How the league’s players, front offices and owners view the Las Vegas Aces investigation — Podcast, links and more

The IX: Basketball Wednesday with Howard Megdal, Feb. 8, 2023

Happy Basketball Wednesday. All around the WNBA, the terms of the new collective bargaining agreement have meant adjustments in the way many veterans of the league have operated for years during the offseason. But the conversation concerning the Las Vegas Aces was, well, different.

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Teams found their offers weren’t being accepted, even countered, when they vastly outstripped what the Aces ultimately paid players once the contracts were logged on the league’s internal salary system. Players were not even taking meetings in many cases, surprising front office members and owners alike.

And notably, several agents, in the midst of negotiations, started asking an odd question: What kind of extra revenue opportunities could the teams line up for a player ahead of time? That last one, of course, runs directly counter to the rules of the league collective bargaining agreement.

The revelation of a league investigation — which I reported Wednesday morning and the WNBA confirmed on the record Wednesday afternoon — into these under-the-table payment allegations touches on every major question currently facing the WNBA. In interviews with 16 players, coaches, front office members and owners, I’ve gotten a deeper sense of just how much this will resonate no matter how the investigation shakes out.

One thing that’s clear: This has been the talk of the league, from those gathered at USA Basketball this week in Minneapolis to every informal gathering, text chain and phone call among the small circle that is women’s basketball. Trying to understand what has happened, and what is likely to happen next, remains unclear to everyone, with those eager to know looking for precedents that simply do not exist.

The closest analog anyone can come up with to what is alleged is the Joe Smith saga in the NBA back in 1999, when the Minnesota Timberwolves arrived at an under-the-table agreement with Smith, paying him a negligible amount for three seasons ahead of a deal to sign him to a massive long-term contract via his [Larry, not Sue] Bird rights.

The punishment: suspensions for owner Glen Taylor and executive Kevin McHale, a $3.5 million fine, and the loss of five (later reduced to four) first-round picks.

The problem with using this as a template, should the Aces be found to have committed salary cap circumvention, is that fines may not matter much to Aces owner Mark Davis. As one league source put it, “It matters more to Mark than it does to [New York Liberty owner] Joe [Tsai], but not a lot more.” The general consensus is that the Liberty paying a $500,000 fine over their chartering flights for their own players was little more than the best kind of advertising.

Notably, no chatter exists asserting the same arrangements have been undertaken by the Liberty as that franchise pursued its superteam, adding Jonquel Jones, Breanna Stewart and Courtney Vandersloot this offseason. And that is part of what confounded so many league figures as the talk of pay-to-play in Las Vegas got louder: Why do this?

“Everyone in the league would love to play with A’ja Wilson and everybody loves it in Vegas,” one league source told me. “Who needs to cheat at that point?”

It’s up to the commissioner to find out the answer to that question. The task ahead for Cathy Engelbert and the league office is a herculean one. Every potential solution carries enormous risk. Even the methodology of applying those solutions are fraught.

For instance: Let’s say the league decided to void the contracts of any players signed to under-the-table agreements. At best, this would place players back into the marketplace at a moment that is far less lucrative — there simply aren’t as many salary cap dollars to spend, say, tomorrow as there were on Jan. 21. Whether such a move would be fought by the WNBPA — which represents both players on the Aces and players on other teams, after all — is uncertain as well.

But the bigger the punishment, the larger the impact on one of the signature teams in the WNBA, the defending champions. And the longer that takes to decide, the longer this hangs over the Aces — unfair to the franchise if it hasn’t done anything wrong and a PR nightmare for team and league alike regardless of the outcome. But short-circuiting the investigation isn’t the best way to ensure all parties are heard from and a decision is handed down justly, either.

There’s this, too: Even if a punishment is harsh and a deterrent in the abstract, should it take a long time, other knock-on effects could make the effort to stop teams from compensating players in extra-CBA ways a dead letter.

Finding a way to pay players more isn’t simply a question of trying to win at all costs. The WNBA — indeed, women’s sports as a whole — is increasingly providing financial rewards to teams that invest and win that justify such expenditures. The dollar-in, dollar-out mentality is disappearing, and the values of teams reflect this new reality, too.

It is easy to think of the CBA as new, and in some ways it is — signed in January 2020, after all, just three years ago. But that might as well have been another lifetime in women’s sports economic terms. Just for one example: Davis reportedly paid $2 million for the Aces in 2021, while the Seattle Storm sold minority shares in their team off a valuation of $151 million just this week, the great Rachel Bachman reported.

But the two primary ways for the league to increase revenue, and thus the salary cap, through the rev-share in the CBA — expansion and a new media rights deal — sit far away. Engelbert, this week, once again pushed expansion’s timetable back further, to at least 2025, the same year the league’s current deal with ESPN ends.

Many WNBA owners considered expansion the likely financial bridge to a new media rights deal some time ago, and there is considerable consternation that those expansion fees — like, say, the $50 million per team banked by NWSL — aren’t coming any time soon.

One possible reason: WNBA owners only own approximately 42% of the league, while the NBA’s owners own another approximately 42%, and the remaining WNBA ownership stake belongs to those who invested in the recent $75 million capital raise. Thus, league revenue is parceled out accordingly. NWSL owners, meanwhile, own 100% of their league. It’s both why a new media rights deal wouldn’t be as lucrative in practice for a WNBA owner as a top-line number would make it seem and why, when that’s converted to revenue share, players will see even less of it.

Without that floor, though, expect plenty of WNBA owners to express significant concern to Engelbert and the league over the idea that, to compete, they’ll need to start finding ways to pay players more — not in a systematic way with the checks and balances of a salary cap, but instead facing an uncertain upward pressure with no particular end in sight. That’s the risk the league faces if it finds the Aces have committed these infractions and does not act.

“I want them to take a look in the mirror at the hard cap and figure out a way to get players more money,” one player told me.

Agents, too, will have to start asking for this. “If I don’t, and other agents can get this for their clients, I’m not going to be in business very long,” one told me.

Ultimately, charter flights and under-the-table payments are but a symptom. The cause is that there’s far more money available to pay players, especially in some quarters, than the current system allows anyone to dole out.

This is good news, provided it is handled in a proactive way.

If it isn’t? Then the next scandal, and the one after that, is a matter of when, not if.

Massive pay-to-play, other circumventions, even a game-fixing scandal — these are all the consequences posed by league figures as not just things to fear, but expectations should the current economic system not change.

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Five at The IX: Podcast on the Las Vegas Aces allegations

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Written by Howard Megdal

Howard is the founder of The Next and editor-in-chief.