How can you get a loan from a bank to sign a player?! That doesn't violate CBA at all?? I was just talking with a co-worker. And how is that allowed? "Oh, we don't have the money to pay Millsap. Let's go get a loan from a bank!" How does that work? In my simpleton CBA brain, I am thinking that the cap is 57 mil. Utah needs what, a 6 million dollar loan to sign Millsap? So does that now make their cap 63 million?! wtf I don't get it. Can someone please learn me?
The Jazz have Millsap's bird-rights, so they're allowed to go over the cap. The loan has to do with their books, not the CBA.
Cap Space =\= Liquid Assets They can pay their players however they possibly can. It's their payroll. It's up to the bank to allow that kind of loan. The cap is only the amount of total salary for the roster for that season. It has nothing to do with the amount of cash on hand.
The salary cap simply relates to the team's payroll (the sum of all the player's reported salaries). How a team pays those salaries, whether by getting a loan, begging for money or taking it out of their bank account, isn't relevant. And teams can exceed the salary cap in order to sign "their" players (players who were under their control the last season and have been on the same contract for at least three seasons).
It's not against the rules, but probably not the soundest of business decisions either for a team that's not even a title contender.
...I wonder what would happen if the bank ever had to foreclose on that loan, would they then "own" Paul Millsap
They will be well under the cap the following year. Maybe they will use some of that money to repay the loan? Or the money they get when they deal Boozer or another expiring?
It's called operating expenses, if they're credit worthy why wouldn't they be able to secure a short term loan?
I don't think Utah will be under the cap next year at all if they match Millsap. They have over 40 million commited to Deron, AK47 and Okur alone.
Possibly.. but the NBA just borrowed $200 million earlier this season to distribute to teams who wanted it to cover their expenses. I wonder if Utah asked or got any of it, and if they did.. they now need more just to pay their own players?
I would imagine it's an unsecured loan. Probably just be part of a general credit towards the team. Like the difference between taking a loan for a car or using a credit card to pay for it... the former is often secured by the car while the latter is not. Ed O.
The cap is just imaginary numbers on a spreadsheet somewhere. They only pertain to the NBA offices aprroval of contracts and trades, computation of luxury tax due, etc. The loan would be to cover the payment to Millsap of appx $10million - that the Blazers cleverly put in the contract to be due within one week of the effective date of the contract - that the Jazz don't have handy in a bank account. That would be in real dollars - not imaginary numbers on a spreadsheet. It is nothing but a cashflow issue. They will be able to pay off the loan as they sell tickets for the next season, and when the NBA distributes the shared TV revenue. Right now during the off-season the Jazz just have a temporary cash flow crunch.
