At RealGM, a look at why a maximum individual salary is one of the main reasons small markets have such trouble retaining their superstars:
The maximum salary Chris Paul, Dwight Howard and Deron Williams can sign for is somewhere around $20 million annually, but NBA superstars would be worth far more on the open market. The imbalance between their take-home pay and their actual value gives them a lot of leverage, and unless the maximum salary is repealed, small-market franchises will always be at the mercy of their All-NBA players.
Without a free market system like the MLB’s, it’s impossible to know exactly how much a superstar is worth. Here’s what we do know: the Cleveland Cavaliers franchise lost $120 million in value when LeBron left, while the city of Orlando paid the staggering sum of $420 million for a state-of-the-art stadium that would generate the revenue streams necessary to put an elite team around Dwight Howard and convince him to stay in Central Florida.
Of course, there would have been an easier way to convince him: cut out the middle-man and give him the cash. Taxpayers can give the front office of the Magic the money to build a title team, but they can’t build it themselves. Orlando GM Otis Smith was unable to do that, and now the entire area is going to suffer.
If the NBA was serious about keeping superstars in the cities that drafted them, they would let a franchise pay whatever it wants to keep its star in town. LeBron turned down around $20 million over the life of the contract to sign with Miami last summer, but what if that number was $100 or $200 million? The Heat and the Knicks certainly couldn’t clear enough cap space to sign three players at over $30 million annually.