After the first day of NBA free agency, the one question on most people’s minds was, “WTF?” Sure, the salary cap jumped this year. That can only mean more confusion when it will massively jump next year. First things first, let’s deal with the here and now.
The fact that Timofey Mosgov will make more money next year than Steph Curry and that DeMar DeRozan’s new five year deal, approximately $145 million will be only $4 million less than LeBron James made in the first 12 years of his career might influence people to believe the owners need to be included in the league’s drug testing policy.
Humor me while I tell a personal anecdote. When our two sons were around the ages of 10 and 5, we used to give them allowances of $4 a week for the older one and $2 a week for the younger one. Not exactly the manner in which wealthy children are raised but since 1) we weren’t wealthy and 2) they had no expenses, it was a reasonable thing to do. I’d give them the money on Friday. One “payday” I asked each one how much money he had left from the previous week.
“None,” was, not surprisingly, the answer both gave. Honestly, I didn’t think kids of that age were going to be frugal so the outcomes didn’t shock me. Had one or both of them told me they actually had some change left, that would have shocked me. I did, however, see the potential for a “teachable moment” for the boys. “Andy,” I said to the older one, “this week you’re getting $4 but I’m going to give you only $2 and put the other $2 in an envelope with your name on it. “Alex, you’re getting $1 of your $2 with the other going into an envelope with your name on it.
“I know this doesn’t sound like a real good deal for you guys,” and judging from the looks on their faces, I pretty much knew I had a correct assessment of each one’s feelings. “But, what I’m going to do is give you guys 12% interest on the money in the envelope – and I’m going to compound the interest monthly – meaning at the end of each month, I will add 1% to whatever is in that envelope” (this generosity was nearly 20 years ago). “I know this doesn’t mean anything to you now but let’s just see what happens.”
Of course there was the understandable griping when the boys got only half their money. Mostly, it was gone by Saturday. Then again, prior to the new fiscal plan going into effect, their money was usually gone by Saturday anyway. My late mentor, John Savage (my wish for each of you readers is that you have someone as influential in your life as John was to mine), was fond of saying, “There are two types of people in the world – those who spend and save what’s left, and those who save and spend what’s left. Invariably, the first group always ends up working for the second.” Added to
our my new strategy was that, every time each of the boys would receive money, e.g. birthday, Xmas, any monetary gift or earning, some of it (we began with a minimum 10% rule – but, believe it or not, as they grew older, even more would be “sacrificed”). As they grew older and their allowances were bumped, $10 for Andy, $5 for Alex, still it was just $2 into one envelope and $1 into the other. This was an attempt to have them understand the difference between being a fiscally responsible individual and being a miser.
Every so often I would share with each the amount of money in his envelope. After a while, they understood – and appreciated – how the combination of saving and compound interest worked in their favor. When Andy went off to college, I vaguely recall he had somewhere in the neighborhood of $1,200. Since Alex had an additional five years of savings, by the time his senior year of high school rolled around, I came to dread the last day of the month due to how much interest I’d have to put in that envelope. Alex’s haul, when he left for college was, I believe, around $3K.
An addendum to the story: the tradition began anew for both boys a few years ago – only this time it’s 6% interest, compounded quarterly (their benefactors are retired now) – and the amounts socked away are greater. Alex had to give a minimum of $5 per week from his spending money (which was pretty significant since he was on scholarship and saved us quite a bit), although when it comes to “gift” money, including last month’s graduation haul, more is saved. We were going to place a minimum $10 per pay period on Andy, who has been gainfully employed since graduating college in 2011, but his contributions have been between $25-100, depending on what his commissions are. On a rare occasion, even more. Lesson learned.
Back to the first day of NBA free agency. Although the majority of my adult life was consumed with basketball, I would want no part of owning an NBA team. Forget that I don’t have billions of dollars (or even millions). I doubt my type of fiscal responsibility would make it as an owner. I feel I’m a rational guy who, as a math major and (former math) teacher bases most of my decisions, financial and otherwise, on logic. This year’s free agency (and I’m certain, next year’s) leads me to one conclusion:
“There is no way billionaire owners used the same strategy to make all their money that they are now using when making decisions on their team’s payroll.”