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Kobe Bryant's Early Termination Option: The $135 Million Elephant in the Room

June 26, 2009 | 12:50 pm

First Things First:

Second Things Second- Central Tenets of My Belief System That Frame Points to Come:

  1. All the individuals to be discussed below are, relative to you (I presume) and me (this I can MoneyElephant confirm), rich.  They will, no matter what happens this summer, remain so.  Or ought to, at least.  This is not a crass, "pity the poor school teacher, fireman, and blogger" bit of pseudo-moralistic twaddle (yes, I said twaddle).  Just a statement of fact.
  2. The higher the dollar amounts involved, the more I consider "sacrifice" to be relative.  Take 15% from my paycheck, and it's going to hurt.  Take 15% from a guy making $5 mil, and it hurts less.  Take it from a guy making $25 million, and it becomes closer to a rounding error.  Not that the money doesn't matter or have real value- it most certainly does- just that the blow is softened by what's left over.
  3. Do not compare NBA contract negotiations with with "real world" scenarios of how you and I would respond to similar questions in the workplace.  They just don't apply. 
  4. Owners are entitled to make a profit, and a healthy one at that.  They also have a responsibility to deliver a winning product whenever possible, particularly when a franchise has the means (i.e. they make money) and place a burden on their fans (i.e. game costs approximately 60% higher than league average, inflated a great deal by tickets that are, generally speaking, really freakin' expensive). They are obligated to spend, rather than pocket, all that booty.
  5. Owners are also entitled to set a ceiling to the payroll.  For profitable teams with a history of winning, say... the Lakers, it should be appropriately high.    
  6. Basketball players have a limited window to earn gobs of money from the game, and can't necessarily be vilified for taking full advantage, but as the dollar amounts grow the more other considerations (happiness, family connections, winning) ought have room to enter the equation.  Money doesn't buy happiness, but it buys a whole lot of stuff, including flexibility and options.

(By now, you can probably guess where this is going...)

Other stuff important to establish/clear up before proceeding: 

  • Kobe Bryant is silly awesome at basketball, isn't going to slack off no matter how much money he makes, is as good a bet as anyone to keep his aforementioned awesomeness into his 30's, and has given a great deal to the Lakers organization.
  • The Lakers, in turn, have given much to Kobe, from the $127 million in salary over the course of his career to loyalty during difficult times, and a strong commitment to winning.  
  • I believe this is what's defined as a symbiotic relationship.  
  • Sometimes, everyone has to give a little. 

How's that for a preamble? 

Nothing, with the exception of Phil Jackson deciding to hang it up, will dominate the consciousness of those who inhabit Planet Lakers this summer more than money.  Money to bring back free agents Kobe Bryant with the Larry O'Brien and Bill Russell MVP Trophy Trevor Ariza, Lamar Odom, and Shannon Brown, money to sign Kobe to an extension should he decide to opt out of his current deal and lock into something a little more long term.

Throughout the season, we've heard Odom and Ariza talk about how they'd like to stay, and Kobe has confirmed he's not going anywhere. That's not a surprise.  (Where exactly would he go?)

What we're still waiting on is word about whether Kobe will start next season on his current deal or with a fresh piece of contractual parchment in his file cabinet.  The answer could play a major role in how the Lakers are constructed over the next few seasons. (Note: Kobe has an early termination option for next season that he must exercise by June 30th, and a player option next summer.  If he doesn't opt out this year, he'll almost certainly do it 12 months from now.)  And while there are all sorts of questions about how this will play out, one thing is clear:

The simplest and easiest way for Kobe Bryant to help the Lakers afford to bring back a fully competitive roster would be to opt out this season and agree to a contract for less than the max to which he's entitled. 

Last week on the blog there was a healthy mini-debate on this subject in the comments section, with readers and hosts voicing their opinions.  It's clear that a lot of Lakers fans don't think Kobe owes the Lakers any slack here, nor believe he's obligated to do anything but take the most he can get.  Others worry about this debate turning into another way to stoke the Kobe Is Selfish! fire. I get all that, and sympathize with the argument.  I don't think Kobe deserves to be vilified if at some point he demands a max deal, which, assuming he opted out this summer, would mean about $135 million over five years. 

But criticized?  Yeah. 

I have to be honest, here.  I'm struggling to get past the notion that if winning is truly the number one priority for 24, it would be foolish for him not to recognize the relationship between his salary, which could encompass over a quarter of the team's total obligations over the next few seasons, even if the Lakers push past $90 million in payroll- an incredibly high number by NBA standards in the luxury tax era- and the team's ability to keep good players around him. 

To terminate and re-up now would give the team cost certainty going forward, the sort of predictability that makes it easier to maneuver. A 10% discount would mean about $13.5 million, give or take, worth about $27 to Dr. Buss because of the dollar-for-dollar tax penalty. That would still leave Kobe with $121.5 million dollars guaranteed, or an average of $24.5 million a season over the life of (what is widely assumed to be) a five year deal.  A 15% discount, worth about $20.5 million in real dollars and $41 million in luxury tax savings to the Lakers, leaves Bryant earning nearly $115 million Kobe in Game 5over the next half decade.

These are still extraordinary amounts of money, and doesn't get into any endorsement income the guy makes.  Call me un-American, but as I mentioned earlier, the notion of real, painful sacrifice here is tough to wrap my head around.   Kobe wants Ariza, Odom, and Brown back, but has said it's management's responsibility, not his, to figure out how to keep the team together.  That's true on the literal, but not practical, level. Assuming Kobe realizes that there is a ceiling to LA's payroll, he must too realize that every dollar not spent on him can be put towards another player, whether this summer or beyond (at some point, the Lakers might need to add a piece, right?). Just looking at Thursday's draft, where the Lakers sold the 29th and 42nd picks for a combined $4.5 million, indicates the team is looking under every rock and couch cushion to fund this summer's expenditures. 

Other stars in salary cap sports have accepted less money or reworked deals to accommodate other players and keep a winning crew together. What Kobe could do is a fantastic expression of team and his desire to win, but isn't unprecedented. 

Fortunately, to opt out for less would have some advantages for Bryant, though they aren't necessarily financial.  (Could he make up some of the lost income in extra off-court activities?  Maybe, maybe not. I have no idea. He certainly shouldn't count on it.)  Beyond the massive and deserved PR pop he'd get, the biggest would be leverage.  The onus would be on the organization to continue to fill holes when they pop up, using that money to continue to field a championship quality roster (as opposed to seeding a trust fund for some random Buss nephew).  Every day, Kobe could walk into the office and ask Dr. Buss where his $40 mil is going. 

He would place the ultimate pressure on the organization to stay at a championship level while helping keep a core together with the potential to give him more jewelry in the next few seasons.  

Kobe is correct that it's not simply his responsibility to ensure the Lakers can keep some fiscal sanity.  It's not all on him.  Everyone has to give for that to happen.  From Kobe and Dr. Buss.  From Trevor and LO, both of whom are likely to get bigger offers from other teams than they will from the Lakers, meaning they'll need to leave money on the table to stay in purple and gold.  Each of the parties involved will have to come up with his personal price for a shot at more titles.  For players, the sacrifice is salary, for ownership, profits.  But Kobe's status as the BMOP (Big Man On Payroll) puts him in a different position than the rest of the squad.  It just does.

The Lakers have already shown a willingness to spend big for a competitive team, and will have to again this summer and into the next few seasons.  They can't, shouldn't, and likely won't ask Kobe to take less, but should they have to?