Michael Jordan has cited a number of compelling reasons for his surprise retirement in 1993, but one stands out as utterly perplexing in a modern context. Jordan revealed in Episode 7 of “” that he told Phil Jackson at the time that he had “no more challenges.”
This was a uniquely 1990s problem. In the modern NBA, new challengers arise to face the champion every year. When LeBron James couldn’t get past the Boston Celtics, he joined Dwyane Wade and Chris Bosh in an effort to take them down, and when James similarly intimidated Stephen Curry and Kevin Durant, they united to win the Golden State Warriors two championships. Superteams are not an organic element in the NBA ecosystem. They are a response to the last superteam.
But Jordan reigned over the NBA for most of a decade andin the process. So why didn’t, say, Charles Barkley, Patrick Ewing and Reggie Miller team up to oppose him? It’s simple: the rules didn’t allow it. While free agents were free to do as they saw fit for most of Jordan’s career, the rules in place at the time made it almost impossible for superstars to actually use free agency to build their own contenders. To understand why, we need to venture back several decades to the very origins of free agency.
A brief history of free agency
The free agency enjoyed by modern players is a relatively new phenomenon. In fact, even the limited movement of the 1990s was an enormous shift from the league’s early history. The NBA didn’t grant any sort of free agency until 1976, and it only did so to settle a 1970 lawsuit brought about by Oscar Robertson.
The free agency adopted then had little in common with modern free agency. Teams were granted the right of first refusal on any contract offered to their own players, essentially making every player whose contract expired at that point the equivalent of a modern restricted free agent. If a team chose to let a player walk, the original team was granted compensation. That compensation was either negotiated between the two teams as a sort of trade, or decided unilaterally by the commissioner if the two sides could not agree.
This all changed four years into Jordan’s career, when the 1988 CBA finally granted players unrestricted free agency once they’d hit certain criteria. As big a win as this was for players leaguewide, it didn’t lead to the immediate formation of superteams. In fact, superstars were largely hesitant to explore unrestricted free agency at first. From the onset of unrestricted free agency in 1988 and Jordan’s second retirement in 1998, only two reigning All-NBA players changed teams through free agency.
One was a 34-year-old Dominique Wilkins, who had already been traded a few months earlier. The other was Shaquille O’Neal, whose hometown fans infamously told him they didn’t want him back at the price he was demanding. A third, Juwan Howard, tried to leave the Washington Bullets for the Miami Heat, but failed because the league ruled that the contract was illegal and that Miami had miscalculated its cap space.
Imagine something like that happening today. Teams spend years planning to have cap space in a specific moment because free agents change teams so frequently. It may have only happened twice in that first decade, but in the summer of 2019 alone, four different All-NBA players changed teams in free agency. It easily could’ve been more. The modern salary cap is designed to encourage player movement. The one that existed during Jordan’s peak, though, was still built around the only reality the league had known to that point: superstars staying put. As a result, it functionally bound the overwhelming majority of superstars to their original team for the duration of their primes.
So let’s look at some of the rules that enforced that reality, and how they were changed immediately after Jordan’s retirement in the 1999 CBA. In some cases, they made it significantly harder for teams to create cap space. In others, they made it significantly harder for teams to use it. After all, the NBA at that point gave incumbent teams one enormous advantage in retaining their own players.
Larry Bird rights
The NBA has always used some version of this rule to allow teams to go over the salary cap to retain their own free agents. Those rules just became more stringent with time. In its original state, the Larry Bird Exception applied to any player who had been under his previous contract for at least one year. There were no exceptions and no tiers. All Bird Rights were created equal. The 1999 CBA altered this system into the one we have today. The current model includes three tiers: Non-Bird Rights (which came after one year), Early-Bird Rights (which come after two) and full Bird Rights (which come after three). Full Bird Rights allow a team to re-sign its own free agents for up to the max. Non-Bird Rights and Early-Bird Rights circumstantially allow some wiggle room, but not nearly that much.
This rule came from the right place. No team should lose an icon because of cap concerns. But it was utterly abused in practice, as players managed to use the it to circumvent the cap entirely and earn contracts that just wouldn’t be possible today. Having no time restraints on Bird Rights meant that free agents pretty routinely signed short-term deals with the unwritten understanding that in the near future, they would re-sign newer, bigger deals that made up for the money they lost.
Horace Grant was the most famous example. He signed a suspicious five-year deal with the Orlando Magic in 1994. That deal paid him under $2.8 million for the 1995-96 season, but included an opt-out in the summer of 1996. Grant took it, and the new deal Orlando gave him paid him a cool $14.8 million for the 1996-97 season. Under the current rules, Grant would have only Early Bird Rights, and with them could have made only around $5.3 million that season from Orlando. This tactic was hardly confined to players of Grant’s caliber, though. Chris Dudley executed a version of this plan so egregious that the league publicly called it “a blatant and transparent attempt” to circumvent the cap and challenged it in court.
If you’re wondering why superstars didn’t take advantage of this loophole, the short answer is that they didn’t reach free agency often enough to do so. We’ll explain why down the line. For the most part, teams used this tactic to bring in valuable players that weren’t quite superstars. After all, if the NBA was willing to go to court over Dudley, imagine how it would have reacted if a team had nabbed Karl Malone on this sort of deal.
Almost every team in the league was taking advantage of this loophole in some form at the time. Without a Mid-Level Exception in place, it was the only tool a capped out team could use to add talent, and conversely, it was the only way a player could land with a team that lacked cap space. These under-the-table deals were so tempting and so inflated a team’s cap numbers that preserving space required far more willpower. That was especially true given the lack of consequences of spending at the time.
The luxury tax
The NBA did not adopt any sort of luxury tax until the 1999 CBA. Even then, the tax would only be paid if the league as a whole paid players over a certain amount, not just individuals teams. That was corrected in 2005, and the more punitive version currently in existence was ratified in 2011. This meant that, so long as a team operated within the rules of the cap in acquiring and signing players, they would not be punished for spending literally any amount of money.
So what did this mean in terms of roster construction? Essentially, it gave teams the freedom to spend with impunity. The small-market Indiana Pacers had the third-highest payroll in the NBA by the 1996-97 season. Why? Because they spent over $18.7 million — just under 77 percent of the cap — on four players at the same position. They spent more on the combination of Dale Davis, Antonio Davis, Rik Smits and Derek McKey, all big men, than either Toronto or Vancouver spent on their entire rosters. There just wasn’t a reason not to. They happened to have those players. They all produced. There was no financial punishment for keeping them. So they kept them. On some level, this was happening practically everywhere. Opportunity cost leads to prudence that didn’t exist in the 1990s.
The combination of limitless Bird Rights and no luxury tax practically begged teams to spend money retaining their own players. As such, as their cap sheets were occupied with players modern teams would have the restraint not to spend on. As meaningful as that combination was, though, it is dwarfed in importance by the single biggest driver of free-agent movement.
The max contract
Players were legally allowed to be paid any amount a team would willingly pay them until 1999, so long as that number fit either underneath the salary cap or the player’s Bird Rights. There were no restrictions on amount (Michael Jordan made 123 percent of the salary cap for the 1997-98 season), or options (Chris Webber’s 15-year rookie deal included a first-year opt-out), and while the 1995 CBA created a seven-year restriction on length, prior contracts greatly exceeded it (such as Magic Johnson’s 25-year deal).
The 1999 CBA created the current three-tiered max system we have today. Players with between four and six years of experience can earn 25 percent of the cap in the first year of a new contract. Players with between seven and nine years of experience can earn 30 percent of it in the first year of a new contract. Players with 10 more years of experience can make 35 percent of it in their first seasons. Lengths have varied over the years, but currently, a team can get five years from his own team and four years from a new one.
Before these restrictions were in place, teams greatly exceeded them on both fronts. Let’s start with salary. The highest first-year salary any current free agent can get is 35 percent of the salary cap. But according to Hoops Hype’s salary database, between Jordan’s first championship season (1990-91) and his last (1997-98), a staggering 26 players made salaries above 35 percent of the cap. That list includes plenty of players who might’ve liked a superstar teammate with which to battle Jordan: David Robinson (five times), Patrick Ewing (four times), Reggie Miller (twice), Gary Payton (twice) and Alonzo Mourning (twice) all make multiple appearances on that list.
In many cases, players took up comical percentages of the cap. Ewing routinely took up gargantuan amounts, as high as 76 percent of the cap in Jordan’s final season, though he did give the Knicks a bit of flexibility by signing a one-year contract in 1996. That was flexibility the Spurs, for instance, lacked. David Robinson cost San Antonio 46 percent of it in Jordan’s final season.
These huge numbers didn’t just make cap space harder to create, they made it harder to use. It’s common sense. Modern free agents are hardly incentivized to remain in place. The ceiling on their max could rise if they gain supermax eligibility, but under no circumstances can that exceed 35 percent, and without it, they can only get one extra year on their contract and slightly higher annual raises to stay put. If LeBron James, Dwyane Wade and Chris Bosh had all been allowed to negotiate for their market value in 2010, there is no way that the Heat would have been able to afford all three. But the max essentially took financial incentives off of the table. If all three could play together for virtually the same amount of money that they would make on their own, then suddenly playing together becomes far more appealing.
Older superstars did not have to make such sacrifices. If Ewing could make 76 percent of the cap from the Knicks, then he’d essentially have to take a 50 percent pay cut to join a new team even a modern max deal. Top players at that point hogged such a ridiculous percentage of a team’s cap space, and could similarly demand that much from their own teams thanks to their Bird Rights, that building a superteam elsewhere would simply be financially impractical.
It wasn’t just the sheer salary of these deals that made free-agent movement so difficult. It was their length. Ewing, for example, didn’t reach free agency until 1996, 11 years after he was drafted. His rookie contract could have lasted anywhere from six to 10 years based on options. The length of those contracts incentivized early renegotiation because market conditions change during the life of those deals.
Nowadays, player contracts are organically so short and so often contain opt-outs that if a player is underpaid, he’ll reach free agency soon enough to correct that. At that point? A player might be underpaid and still have six or seven years left on a deal. Making more money meant committing more years. Superstars routinely signed new deals years before their old ones would expire to ensure that they were properly paid.
Now think about those longer contracts in the context of an entire roster. When a team wants to sign multiple stars today, it simply jettisons its role players, who are typically on short contracts. Doing so becomes significantly harder when those role players are on six- and seven-year deals. There was no stretch provision at this point in history either. If a team wanted to clear cap space, trading contracts was the only way to do so.
And finally, there’s the mental toll of all of this. Teams were aware of all these realities. They knew that clearing cap space would require convincing stars to take pay cuts, hoping other stars didn’t extend their contracts, and spending years either dumping their bad contracts or waiting for them to expire. It was such a perilous and unpredictable track that no team truly attempted it until the 2000 Orlando Magic. Using the methods described above made it easier to aim lower. Getting and retain role players was so simple that aiming for stars just wasn’t appealing. To an extent, this was by design. Most of the past methods of superteam formation had been eliminated by league-intervention.
Where did the superteams of the 1980s come from?
Superteams were plentiful in the 1980s, and they are plentiful now. They just happened to be built in entirely different ways. Broadly speaking, most of the best teams of that decade stacked the deck using methods that are now illegal. One such practice involves an owner so infamous he now has a rule named after him.
Ted Stepien had no interest in rebuilding when he took over the Cleveland Cavaliers. He wanted a playoff team immediately, so he traded all of his draft picks for veteran help. That isn’t an exaggeration. The Cavaliers did not keep a single one of their first-round picks during Stepien’s entire tenure. Another team had their pick every year from 1980-86, and each selection was in the top nine. In 1982, that pick went to the Lakers. It was No. 1 overall. They used it to select James Worthy. Nowadays, this would be impossible because of the aptly-named Stepien Rule. It prevents teams from trading first-round picks in consecutive years.
The Philadelphia 76ers were able to take advantage of a different sort of desperation. When the ABA and NBA merged, the then-New York Nets owed the Knicks a $4.8 million fee for entering their territory. This is a fairly standard expansion and relocation clause that still exists in many sports today. The problem was that the Nets couldn’t afford it, so they sold Julius Erving to the 76ers in order to pay off the Knicks. Today, any new ownership group would be vetted. It would have to be financially stable enough to support the franchise, and even if it wasn’t, the sale of players for cash is now illegal. That it wasn’t then allowed the 76ers to steal a Hall of Famer.
And then we have the Boston Celtics. Rather than exploit the trade market, they turned to the NBA Draft. With the No. 6 pick in the 1978 draft, they took Larry Bird. The only problem? Bird hadn’t entered the draft. He remained in school at Indiana State, but the Celtics were able to retain his rights and sign him a year later, after he graduated. As with practically every other rule we’ve discussed, this one was changed as well. Players cannot be drafted and still return to college anymore. It is the second rule mentioned in this story named after Bird.
The perfect storm
The above moves were a staple of the 1980s. As Larry O’Brien gave way to commissioner David Stern in 1984, the NBA went from a somewhat lawless league into one with structural order. When a team exploited a rule to gain an unfair competitive advantage, the NBA changed that rule to protect the balance of the sport. By the time Jordan starting winning, the old methods of combating a team as dominant as the Bulls were all gone, yet the new ones that would eventually be concocted weren’t yet possible. In other words, building a superteam was only possible through brilliant, by the numbers management.
And that’s what the Bulls had. Not only did they select Jordan, but they had the foresight to select Scottie Pippen and Horace Grant in the same draft. They stole Dennis Rodmanand to maintain flexibility. They identified Toni Kukoc in Europe and prioritized 3-point shooting guards next to Jordan like Steve Kerr and Craig Hodges before the rest of the league caught on to analytics. Jordan would have won championships practically no matter what. He was that good. But that he won six with dominant rosters around him came down to his front office’s ability to surround him with more talent than anyone else.
In that sense, Jerry Krause was right all along. At that point in NBA history, players couldn’t forcibly build their own dynasties. It was organizations that won championships.