January 7, 2010, 11:03 pm
Arenas Suspension Has Limited Benefit to Wizards
By LARRY COON
The recent news surrounding Gilbert Arenas has generated a lot of questions.
First, I was unclear yesterday when I wrote that 50 percent of Arenas’s salary would come off the Wizards’ cap while he is serving his suspension. That is only true for specific purposes — for example, when computing the amount the Wizards will owe in luxury tax. When calculating the Wizards’ tax bill, the accountants will subtract 1/220th of Arenas’s annual salary for each missed game. If Arenas’s suspension lasts the remainder of the season, the Wizards will save about $3.68 million on their tax bill.
Even if Arenas is suspended for the rest of the season, the Wizards would still owe about $5 million in luxury tax. But perhaps it will be easier for the Wizards to make a trade that moves them below the tax threshold of $69.92 million. Below that amount, teams are tax beneficiaries rather than payers, and receive a portion of the money paid by the taxpaying teams.
For other purposes, Arenas’s salary remains steadfast at $16,192,080. The Wizards cannot use salary savings from Arenas’s suspension to sign another player (and even if they wanted to, their roster is already at the 15-player maximum). His trade value also remains unchanged –- from a rule standpoint, at least. Their chances of finding another team willing to trade for him are now likely zero.
The Wizards do not get to pocket the salary saved by Arenas’s suspension. Assuming he does not prevail in a grievance hearing, the money is donated to charity, with 50 percent going to a charity of the league’s choosing, and the other 50 percent going to a charity of the Players Association’s choosing.
The other question that I’m frequently asked is whether -– or when –- Arenas can file a grievance. The league has two standards for determining whether a punishment can be grieved. If it was the result of an incident “on the court” then a fine of more than $50,000 and/or a suspension of more than 12 games can be grieved. In that context, “on the court” is vaguely worded. It actually means anywhere in the arena, including the locker rooms, from the moment the player enters the arena to the moment he leaves.
If the suspension was related to the integrity of -– or public confidence in -– the game of basketball, then it can be grieved if the total financial impact on the player exceeds $50,000. Since Arenas stands to lose $147,201 for each missed game, that threshold will be met after one game.
It’s pretty clear that this incident does not fall under the definition of “on the court,” even though it occurred inside the Verizon Center. The firearms clause of the collective bargaining agreement classifies a violation as “conduct prejudicial to the NBA.” Furthermore, in his news release announcing the suspension, Commissioner David Stern pronounced Arenas “not currently fit to take the court in an NBA game.” So this clearly is not classified as an on-court incident -– even using the broad definition for that term –- and Arenas can grieve the suspension right away.
Strategically, Arenas and his representatives may decide not to go this route. They may decide it’s better to wait to deal with the punitive suspension that is sure to come, along with a possible attempt by the Wizards to void his contract, and any legal consequences he may face.
