Cavs-Warriors “V”...Gamesmanship or Circumvention?
By Joe Manganiello
It only takes one team to set the market on a player. For this reason, and others, the Golden State Warriors and Cleveland Cavaliers are probably not on good terms. Barring a historic second-half reversal of fortunes for the Cavaliers, these two franchises will not be meeting in a fifth consecutive NBA Finals. But the front office of the draft lottery-bound Cleveland team made sure they were in the minds of Golden State’s brass when the Cavaliers suddenly asserted themselves into the standoff between the Warriors and restricted free agent Patrick McCaw.
Most NBA players become unrestricted free agents after their contracts expire. As such, these players are free to sign with any new team. On the other hand, restricted free agency exists on a limited basis, impacting the following types of players: any first round pick following the fourth year of their rookie contract; all veteran free agents who have been in the league three or fewer seasons; and any player following the completion of a two-way contract if they were on an NBA roster for at least 15 days in the preceding season. Restricted free agency gives the player's original team what is called the "right of first refusal" — the right to keep the player by matching another team’s offer sheet — but only if the original team extended what is called a “qualifying offer” (a one-year guaranteed contract) to open negotiations with the player.
McCaw, 23, is most remembered for starting three games for Golden State as a rookie in the 2017 playoffs. Otherwise, he has played sparingly through two regular seasons, and missed the entire 2018 postseason with an injury. McCaw faced restricted free agency last summer — an unkind marketplace for young talents because teams possess the bulk of the leverage. Tensions flared publicly between the two camps without the completion of a deal. McCaw allowed his qualifying offer to expire before turning down a two-year, $5.2 million offer by Golden State in which the second season was not guaranteed. McCaw sat out until December 28th, hoping that “one team” would emerge, and sure enough, Cleveland broke the stalemate with a two-year, $6 million offer sheet. Notably, the contract featured no guaranteed money. At first, the signing was painted as the rebuilding Cavaliers simply investing in a cheap guard with some skill. Taking a petty shot at the Warriors for their trouble was interpreted as merely a perk of the signing.  But McCaw barely saw the floor in three games before Cleveland waived him on January 7th. January 8th is the league’s annual guarantee date. Had the Cavaliers not waived McCaw when they did, league rules would have required the payment of $3 million- McCaw’s entire 2018-19 salary.
This odd turn of events begged the question: were Cleveland’s actions wrong? To be clear, there is nothing illegal about Cleveland releasing McCaw so suddenly after acquiring him. Signing a player to a nonguaranteed offer sheet is not against league rules, and Golden State had every opportunity to match Cleveland’s offer sheet. But considering the history between the two franchises, there was an apparent toeing of the line between gamesmanship and circumvention — the former an inevitable dynamic in any competitive industry, the latter a violation of the NBA’s Collective Bargaining Agreement.
On January 8, Golden State asked the NBA to formally review the Cavaliers’ signing and near-immediate release of McCaw. Soon thereafter, the league announced Cleveland did not commit any rules violations. “Based on the specific facts and circumstances of this matter, the NBA found that there was no violation of the league’s collective bargaining agreement, including the anti-circumvention rules,” the league said in a statement.
Circumvention differs from tampering, which is arguably a more common and detrimental issue in the NBA because of the intrinsic advantages held by large-market franchises in recruiting superstar players. Tampering occurs when the violating team targets a player under contract with a different NBA team. In 2017, the Los Angeles Lakers were fined $500,000 for tampering with Paul George while he remained under contract with the Indiana Pacers. Under Article 35A of the Constitution, NBA commissioner Adam Silver may fine up to $5 million for tampering, in addition to serving other penalties, including suspending team officials, prohibiting the tampering team from acquiring the targeted player, and transferring draft picks to the victimized team. Article 35A is clear that Silver’s discretion for penalizing the tampering team is “final, binding, conclusive, and unappealable.”
Circumvention, meanwhile, occurs when the signing team includes side agreements or arrangements outside of a player’s written contract as a way of enticing the player. The league’s anti-circumvention rules can be found in Article XIII of the NBA’s Collective Bargaining Agreement. The NBA can use this prohibition to disallow a signing or trade that it feels circumvents the CBA, even though it is not specifically prohibited by the agreement. Violations of the anti-circumvention rules might include understandings of future contracts or extensions (presumably in an effort to circumvent the NBA’s salary cap rules), or promising a player or related person any outside compensation, investment or business opportunities.
A recent example of circumvention in the NBA was in 2015, when the Los Angeles Clippers were fined $250,000 for involving a third-party endorsement opportunity in their recruiting pitch to then-free agent DeAndre Jordan. (Of course, that was not the craziest thing the Clippers did that summer to keep Jordan from signing with the Dallas Mavericks.) While the NBA deemed that the potential opportunity did not “swing the decision” for Jordan, who returned to the Clippers on a four-year, $87 million contract, the team’s conduct nevertheless violated the league’s anti-circumvention rules because such compensation is not expressly permitted under the CBA. Penalties in these cases, at their most extreme, can include fines as high as $6 million or the loss of draft picks.
After clearing waivers, McCaw became an unrestricted free agent, likely what the young guard had in mind when Cleveland approached him with an offer sheet to begin with. If the NBA discovered that Cleveland made its offer to McCaw as an attempt to cozy up to McCaw’s agent and lubricate future arrangements with their clients, for example, it is likely that the NBA would have penalized Cleveland for violating its anti-circumvention rules. Ditto for a hypothetical where Cleveland and McCaw arranged for a “future contract” once McCaw hit unrestricted free agency while functionally McCaw remained a restricted free agent. Instead, McCaw signed a one-year minimum contract with the Raptors that will pay him $777,665 for the rest of the season after earning $323,529 for his short stint with the Cavaliers. One-third of his original contract with Cleveland.
Overall, Golden State is a marginal loser, but there is no need to feel bad for the back-to-back champions. The Warriors could have matched McCaw if they were willing to pay an additional $11.3 million in the NBA's luxury tax. https://twitter.com/BobbyMarks42/status/1078691441826775040
Moreover, McCaw did not figure to make or break the Warriors’ title chances. As badly as Golden State could use additional shooting coming off the bench, there will be no shortage of veterans willing to take the minimum — likely somewhere around $2 million, depending on the player’s years in the league — as many players are bought out of their contracts after the trade deadline. And if Golden State is forced to pay an increased luxury tax bill regardless of who they sign, General Manager Bob Myers can likely do better than McCaw’s career 29 percent from behind the 3-point line.
The real winner in this saga is Patrick McCaw. In the end, what McCaw valued most was getting to unrestricted free agency, and he was willing to part with guaranteed money this season in order to escape Golden State’s grasp. There is even a decent chance that Toronto and Golden State face off in the NBA Finals this spring, which preserves the possibility of McCaw having “a moment” against his former team. If pettiness is a satisfactory reward for their trouble, then Cleveland is a winner, too.
References:  Larry Coon, What is restricted free agency?, Larry Coon’s NBA Salary Cap FAQ, (July 1, 2018), http://www.cbafaq.com/salarycap.htm#Q42  Id.  Marc J. Spears, Warriors' Patrick McCaw to decline 2-year, $5.2 million extension, ESPN (October 1, 2018), http://www.espn.com/nba/story/_/id/24865234/patrick-mccaw-golden-state-warriors-decline-2-year-offer  Marc Stein, Cavaliers’ Handling of Patrick McCaw Broke No Rules, N.B.A. Finds, NY Times (January 14, 2019), https://www.nytimes.com/2019/01/14/sports/basketball/nba-investigation-patrick-mccaw-warriors.html  Id.  Tom Ziller, Patrick McCaw isn’t important, but being petty to the Warriors apparently still is to the Cavaliers, SB Nation (January 8, 2019), https://www.sbnation.com/2019/1/8/18173508/patrick-mccaw-contract-warriors-cavaliers-free-agency-petty  Id.  Marc Stein, Cavaliers’ Handling of Patrick McCaw Broke No Rules, N.B.A. Finds, NY Times (January 14, 2019), https://www.nytimes.com/2019/01/14/sports/basketball/nba-investigation-patrick-mccaw-warriors.html  Id.  Id.  Ohm Youngmisuk and Bobby Marks, How will tampering charges against the Lakers proceed?, ESPN (August 21, 2017), http://www.espn.com/nba/story/_/id/20402343/2017-nba-tampering-faq  Michael McCann, Breaking Down How the Lakers Got Caught Violating the Anti-Tampering Rule, Sports Illustrated, (August 31, 2017), https://www.si.com/nba/2017/08/31/lakers-500k-fine-tampering-paul-george  Id.  Id.  Ohm Youngmisuk and Bobby Marks, How will tampering charges against the Lakers proceed?, ESPN (August 21, 2017), http://www.espn.com/nba/story/_/id/20402343/2017-nba-tampering-faq  Id.  Larry Coon, Can teams find loopholes in the CBA and do things the league never intended to allow? What is circumvention?, Larry Coon’s NBA Salary Cap FAQ, (July 1, 2018), http://www.cbafaq.com/salarycap.htm#Q106  Id.  Zach Harper, NBA fines Clippers $250,000 for violating anti-circumvention rules, CBS Sports, (August 25, 2015), https://www.cbssports.com/nba/news/nba-fines-clippers-250000-for-violating-anti-circumvention-rules/  Id.  Id.  Marc Stein, Cavaliers’ Handling of Patrick McCaw Broke No Rules, N.B.A. Finds, NY Times (January 14, 2019), https://www.nytimes.com/2019/01/14/sports/basketball/nba-investigation-patrick-mccaw-warriors.html  Real GM, 2017 CBA Minimum Annual Salary Scale, (https://basketball.realgm.com/nba/info/minimum_scale
*Joe Manganiello is a first year student at Villanova University Charles Widger School of Law and a staff writer for the Sports Law Society Blog.