Buyouts in Europe Raise Alarm in the N.B.A.

[MavKikiNYC]

Buyouts in Europe Raise Alarm in the N.B.A.
By CHRIS BROUSSARD


here is a 12-year-old boy in Serbia whose 6-foot-11 frame has European scouts beside themselves, itching to sign him to a professional contract. The hope is not that he will one day blossom into a dominant player overseas but that in six or seven years the N.B.A. will come calling, leading to a financial boon worth millions for whatever club has his rights.

Over the past few years, the selling of international players to teams in the National Basketball Association has become big business, and some agents and officials of N.B.A. teams believe it is becoming a big scandal, one in which international clubs are signing teenagers to long-term, relatively low-paying deals, then demanding buyouts worth significantly more than the original contract when they are drafted by an N.B.A. team.

With international players becoming increasingly prominent in the N.B.A. draft and with buyout amounts escalating, there is a growing sense that FIBA, the sport's international governing body, and the N.B.A. should revamp the system. Some American agents likened it to a form of indentured servitude because N.B.A. rules forbid teams to pay more than $350,000 for an overseas buyout, so the player ends up paying the bulk of the money.

"There has to be a committee formed by FIBA, the N.B.A. and all the governing bodies of basketball around the world because it's getting out of hand," said Tony Ronzone, the Detroit Pistons' director of international scouting. "Teams are now seeing the rewards they can get and they're looking for kids younger and younger, 12 and 13 years old, with the intention of signing them to contracts. It hasn't been done yet, but it's coming. It's going to come to a head sooner or later. In two years, something will have to be done."

Two recent situations illustrate Ronzone's point. Maciej Lampe, the Knicks' second-round draft pick from Poland, made about $50,000 last year on a contract with Real Madrid that was to run through 2008. But the buyout clause in the contract was for $2.2 million, though the Knicks were able to whittle it to $900,000.

And last week, Detroit completed a long, complicated negotiation with Hemofarm Vrsac for the rights to Darko Milicic, its first-round pick from Serbia and Montenegro. After telling Milicic's agent, Marc Cornstein, in February that it would take $15 million to buy him out of a nine-year contract that paid Milicic less than $100,000 last season, Hemofarm asked for $8 million to $10 million when approached by the Pistons after the draft.

On Friday, the Pistons signed Milicic to a contract after agreeing to a buyout that was worth $3 million, according to a person briefed on the negotiations.

"It's been quite a roller coaster to get to this day," Joe Dumars, the Pistons' president for basketball operations, said at Friday's news conference.

Earlier, responding to a question sent via e-mail, Dumars said he believed the current system of transferring an international player's rights to the N.B.A. would "have to be addressed."

Cornstein, who represents four foreign-born 2003 draft picks, was more outspoken.

"The European teams sign these kids at a very young age to long-term deals for tiny amounts of money and then hold the N.B.A. teams over a barrel," he said. "They've found a way to strike it rich, and I think it's a major problem. The N.B.A. shouldn't be able to raid a European team, but at the same time, when the buyout is worth multiple times more than the contract itself, at what point does it go from compensation to extortion?"

Few disagree with Cornstein's assertion that international clubs are seeking to profit from players who are drafted by the N.B.A. But representatives of FIBA and the N.B.A. said the system was unlikely to change.

"I don't see how there can be any regulation," Russ Granik, the N.B.A.'s deputy commissioner, said. "And I don't see it as a huge problem because in the end, these things tend to work out. You may walk away thinking that maybe the European team got away with something, but it works out."

Granik said one possible solution is for younger international players, on the advice of an agent, to reject long-term deals in favor of shorter contracts. But the European teams typically get to 14-year-olds before agents, and with many of the players coming from impoverished backgrounds, the deals they receive appear lucrative.

"A $50,000 contract may be nothing by the standards of the L.A. Lakers, but in some places, that's a lot of money," Dirk-Reiner Martens, the legal adviser for FIBA, said in a telephone interview from Munich.

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Ronzone believes a system similar to the N.B.A.'s rookie pay scale should be instituted: a percentage of a players' N.B.A. contract, based on draft position, would go toward a buyout.

But Martens said the system could not, and should not, be changed. In 1990, FIBA, which represents 208 countries, including the United States, and the N.B.A. agreed to honor all legitimate contracts worldwide. Martens contends that the team holding a player's contract has the power to refuse any offers it receives or to say in effect, "make me an offer I can't refuse." He said anything else would be tantamount to overriding a nation's domestic law.

"We should not interfere with contractual rights," Martens said. "Even if we were concerned, we have no way of changing the system. You have to abide by the laws. In the U.S., the N.B.A. has to abide by one legal system. At FIBA, we have to abide by 208 legal systems."

Not all European teams are looking to recoup a tenfold return on their contracts. Benetton Treviso is known as the most N.B.A.-friendly international club; Maurizio Gherardini, Benetton's general manager, said the team would never ask for a buyout that exceeded the total value of a contract. When Denver made Benetton's Nikoloz Tskitishvili the fifth overall pick in 2002, Tskitishvili bought out his seven-year, $1.2 million contract for $1 million.

"My rule is that it has to be something that makes sense and is reasonable for both parties," Gherardini said in a telephone interview from Stockholm, where he was watching the European championships. "I think a buyout that's higher than the contract is unreasonable."

Not every agent believes the system borders on scandalous. Bill Duffy, whose clients include Yao Ming, Rasho Nesterovic and Marko Jaric, wishes that N.B.A. teams would pay more than $350,000 and not leave the financial burden to the players.

"The European teams don't have the revenue from television, radio and ticket sales that the N.B.A. does, so one of their few ways of getting lucrative, long-term money is when a player is bought out of his contract," Duffy said.

If an international team wants to make an exorbitant amount of money from a player it produced, more power to it, Martens said.

"If I had a team in Europe and I invested a lot of money in the formation of a player - I took him to basketball school, fed him, paid all his expenses - and by the time he turns 17, he's a big prospect, I would try to make as long a contract as I can possibly make," Martens said. "Then, if an N.B.A. team comes along, I say, 'No, you can't have him, unless I get back a buyout and extra benefits.' And given the N.B.A. salaries, people get greedy and say: 'Ah, this is the N.B.A. The price goes up 10 times.' That's reality, and we can't stop it."

[Avrillicker]

those NBA guys are really something; because they have the richest league in the world they believe everything is owed to them. Well,a $350.000 buyout for a top european player is ridiculous. And clubs do not sign just the future 1° rounders: for 1 Darko there might be 20 other teenagers who will never have any serious basketball career,and therefore value for the club who has nurtured,fed,housed and to a small amount payed them through half a decade or more.

It's only natural that this investment has to compensated,otherwise there won't be a next generation of players,simple as that.

[MavKikiNYC]

I get the feeling that even if some Euro clubs may be trying to gouge out a few extra $100Ks or so, the NBA will NEVER want to invest what it would take to develop a farm and/or minor league system.

They'd much prefer to let some other entity (be it the NCAA, the Euro clubs, or the Chinese army) do the 'investment', let that entity figure out how to turn a profit for itself, and then poach the best talent.

NBA would probably come out cheaper in the long run to just learn how to negotiate with the Euro clubs, and pay them a return, rather than crying about how they're being gouged.

[Rod1975]

Six foot eleven and only twelve? OMG is that even healthy? They must be referring to a hypothetical player....

I agree with the buyout not to exceed the overall value of the contract. These players are gettting the exposure they need from these professional teams and in return they put butts in the seats until they are drafted. If they are good enough to play in the NBA, they should'nt have to pay more than the original contract value.

[Chiwas]

The European soccer teams do the same thing but not only in Europe; they are constantly seeking all the world. Catch them very young and wait to have them fully developed or develop them theirselves. Normally the Clubs contract them cheap -although there are expensive contracts too when the kid is a natural wonder on the sport- but if the player succeed and play in the prime leagues, his value -contract- and wage skyrocket.

But my point is: they have a terrific, tenacious and very effective scouting, something that I think the NBA's teams do not do very well, even in the own backyard.