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Prolonged contract battle is too complicated to have a clear winner now
By Brian Windhorst
Beacon Journal columnist
Published on Monday, Dec 10, 2007
There seems to have been a rush to judgment to declare winners and losers in the Anderson Varejao contract resolution last week.
In fact, knowing the back story, it was easy to pinpoint which national writers and commentators were sympathetic/friendly with the Cavaliers management or with Varejao's agent, Dan Fegan, who has a history of carefully restricting his media dealings to reporters who will side with him.
In trying to look at it objectively — at least after covering the story in-depth for a year and then spending hours talking to both sides over the last week — it simply is too early to call. Declaring a victor now is not only premature, it also lacks perspective.
Ultimately, the Cavs got Varejao at their price. In fact, they got him below their price. Considering the hefty contract demands, playing hardball seems to have paid off for the Cavs, but only in the short run.
At the start of all this, the Cavs' plan was to control Varejao for at least the next four seasons. Their early three-year contract proposals all included team options for a fourth season. Recently they dropped that demand, but all the teams' offers were a minimum of three years.
Now, Varejao could be out in two years. Fegan and Varejao did not get their price, but they will get another chance sooner than the Cavs would've preferred. However, the flip side of that is the agent and player walked away from an additional $8.5 million in guaranteed dollars. They are absorbing significant risk, especially for a player whose style risks injury.
No team with salary-cap space made Varejao an official offer last summer, which meant he was left to try to find sign-and-trade deals or settle for the mid-level exception, which he did with the Charlotte Bobcats. Who is to say that won't be the case again in 2009, when the market will be deeper than last summer and it is not guaranteed a team with cap space will want him? It's projectable but still very unpredictable, which is why this is a gamble.
It is possible that two years from now Varejao will be introduced at a news conference as he celebrates a contract that pays him $9 million a year somewhere besides Cleveland and he'll laugh all the way to the bank. But the chances seem just as equal that he'll be waiting around in 2009 arguing with the Cavs again to do a sign-and-trade because the market again didn't play out like he and his agent thought.
So save your blue ribbon for that time, not now.
Dribbles
The Memphis Grizzlies did have serious talks with Varejao in July and, according to sources, seemed ready to offer a five-year contract worth $43 million, which represented all of the Grizzlies' cap space last summer.
They ended up preferring to go with Darko Milicic, who wanted less money and fewer years and was an unrestricted free agent. That potential offer, worth an average of $8.6 million per season, made Varejao and Fegan decide that was his market value. They spent the rest of the summer attempting to get that deal, but not having a suitor with cap space that could put down an offer sheet left them without leverage. Sure, Fegan asked for more from the Cavs, but really only wanted the same offer he was sure he could get elsewhere if the circumstances were different. Chances are he'll be trying to get it again in 2009.
Late in the talks, in an extreme effort to get the Cavs to give Varejao a one-year, $5.3 million deal, Varejao's side offered to come out and state publicly that he would not sign for less elsewhere next summer. Such deals are prohibited between teams and players, but the offer was for Varejao to put himself on the line by making a public promise and not a private one. It was a creative idea, but there is no way after the Carlos Boozer affair that such a tactic would work in Cleveland. There was no scenario in which the Cavs would have signed Varejao to a one-year deal after he passed up the one-year qualifying offer in September.
At this moment, the Cavs are on the hook for $8.7 million in luxury taxes this season. They have the fourth-highest payroll in the NBA at just more than $76 million. Two things should be pointed out. While it has not been a good year for Cavs owner Dan Gilbert's Quicken Loans, he has been true to his word that the mortgage industry would not affect his basketball spending. This is the Cavs' highest payroll ever. Second, while it has been popular for media to say the $11 million owed to Varejao over the next two years will cost the Cavs $22 million with taxes, that is simply myopic. No single contract has the Cavs over the line; all of them do. And if the Cavs were going to view one contract as costing them extra, it would be LeBron James' new contract that pays him $12 million this season. They are happy to pay the tax for his deal.
During the entire Varejao ordeal, it was seen as a potential landmark case because Varejao's holdout was unprecedented. The unexpected resolution — Varejao signing an offer sheet no one in the league really understands — let that air out. Considering the standoff only seemed to hurt both sides and no clear winner was established, if anything, in the future it is probable that teams and agents will attempt to avoid such a bloodletting instead of trying to copy it.
Brian Windhorst can be reached at bwindhor@thebeaconjournal.com. Read his blog at http://www.ohiomm.com/blogs/cavs/.
There seems to have been a rush to judgment to declare winners and losers in the Anderson Varejao contract resolution last week.
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