has a player option he is unlikely to exercise. Eduardo Najera's contract is for four years and $12 million, but it drops by $500,000 each year and reportedly can be bought out in 2010 for about 80% of what he's owed in those years. Not great, but it's not a full guarantee. Keyon Dooling, playing the best basketball of his life, is making $3.8 million next year and has a reported buyout of $500,000 in 2010.

The Nets may dump salary in the off-season. They may need to, depending on their financial situation. But compared to most NBA teams, they have managed their payroll quite well and not just for 2010.