Rubio Buyout

Ricky Rubio, the Spanish point guard who will turn 19 this October and was recently drafted by the Minnesnowta Timberlolves, has had a sports news article written about him every week summer. From debating about where he would be drafted, to speculating whether teams were willing to trade to move up in the draft to pick him, to the most recent postulations of if he will even be able to play in the NBA this season, he has been the media's favorite character of this draft class. With his shaggy hair and flashy play, and after watching him hold his own against the NBA elite in the Olympics last summer, it is not hard to see a star in the making--something those T'LOLves could desparately use considering the tough economy and projected losses for the upcoming season.

General Manager David Kahn has been flying back and forth to negotiate a buyout with DKV Joventut, Rubio's Spanish league team, so that the young player can join Minnesota in training camp. The problem is that DKV Joventut seems very unwilling to forgo the $6.6 million dollars they are entitled to for the remaining 2 years of Rubio's contract. That is not how much Rubio is slated to make these next 2 seasons, but rather a clause the Spanish team put in his contract knowing full well that he would be an NBA player in a few years--he debuted with the team in the 2005-06 season. Rubio's origianal salary was 80,000 Euros per season, about $113K in US dollars. That was raised last summer to 300,000 Euros, about $425K. Either way, far below the buyout figure. That means DKV Joventut deliberately inserted that clause to cash in on the young players future at the cost of some NBA team. Lucky for the T'LOLves, the NBA has a rule that limits the amount of money a team can use towards a buyout to $500,000.

DKV Joventut is facing the harsh market the recession has placed us all in and does not want to settle for the mere half a million. More importantly, the team financially can not settle for the half million. DKV Joventut owes the Spanish IRS (Hacienda) millions of dollars (couldn't find an exact figure) and used Rubio's contract as collateral to postpone payments. That means the Hacienda will not allow Rubio to be bought out for only half a million dollars. What that could also mean is that Hacienda expects payment sooner rather than later, as Rubio could negotiate to buy the contact out himself through delayed payments over his Rookie contract (which would end up being worth over $10,000,000) and make up the differences through endorsement deals. The reason he probably doesn't do that is that he loses that $6.6 million when he believes the team should pay for it... but really it is probably just his agent, Dan Fegan, telling him not to do it because that would be a significant cut (15% of $6.6 Mil = $990,000) in pay for him as well.

What kind of situation would allow for Rubio to end up in the NBA this season?

Rubio would have to be able to sign some endorsement deals that paid him millions immediately, thereby allowing him to afford the buyout now and take in the NBA salary as income. Is that realistic? An international teenager playing in the Midwest... not likely. So it seems Rubio will end up playing in Spain for at least another year, where the buyout will then be worth less and negotiations will begin again (if not and he plays in Spain for 2 more years his contract ends and there is no buyout).

With the trouble this is causing the T'LOLves this summer, it seems like inserting ridiculous buyout clauses in contracts is not really beneficial. The NBA limit on buyout contributions is unlikely to change as it was created just for this type of situation, to protect NBA teams from money-seeking foreign teams looking to cash in on their young players. The result of the Rubio contract issues may lead more international teams to insert buyout clauses into their contracts for all players. Even if the buyout isn't $6.6 million, but $500,000 then that is another half million for the team that formerly employed the player.

What can the NBA do to help teams with situations like this?

Obviously teams do not really believe in the $500,000 limit on buyouts considering how the NBA minimum salary for a rookie is almost that itself and no player being signed to the NBA minimum is going to be bought out (regardless). The NBA has a right to set a limit and should so that teams are not being taken advantage of for having a good draft pick. Whether or not the limit is set at the right figure is hard to say because international teams will undoubtedly be better off financially keeping their best players as that leads to more attendance and more endorsement deals. At the same time the young foreign players deserve to make NBA type money if they have NBA talent and most international teams can not offer that type of money. Also, the NBA is the best competition in the world and a goal for most professional basketball players. It would not be good publicity for international teams to prevent players from coming over to the NBA despite their wishes, though if they paid the players so that they didn't want to leave that is a different

story. Raising the limit allows teams to feel justified inserting high priced buyout clauses into contracts, while lowering it makes teams feel cheated by the greedy NBA.

The NBA is by no means looking to hurt the image they have developed overseas. It could help to facilitate an easy method of contract dealings between NBA and international teams. For example with Rubio, to offset some of the buyout, the NBA could offer DKV Joventut some pre-season exhibition games vs. the team in Spain. This would be a hit as a ticket draw in Spain as well as good marketing for the NBA. Another idea, although unconventional, would be to allow trades between the teams to offset the difference in money. Rubio's contract buyout is worth $6.6 million, Minnesota could offer to give DKV Joventut a young player while still paying the NBA

contract he is signed to. Let's say Minnesota lends DKV Corey Brewer for the year, while still paying his $2.9 million contract for this season. DKV in return allows Rubio to play in Minnesota for the season while still paying his 300,000 Euro contract. DVK gets a player to compensate for the talent lost, and avoids having to pay his NBA scale contract and instead only pays the reduced money that Rubio would be paid. This would help Joventut maintain a winning team and give them an NBA attraction for fans while still retaining the buyout clause in Rubio's contract. So at the end of the season, the teams can begin negotiations again and DKV could still get some money out of having developed Rubio and not have to more or less give him away. The T'LOLves win because they give Rubio a year of NBA experience, introduce him to fans and avoid paying the full buyout amount. While they lose the play of Corey Brewer for the year, it allows Brewer to

play in a different setting where he will have the chance to regain his confidence, something that's been lacking from his game since entering the NBA. It is hard to say if Joventut would accept the deal since they could view it as unfairly bypassing the money they are legally entitled to, but surely it is better than simply retaining Rubio and starting negotiations agian next off-season while having a pissed off and unhappy Rubio run the team for the upcoming year.