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Post by Bryan Colangelo on Jul 11, 2017 1:56:01 GMT
MKG is going back to his team, Brooklyn Nets to the following deal:
Year 1: $15,000,000
Year 2: $13,875,000
Year 3: $12,750,000
Year 4: $11,625,000
Year 5: $12,750,000
Easy decision for MKG. Josh offered my client a starting role. He loves the Nets and wants to be part of the future. He loves the team direction and cant wait to see what's next for his team.
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Post by Andrei Kirilenko on Jul 11, 2017 2:03:14 GMT
I have to admit, I gave myself a threshold before FA started and braced myself to walk away if someone offered more than that threshold. We have been loyal to MKG in both Utah and Brooklyn and he has been a starter for me for years. I'm extremely happy no one offered more than my threshold and he has decided to return to Brooklyn!
Thank you Bryan for quick responses and keeping us informed.
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Post by Alex English on Jul 11, 2017 2:11:29 GMT
I have no problem with this decision, but I really don't like the declining contract. 23 year olds don't sign declining contracts imo. I dunno, maybe I'm nitpicking, but this contract is even cheaper than it first looks once the $15 mil season is off the books next summer.
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Post by Walt Frazier on Jul 11, 2017 2:18:30 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious!
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Post by James Kay on Jul 11, 2017 2:21:01 GMT
I have no problem with this decision, but I really don't like the declining contract. 23 year olds don't sign declining contracts imo. I dunno, maybe I'm nitpicking, but this contract is even cheaper than it first looks once the $15 mil season is off the books next summer. Personally, I'm a big fan of declining contracts. I don't see why a player would NOT want one. More money up front is actually more value for the player considering inflation. If it's about the overall value, then make it about that. But the structure of a declining deal is actually favorable to the player. |
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Post by Andrei Kirilenko on Jul 11, 2017 2:22:36 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious!  |
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Post by Chauncey Billups on Jul 11, 2017 2:24:39 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious! monkeys throwing shit gifs on cue hahahah |
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Post by Walt Frazier on Jul 11, 2017 2:27:11 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious! OK? I wasn't sure if it was a promise or just an offer. As you know, we keep track of that and it is important distinction. |
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Post by Andrei Kirilenko on Jul 11, 2017 2:31:26 GMT
OK? I wasn't sure if it was a promise or just an offer. As you know, we keep track of that and it is important distinction. Sorry lol I misread your post, plus I got a lot of these shit-throwing gifs down that I'm trying to cycle through. |
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Post by Bryan Colangelo on Jul 11, 2017 2:46:39 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious! He has a starting role with the nets from josh |
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Post by Jeremiah Hill on Jul 11, 2017 6:55:40 GMT
Is that a starting role promise or just an offer? Just curious. I'm not sure there's a penalty for trading which is the main reason I could see Barber breaking that promise, so it probably doesn't matter, because I know he really likes MKG. Just curious! I think he meant that he just happens to have been starting on his teams for years now. |
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Post by Jeremiah Hill on Jul 11, 2017 6:57:49 GMT
I have no problem with this decision, but I really don't like the declining contract. 23 year olds don't sign declining contracts imo. I dunno, maybe I'm nitpicking, but this contract is even cheaper than it first looks once the $15 mil season is off the books next summer. Personally, I'm a big fan of declining contracts. I don't see why a player would NOT want one. More money up front is actually more value for the player considering inflation. If it's about the overall value, then make it about that. But the structure of a declining deal is actually favorable to the player. How is it favorable to the player? Maybe in the real NBA where only portions of contracts are guaranteed for role players on 2-3 year deals. But a player like MKG is getting a guaranteed amount and a normal contract. |
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Post by Brian Scalabrine on Jul 11, 2017 13:22:17 GMT
Quick clarification: I've been told in the past by PAs that contracts can't decline then incline or vice versa. Is that true Ian Noble? Just trying to figure out if I can use this structure with other FAs |
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Post by Walt Frazier on Jul 11, 2017 13:23:10 GMT
Quick clarification: I've been told in the past by PAs that contracts can't decline then incline or vice versa. Is that true Ian Noble? Just trying to figure out if I can use this structure with other FAs That was itching the back of my mind as well. |
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Post by Bryan Colangelo on Jul 11, 2017 13:43:02 GMT
Oh really?
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Post by Ian Noble on Jul 11, 2017 14:32:03 GMT
Quick clarification: I've been told in the past by PAs that contracts can't decline then incline or vice versa. Is that true Ian Noble? Just trying to figure out if I can use this structure with other FAs It's not something we've ever encountered before, if memory serves me correctly. There's no rule that applies to it, so I'm ok with it personally. I'd be interested to see if there's an NBA precedent. |
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Post by Jeremiah Hill on Jul 11, 2017 19:01:57 GMT
Quick clarification: I've been told in the past by PAs that contracts can't decline then incline or vice versa. Is that true Ian Noble ? Just trying to figure out if I can use this structure with other FAs It's not something we've ever encountered before, if memory serves me correctly. There's no rule that applies to it, so I'm ok with it personally. I'd be interested to see if there's an NBA precedent. I know for a fact we've had it happen here in D5 but no one ever said anything about it except me being pissed about declining contracts. |
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Post by James Kay on Jul 11, 2017 19:08:35 GMT
Personally, I'm a big fan of declining contracts. I don't see why a player would NOT want one. More money up front is actually more value for the player considering inflation. If it's about the overall value, then make it about that. But the structure of a declining deal is actually favorable to the player. How is it favorable to the player? Maybe in the real NBA where only portions of contracts are guaranteed for role players on 2-3 year deals. But a player like MKG is getting a guaranteed amount and a normal contract. It's favorable to the player because you get more money up front - which is also less influenced by inflation. 65 million over 5 years on a declining contract is better than 65 million over 5 years on an increasing contract. It's the total amount that you should be arguing over. The declining structure favors the player. |
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Post by Jeremiah Hill on Jul 11, 2017 21:03:21 GMT
How is it favorable to the player? Maybe in the real NBA where only portions of contracts are guaranteed for role players on 2-3 year deals. But a player like MKG is getting a guaranteed amount and a normal contract. It's favorable to the player because you get more money up front - which is also less influenced by inflation. 65 million over 5 years on a declining contract is better than 65 million over 5 years on an increasing contract. It's the total amount that you should be arguing over. The declining structure favors the player. ----- Market Value for a FA is measured by % of the cap. Max FA Salaries are as such: 25% - 30% - 35% MLE level this season is at: 8,406,000 or 8.4% of the cap. ----- MKG's value here is 15% of the cap year 1 of his deal. Year 1: 15% Year 2: 14% Year 3: 12.8% Year 4: 11.7% Year 5: 12.8% Now, we can expect, given the recent success of the NBA that the cap will go up again for at least the next 4-5 years. Meaning years 2-5 will be even less than they are using this cap. ----- Side bar here: Your argument for inflation is stupid, the money he gets at the start of his contract will still drop in value with inflation. Unless he's buying nothing but gold bars or real estate in California everything else he buys will be affected. In fact regular workers' raises not keeping up with inflation is a huge deal meaning they have less money effectively now. The same happens if you have lots of money you just aren't as affected. So in reality without annual raises the player gets much less in regards to inflation. I'm not a finance or accountant but I think this is pretty much about right, ask Kevin or Chuck. I knew this argument was retarded I just had to think about it for a second. ----- Raises are a motivating factor, along with bonuses (which we do not have) for a player to continue to improve over the course of their contract. It might not be that much, but it must not be fun being the player who didn't pan out and is now a salary drain sitting on a team ready to make the next step *cough* Greg Monroe *cough*. ----- THE ONLY time that a contract with decreases make sense is if the player has large portions of their contracts that aren't guaranteed. From the CBA Website Section 63: There are only a few specific types of contracts that must be guaranteed. All other guarantees are a matter of individual negotiation between the player and team. In practice, the majority of NBA contracts (especially for established veterans) are fully guaranteed. Non-guaranteed salary is most often used for fringe players (either at the beginning or end of their careers) or for the later years of long-term contracts (often in conjunction with benchmarks that allow the salary to become fully guaranteed over time). So, if we mirror this to say D5. A contract decrease only makes sense if a player is a fringe dude with a team option. ----- I can't find an instance of a player of Kidd Gilchrist's caliber (15% or so range) taking a decrease. Sometimes a superstar on a max will allow the contract to drop in a year to help a team out, not a max dude but Mozgov's salary went down the 2nd year of his deal and then continued on with raises, but outside of some random role players in the MLE range it just doesn't happen. The closest they get is to what MKG did in real life which is just a flat salary of 13,000,000 each year for several years. Even if it has happened, based on how many players I looked at, it can't be common. ----- This contract is unrealistic and bullshit. Anyone peddling inflation crap at player agents should be ignored. I'm not mad about the contract because frankly, I wouldn't pay that for MKG. But it is absolutely not realistic and probably shouldn't happen again. Ian Noble |
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Post by James Kay on Jul 11, 2017 21:52:38 GMT
It's favorable to the player because you get more money up front - which is also less influenced by inflation. 65 million over 5 years on a declining contract is better than 65 million over 5 years on an increasing contract. It's the total amount that you should be arguing over. The declining structure favors the player. ----- Deleted what you wrote because I didn't want to quote a gigantic block of text. But, you're wrong. More money up front is absolutely preferred. It's why lottery winners take the lump sum over the annuity like ... almost every time. Your workers wages analogy doesn't even apply here, and frankly I don't even know how to address it lol because again, total money is still the same. Wages not keeping up with inflation isn't a factor if total wages over a four-five year period are still identical. And further, the reason why NBA teams don't frequently use this is because they'd like to defer the cap hit until later years AND because they can build incentives into their contracts. We can't. There's absolutely no legitimate reason why, when comparing contracts of identical total amounts, a declining contract would be less preferred than an increasing contract. |
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Kevin Hollis
Former Thunder GM for 7 years
All Star
Posts: 2,838 
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Post by Kevin Hollis on Jul 11, 2017 22:10:07 GMT
Sorry James, you sir, are wrong this time...
Take two cash flows at 5% interest year over year:
Example one:
15,750,000 19,144,223 Value after 5 years
13,875,000 16,865,149 4 years
12,750,000 14,759,719 3 years
11,625,000 12,816,563 2 years
12,750,000 13,387,500 1 year
66,750,000 76,973,154 total ending value
Example two - flat rate:
13,350,000 17,038,359
13,350,000 16,227,008
13,350,000 15,454,294
13,350,000 14,718,375
13,350,000 14,017,500
66,750,000 77,455,536
MKG losing almost 500k on this deal. Marginality plays a bigger role when you take relatively close numbers. Lotto winners take the lump because the difference is beyond substantial. It would be different if you were paying MKG his entire salary in year one.
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Post by Charles Barkley on Jul 11, 2017 22:20:55 GMT
Personally, I'm a big fan of declining contracts. I don't see why a player would NOT want one. More money up front is actually more value for the player considering inflation. If it's about the overall value, then make it about that. But the structure of a declining deal is actually favorable to the player. How is it favorable to the player? Maybe in the real NBA where only portions of contracts are guaranteed for role players on 2-3 year deals. But a player like MKG is getting a guaranteed amount and a normal contract. because if you assume MKG makes the same amount of money over a contract with increases instead of decreases, he will ultimately lose money to inflation. Its the dollar today is better than a dollar tomorrow, time value of money argument as well. You'd rather have 15 million right now rather than 12.75 million right now, right? |
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Post by James Kay on Jul 11, 2017 22:30:57 GMT
Sorry James, you sir, are wrong this time... Take two cash flows at 5% interest year over year: Example one: 15,750,000 19,144,223 Value after 5 years 13,875,000 16,865,149 4 years 12,750,000 14,759,719 3 years 11,625,000 12,816,563 2 years 12,750,000 13,387,500 1 year 66,750,000 76,973,154 total ending value Example two - flat rate: 13,350,000 17,038,359 13,350,000 16,227,008 13,350,000 15,454,294 13,350,000 14,718,375 13,350,000 14,017,500 66,750,000 77,455,536 MKG losing almost 500k on this deal. Marginality plays a bigger role when you take relatively close numbers. Lotto winners take the lump because the difference is beyond substantial. It would be different if you were paying MKG his entire salary in year one. Kevin I ran the numbers using this: www.calculatorsoup.com/calculators/financial/simple-interest-plus-principal-calculator.phpand got different results than you. Honestly NOT sure lol $19,687,500.00 $16,650,000.00 $14,662,500.00 $12,787,500.00 $13,387,500.00 Total of $77,175,000 $16,687,500.00 $16,020,000.00 $15,352,500.00 $14,685,000.00 $14,017,500.00 Total of $76,762,500 |
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Post by Charles Barkley on Jul 11, 2017 22:33:56 GMT
Sorry James, you sir, are wrong this time... Take two cash flows at 5% interest year over year: Example one: 15,750,000 19,144,223 Value after 5 years 13,875,000 16,865,149 4 years 12,750,000 14,759,719 3 years 11,625,000 12,816,563 2 years 12,750,000 13,387,500 1 year 66,750,000 76,973,154 total ending value Example two - flat rate: 13,350,000 17,038,359 13,350,000 16,227,008 13,350,000 15,454,294 13,350,000 14,718,375 13,350,000 14,017,500 66,750,000 77,455,536 MKG losing almost 500k on this deal. Marginality plays a bigger role when you take relatively close numbers. Lotto winners take the lump because the difference is beyond substantial. It would be different if you were paying MKG his entire salary in year one. I don't understand your numbers and how it goes from 13.4 to 12.8 if there's interest YOY But I think you are missing an important thing, as is Jeremiah HillThe contract is for 5 years, 66 million. That 66 million can be broken up any which way you'd like. Ideally, you'd take 66 million in year 1, and in years 2-5 you get nothing but you earn interest/return on the 66 million. And, we know we can't do that in here, so what can we do? 13.2 million is a flat rate over 5 years, but again, you're losing possible return in those later years because you don't have it in the present to invest it and because of inflation. So as a player, knowing you can't get more than 66 million, which is the important part, you want the most you can get in that first season. Will MKG likely be underpaid years 3-5 if he maintains his current form? Possibly. But he's getting 66 million, guaranteed, and he couldn't get more than that. |
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Post by Andrei Kirilenko on Jul 11, 2017 22:42:38 GMT
It's always better to have the money up front if you are a player, it's simple compounding and time value of money. Come on guys. We take care of our players in Brooklyn.
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Post by Jeremiah Hill on Jul 11, 2017 23:09:28 GMT
How is it favorable to the player? Maybe in the real NBA where only portions of contracts are guaranteed for role players on 2-3 year deals. But a player like MKG is getting a guaranteed amount and a normal contract. because if you assume MKG makes the same amount of money over a contract with increases instead of decreases, he will ultimately lose money to inflation. Its the dollar today is better than a dollar tomorrow, time value of money argument as well. You'd rather have 15 million right now rather than 12.75 million right now, right? I think that the beginning number is the main number that matter. It should be 15,000,000 either flat. Or with increases. Considering the amount the cap went up this would be right in line with real life personally. I just don't think that it's realistic, no one in real life does it and it shouldn't happen. |
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Post by Jeremiah Hill on Jul 11, 2017 23:10:21 GMT
Sorry James, you sir, are wrong this time... Take two cash flows at 5% interest year over year: Example one: 15,750,000 19,144,223 Value after 5 years 13,875,000 16,865,149 4 years 12,750,000 14,759,719 3 years 11,625,000 12,816,563 2 years 12,750,000 13,387,500 1 year 66,750,000 76,973,154 total ending value Example two - flat rate: 13,350,000 17,038,359 13,350,000 16,227,008 13,350,000 15,454,294 13,350,000 14,718,375 13,350,000 14,017,500 66,750,000 77,455,536 MKG losing almost 500k on this deal. Marginality plays a bigger role when you take relatively close numbers. Lotto winners take the lump because the difference is beyond substantial. It would be different if you were paying MKG his entire salary in year one. I don't understand your numbers and how it goes from 13.4 to 12.8 if there's interest YOY But I think you are missing an important thing, as is Jeremiah Hill The contract is for 5 years, 66 million. That 66 million can be broken up any which way you'd like. Ideally, you'd take 66 million in year 1, and in years 2-5 you get nothing but you earn interest/return on the 66 million. And, we know we can't do that in here, so what can we do? 13.2 million is a flat rate over 5 years, but again, you're losing possible return in those later years because you don't have it in the present to invest it and because of inflation. So as a player, knowing you can't get more than 66 million, which is the important part, you want the most you can get in that first season. Will MKG likely be underpaid years 3-5 if he maintains his current form? Possibly. But he's getting 66 million, guaranteed, and he couldn't get more than that. If that is true why do NO players do it? |
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Kevin Hollis
Former Thunder GM for 7 years
All Star
Posts: 2,838
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Post by Kevin Hollis on Jul 11, 2017 23:12:37 GMT
The problem is that the contract increases and decreases rather than just a straight decline. If it were a straight decline, more money would be up front and the right way to do it. In principal, James is right, but this contract is fucking weird because of the increase and decrease. And no one player does it because owners won't front the money most likely - as the others said, the are deferring the cap hit bc owners are business men and know if they play less now, they have more later.
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Post by Jeremiah Hill on Jul 11, 2017 23:20:12 GMT
Kevin Hollis James Kay Charles Barkley Ian NobleInflation has been going up 2.5-4% the past several years. The raises are 7.5% in our league, 8% in real life. Would then the player still not come out on top when getting raises?
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Kevin Hollis
Former Thunder GM for 7 years
All Star
Posts: 2,838
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Post by Kevin Hollis on Jul 11, 2017 23:29:58 GMT
I don't think he is arguing that, he is arguing the fact he gets paid x amount of money and how receiving differently is beneficial to the player.
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