Front-Loaded Contracts are stupid

At this point front-loading Noc and Kirk's contracts looks like a downright stupid move.

If they'd given Kirk and Noc traditional, back-loaded contracts, they'd have an extra $3.5M before they hit the luxury tax threshold. Thus, instead of having $17.5M to re-sign Ben and Lou, we'd have 21M, and management wouldn't be freaking out over paying the luxury tax. As much. At least we could have offered, say, $70M over six years to both of those guys over six years instead of the $56M or so we're probably offering (that's the most we could offer to them before hitting the tax).

And one of the reasons other teams are prowling around making offers now is they know the Bulls are very tax-averse and they know we're right on the cusp. A few million could be enough cushion to help us, because it removes some of the question in their minds that we're willing to retain our guys. And it'd make us more willing to retain our guys.

Now maybe you're saying "OK, but those front-loaded contracts make Kirk and Noc more tradeable, but I say:
1. The amount it helps is probably marginal. They're still on very long-term deals in a league that prizes short-term deals. If a team likes one of those guys enough to take them, I think it's going to be because they like the player and can live with him being under contract for another several years, not because the deal is front or back loaded. In fact, if you actually figure it likely you'll trade a guy in a couple years, it makes sense to backload, not frontload. You'll have to pay them less and leave the more onerous contract years to the next team.

2. Whatever the extent it bolsters those guys' value, it's not worth the cost of potentially losing Deng or Gordon. That comparison isn't even close.

So in fact, front-loading is turning out to be quite a poor deal for the Bulls. By front-loading those guys, they've made it more difficult to sign their better guys.

Front-loading might have been a good idea if the Bulls expected to have those guys around for a long time, but as we see, we're talking about two players who are quite likely to be traded and don't project as long-term starters (In Kirk's case that's a matter of lucking into Rose, but even if we hadn't, he stank it up last season and people were hot for a replacement). And front-loading might have made sense if we were truly committed to not letting financial concerns be a major factor in signing Deng and Gordon. But we are. And we knew that back when we were front-loading those deals (and giving Noc and ungodly sum, which is a whole seperate issue). So basically, front-loading those contracts (and signing Noc in the first place) was very poorly conceived.

 

<div class='quotetop'>QUOTE (Denny Crane @ Jul 24 2008, 09:42 PM) <{POST_SNAPBACK}></div><div class='quotemain'>Front loading was a good idea. It allowed Pax to sign Ben Wallace and Adrian Griffin, the cornerstones of the Bulls' latest championship teams. It also gave Pax the illusion that re-signing Noc was a reasonable thing to do (arguably, it actually was).

What isn't in the figuring is Benedict Wallace and Griffin proved to be willing to out the organization for what it actually is, and Pax ended up trading them for non-declining contracts. Does that change the figuring any?</div>

I had to read that first paragraph a couple times. I don't know whether to or

And no, it doesn't change the figuring much.

 

It made more sense when the largest contract, Ben Wallace, on the team was front-loaded as well.

If it was so critical that the Bulls open up $3M in cap space, they could work a buy out with Hughes.

 

But he's a valuable member of the team!!!

Seriously... although I don't think too much of him, I do think he still rates above the "we need to buy this guy out" level that some folks put him at.

I think the biggest problem with all our perimeter defenders is the complete lack of appreciation for how well our interior defenders played up until about a year go.

 

<div class='quotetop'>QUOTE ('MikeDC')</div><div class='quotemain'>I do think he still rates above the "we need to buy this guy out" level that some folks put him at.</div>

I don't know. Some guy on this thread told me $3.5 could make a big difference. (Also, I would be happy to keep Hughes if I didn't have 4 guys that I want to play ahead of him.)

<div class='quotetop'>QUOTE ('MikeDC')</div><div class='quotemain'>Thus, instead of having $17.5M to re-sign Ben and Lou, we'd have 21M, and management wouldn't be freaking out over paying the luxury tax. As much. At least we could have offered, say, $70M over six years to both of those guys over six years instead of the $56M or so we're probably offering (that's the most we could offer to them before hitting the tax).</div>

<div class='quotetop'>QUOTE (Denny Crane @ Jul 26 2008, 08:21 AM) <{POST_SNAPBACK}></div><div class='quotemain'>How does buying out Hughes help our cap space situation? It only gives us a roster spot.</div>

I've got to think that Hughes would take a buyout of $19M rather than the $25M we owe him. He could sign anywhere even for the Min this year and potentially think he would line himself up for a big contract next year.

 

<div class='quotetop'>QUOTE (Denny Crane @ Jul 26 2008, 09:08 AM) <{POST_SNAPBACK}></div><div class='quotemain'>I think if you buy out a $10M guy for $1, you are still have a cap hit for $10M.</div>

Not true. From http://members.cox.net/lmcoon/salarycap.htm

<div class='quotetop'>QUOTE </div><div class='quotemain'>60. How do buy-outs affect a team's salary cap?

The agreed-upon buy-out amount (see question number 59) is included in the team salary instead of the salary called for in the contract. If the player had more than one season left on his contract, then the buy-out money is distributed among those seasons in proportion to the original salary.</div>

 

<div class='quotetop'>QUOTE (Denny Crane @ Jul 26 2008, 09:08 AM) <{POST_SNAPBACK}></div><div class='quotemain'>If he is the player he was in D.C. next to Arenas, he's the best G on the team. If he doesn't pan out, at least we tried to make the most of our big investment in his contract.</div>

We might as well as kept Ben Wallace and hoped he found the fountation of youth. Ain't happening.

 

<div class='quotetop'>QUOTE (Denny Crane @ Jul 26 2008, 10:08 AM) <{POST_SNAPBACK}></div><div class='quotemain'>I think if you buy out a $10M guy for $1, you are still have a cap hit for $10M.

The benefit to the player if free agency, the benefit to the team is a roster spot. The same goes for the leverage on both sides.

My view on Hughes is that we should probably start him at the beginning of the season. If he is the player he was in D.C. next to Arenas, he's the best G on the team. If he doesn't pan out, at least we tried to make the most of our big investment in his contract.</div>
Better than Rose?

 

But Ben Gordon reads the bible!

 

Mike you make some really great points that I would have never thought about.

However I don't fully agree with the notion that the front loaded contracts hinder our ability to resign Deng and Gordon. I feel that has more to do with how management are approaching negotiations.

First of all we don't know who is in charge of negotiations, could be Paxson, could be JR, but I think there was an article claiming JR is taking the reigns. So there could be some confusion in negotiations given that Paxson handled them last year and now JR is handling this year. There is probably no consistency. For example I've read the Bulls at one stage were offering less than what they offered last year to Deng. Even on a down year by Deng that is still a slap in the face to him. In addition its less than what hes probably worth (at least in Deng's own mind).

The additional amount you presented was only $3.5million, hardly enough really to get both on board considering how each player views themselves.

So although front loading contracts may have made it just a little harder to resign Deng/Gordon, other factors have more of an influence in my opinion.