Pau Gasol three-year extension through 2014, at an average of $19 million a year, should worry all NBA fans. At his press conference, Gasol mentioned several reasons why a player would like coming to Los Angeles, like less cultural differences, its an international city, there's a lot going on, and the weather is nicer, especially after the cold east coast road trip. But he left out the biggest reason -- you can get paid.
Maybe the first question NBA fans should ask would be "How big is $19 million?" It's big, even compared to other giant NBA salaries. Next season, $19 million would be a Top Five salary in the NBA -- and while Gasol is very good, he is not a Top Five player. Also, while those five deals are often the high end of older NBA contracts, Gasol's extension averages that much, and its locked in until 2014.
But if $19 million/year is a lot, remember this -- it will cost the Lakers $38 million with luxury tax penalties! This astronomical sum would quickly bankrupt many franchises who are just trying to keep their head above water in tough economic times. The fact that the Lakers can afford it, and still have money left over, should be of concern to fans that want a competitive NBA, particularly the Chairman of the NBA's Board of Governors, Glen Taylor.
Most fans remember when the Lakers acquired Pau Gasol nearly two years ago, it was one of the most controversial trades in the history of the NBA, pointing to the problem of the "have's" and the "have nots." Small-market Memphis was struggling to avoid major financial losses, and traded their franchise player to the Lakers for an expiring contract and two late future first-round picks. This was essentially a salary/talent dump, and while cutting costs and putting the team back in the lottery for a number of years may have fit ownership, Grizzly fans were very unhappy to lose their best player. Many experts feared that the Gasol trade demonstrated that big market teams would be able to poach the best talent from smaller markets simply because they can afford to pay big contracts. Smaller markets would not be able to compete, and be doomed to mediocrity.
Unfortunately, the situation is worse than ever financially, and I expect to see more shocking trades like this in the next right months. Ken Berger from CBS Sportsline writes that net gate receipts fell 7.4% this year so far, and now eight teams make less than $500,000/game, with the PHI, SAC, CHA joining MIN, MEM, MIL, IND and ATL. While the Timberwolves attendance hasn't dropped as much as other teams, they are still near the bottom despite offering many free and low-priced tickets to boost attendance.
However, things are peachy for the Lakers. The Forbes numbers came out last week, and despite the highest payroll and luxury taxes in the league, the Lakers were #1 in operating income, revenue, and in the value of their franchise, which is now over $600 million. While the Wolves make merely $350,000/home game in revenues (not profits), the Lakers make an astonishing $1.96 million -- over five times as much per game! Local TV revenues (within 70 miles) are not shared, so that's a lucrative revenue stream as well for successful big market teams.
Some experts flinched when the Lakers signed Bynum to a $12.5 mil extension. While people can debate whether he's proven enough to be worth it, the Lakers were already securely over the luxury threshold, and retaining him will cost $25 mil. Few other teams could have afford that much money, and normally that talent would have drifted to the NBA's open market. Now the Lakers sign Gasol to a huge extension, and have headed straight over to Kobe to spend more money on his extension. While most teams can barely afford to build a team around two expensive players, the Lakers can afford four, and still have plenty of money left over. While the luxury threshold squeezes nearly everyone, the biggest team can ignore it, and ruin the parity of the league.
Jerry Buss told the media that this signing sends a message. I think he has. The Lakers are open for business, and will use their cash to add or retain expensive players that other teams can't hope to keep. Hopefully, Glen Taylor and the rest of the league will devise a new Collective Bargaining Agreement next year that restores more parity to the league, or the Lakers could become the NBA's version of the Yankees, throwing money at players and buying championships.