Why proposed system changes won’t solve bad contracts

At every opportunity, NBA owners and negotiators, chiefly David Stern and Adam Silver, have argued that their proposed changes to the NBA's contract system will give the league more competitive balance. The idea, as far as their very basic explanations say, is that a league with a harsher luxury tax, a costly mid-level exception, and more barriers to sign-and-trade deals will keep large-market teams (primarily the Lakers and Heat, really) from out-spending small-market teams in a way that keeps the NBA in a state of competitive cryostasis. Never mind that the Knicks of the past decade set a record for money spent per win, or that the Spurs and Thunder have done just fine in markets that no other professional sports league will touch.

The trouble here, of course, is that we don't yet have any idea if the league's proposals will actually result in competitive balance -- all we really know is that players will make less money. So we must wonder if the results will look as intended, and that's exactly what Kevin Arnovitz did at TrueHoop on Friday. Here are his thoughts on the impact of shorter contracts:

[E]xecs' colossal mistakes will be trimmed in scale by about 20 percent and their medium-size stupid pills would be reduced by 35 to 40 percent. Curry would've merely been a 5-year, $50 million blunder, while Milwaukee would be on the hook for one year and $12 million less, assuming the Bucks would've opted to use the mid-level on [Drew] Gooden -- and that Gooden wouldn't have had suitor willing to pay him more. [...]Kobe 6

General managers would be inoculated from truly epic failures, but they'll also be filling more roster spots, more often in more feverish free agent markets. Execs will have more opportunities to make more mistakes of, albeit, slightly less detrimental consequences. That means bad judgment could potentially be compounded in an off-season when a league has dozens of more roster spots to fill with free agents.

On the flip side, shorter contracts would punish crafty executives capable of locking in talent to favorable long-term contracts. With more roster slots to fill more frequently, smart execs will have more shot attempts to work their magic. In 2002, Joe Dumars signed Chauncey Billups to a 6-year, $34 million deal, possibly the best mid-level deal in history. In today's NBA, Dumars would be denied full reward for his prescience. The jury is still out on Wes Matthews in Portland, but his $7.2 million contract in the final year of his 5-year deal might prove to be a bargain. Under the new system, the Trail Blazers wouldn't enjoy the benefits of Matthews' potentially cost-efficient services. Kobe 2010

Kevin's argument is a simple one -- if contracts are shorter, bad contracts could become more plentiful but less individually painful to a team's ability to compete. Presumably, that trade-off would result in something like a net-negative (or at best neutral) outcome for poorly run teams. That's fine, but if the system also hurts the well-run teams then it might work too well.