I am watching with some delight the moves of NBA general managers through the last weeks. I think the NBA has a very sophisticated salary rule system, and the wisest among the managers know how to combine:
1. Player's skills (value).
2. Market forces (price)
3. Salary cap (rules).
Wise managers like Bryan Colangelo know how to play the game. Colangelo, for instance, is an example of what creative negotation can yield.
I'd like to point out that other sports are not regulated in such a way that allow flexibility, financial ortodoxy and creativity to play a part in the game. European soccer is the best example, as far as it becomes a wealthiest-always-reigns game.
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Posted by: Vilyamhq | August 08, 2007 at 05:59 PM
Keep your eye on the Boston Celtics to watch how their off season moves have a dramatic effect on their performance in 2007-2008!
Posted by: Tom Asacker | August 19, 2007 at 04:04 PM
That's for sure, Tom. What a team the C's will have next season. Wow!
I think they need some help at the 5 spot. Perkins has good moves at the post, but in my modest opinion, he's a bit slow, and gets in trouble when double teamed. Other than that, an amazing team.
Danny Ainge has earned his salary this offseason.
Posted by: Felix Gerena | August 19, 2007 at 10:55 PM
I've been watching the NFL, specifically the Dallas Cowboys and their least paid quarterback in the league, Tony Romo. His skill level has just exploded over teh past few games yet Jerry Jones still says he wants to see more. Tony makes a little over $1m. I have a feeling he'll be making close to $30m before the end of teh year.
Posted by: Herman Najoli | October 04, 2007 at 04:37 PM
One of those factors you mentioned,
3. Salary cap (rules)
has become paramount in shaping the TYPE of skill set that leads to successful team-building. And there's a good lesson from that for negotiators in other lines of work.
The NBA Salary Cap regulations are compound and complex, well over a hundred pages, and, when last explained to me by a GM (about a year ago) had 43 interlocking exception/modifiers. Many of the amendment/sub-regs have cute names (like "The Larry Bird Exception"). The lague operates not in a market system, but as a cartel -- the players' side of the equation (their Union) is very weak, unlike baseball, for example.
There's apparently no off-the-shelf software to help manage the cap -- and I'm not sure the number of possible buyers and dollar value to them of having it, that anyone could build it.
So the Cartel's highly-regulated cap system rewards the ability of a very specific type of thinker, either in the corpus of the GM him- or herself or a staff member. And this contrasts with football salary cap (less complex) and the almost-free market model they use in baseball & real-football/soccer.
Complex regulations change the shape of what constitutes optimal management practices in areas such as negotiation. In a less-regulated system such as baseball, it's more talent/price/current-need/future-need. But in the highly regulated NBA, an optimal personnel decision will get subsumed by the regulation set.
Managing these interlocking, sometimes mutually-exclusive regulations (way more complicated than what the nuclear-power industry faces or any environmental regulations) gravitates a premium towards organizations that have that skill set or alternately, those that can "game" the regulation systems.
The NBA, specifically, allows teams to keep all revenue from retail and certain other activities, away from the regulated cartel sharing/caps. So now management has to figure out ways to optimise non-ticket revenue. This is leading to teams building (or pressuring taxpayers to build) new facilities that feature more retail, restaurants, etc., in areas removed from potential competition.
It's fascinating, as you stated, to watch these management samurai delicately balance all of this season after season -- each year's decisions constrained by previous years' and the imposition of ever-more complex regulations by the NBA Cartel. And it's amazing that almost all of them do at least a pretty fine job of it.
Posted by: jeff angus | October 04, 2007 at 05:25 PM
Herman, thanks for your contribution, you are welcome in my blog. I am not very familiar with football rules, but I imagine they contribute to make the game more spectacular.
Jeff, what a brilliant exposition of the NBA salary cap rules. Thanks!
As you know, I am a big basketball fan and love the NBA because it is ruled in a very intelligent way. I think cap rules show out the ability of some GMs. Personnally I read the NBA website everyday, even in the offseason for that reason.
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Posted by: jack3_bi | December 13, 2008 at 01:27 PM
Just read a book - "The Catalyst", which deals with exactly what your talking about: the ability of managers to use what they have instead of looking to outside injection (money, personnel) to facilitate growth - or a winning team. The best leaders - whether they are middle managers, NBA owners, or CEOs - know how to best utilize what they have to grow and win in a hard market.
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