COMMENTARY : Salary Cap Threatens to Disrupt Knicks

Forget for a moment the stance of the New York Knickerbockers, who are pledged to defend the sanctity of an NBA contract. Put aside the claim of self-determination by Patrick Ewing, who says he is placing individual freedom above monetary compensation. Let’s focus on the source of the rift that threatens to disrupt Pat Riley’s championship plans before the coach blows his first whistle in New York.

Clearly, it’s the fault of the salary cap.

A little history is in order here. When the league opened its books to the NBA Players Association in the early ‘80s and asked for cooperation, the union agreed to a plan that would prop up the NBA’s shaky financial position while giving its members a fair share of any future prosperity. “The business needed to be stabilized,” noted Charles Grantham, executive director of the NBAPA.

The result was the Guaranteed Compensation Plan, more commonly known as the salary cap. In exchange for receiving 53 percent of the NBA’s defined gross revenue, the union authorized the league to place a limit on each team’s expenditures for player salaries and benefits. Theoretically, this would enable weaker franchises to compete on even terms with clubs in larger markets and curtail full-scale bidding wars without inhibiting the free agency that had been won in court.

Whether subsequent growth of the league was due to increased parity, dynamic stars, a strengthened economy, an enlightened drug program, improved marketing or all of the above, the salary cap was accepted as a cornerstone of the league’s success. That didn’t prevent the Players Association from filing an antitrust suit -- charging that the salary cap, college draft and right of first refusal violated constitutional rights -- during negotiations for a new labor agreement four years later. The union dropped the suit after signing a six-year deal with the NBA that maintained the cap but reduced the draft to two rounds, relaxed the requirements for unrestricted free agency and provided for a large boost in pension and other benefits.

In short, the cap was used as a bargaining chip to realize other goals. And the players have not had a major complaint in terms of compensation because the cap has risen much faster than economic projections had indicated. When the current contract was signed in April 1988 (with provisions retroactive to the previous June), it was expected that the cap would climb to $11 million a team by 1993, the final year of the agreement. It already has exceeded that.

Still, there are two sound reasons to expect that the cap will become a casualty of the next collective-bargaining agreement. The first is that the union no longer is convinced of its necessity and would prefer to see an open market in what has become a very prosperous league. The second is that so many general managers and their support people are expending so much energy in attempting to circumvent it.

Give points to Grantham for diplomacy. Circumvent is a word I chose. He called it “maximizing the rules” governing the cap, adding legitimacy to the practice by which teams have been paying players out of their left pocket after the right pocket has been emptied.

While all teams allegedly are equal under the system, some teams continue to be more equal than others. According to NBA records, Larry Bird will be paid a base salary of $1.5 million by the Boston Celtics next season. Yet he will receive more than $7 million with the addition of bonuses. Since John “Hot Rod” Williams, Michael Jordan and Hakeem Olajuwon admittedly will receive greater compensation than Ewing’s listed salary of $3.3 million for 1991-92, and since a clause in the contract he signed in 1985 entitles him to free agency if he’s not among the NBA’s four highest-paid players as of June 1, Ewing and his agent have filed a grievance. It will be heard by an arbitrator July 22.

At issue is whether NBA teams can flaunt the cap they instituted by augmenting artificially low salaries with signing bonuses and the like or by deferring payment for years and years. The Celtics are not the only team well-versed in such manipulations. Only last summer, they presented Reggie Lewis with a five-year contract for $16.5 million but deferred so much money into the next century that Bird remains the team’s highest-salaried member.

The better teams have been outspending the lesser teams for some time while still pledging allegiance to the cap. In August 1990, the Los Angeles Lakers made room for free-agent forward Sam Perkins under the cap by sweetening their offer with a $1 million signing bonus and assigning the man a series of escalating salaries. And, of course, there was the celebrated case of Magic Johnson, who deferred some of his salary so the team might deal for Terry Teagle.

On the other hand, the regime of Al Bianchi in New York was stymied by the cap, or so he said. For the Knicks and others, it became a crutch. The contenders exploited the cap as adroitly as Jordan uses a pick at the top of the key. Ironically, now that the Knicks have a management team said to be equally adept, Ewing is challenging the procedure.

He has stated, through agent David Falk, that his grievance is about freedom of choice. Ewing may well be sincere in contending that, under the restrictions of the cap, “no team in the league has the ability today to offer me as much money as the Knicks.” And the Knicks did tender a proposal valued at more than $33 million if he would sign on the dotted line for the next six years.

Rest assured, however, that somewhere there is a man employed by a rival club who is busy figuring out the ramifications of providing Patrick Ewing with a $100 million annuity collectible on his 50th birthday. Despite the original intentions of the system, there is no NBA cap on creative financing.