NBA referee Kenneth Dam ruled Monday that the Timberwolves signed a secret contract with Smith in January 1999 worth up to $86 million (U.S.) for seven years. The team, which had blatantly cheated by signing Joe Smith on secret contracts, suffered a devastating blow with the loss of five first-round picks, a $3.5 million $US fine and the nullity of Smith`s deals with the Timberwolves. The sentences imposed by Commissioner N.B.A. Commissioner David Stern followed an arbitrator`s ruling on Monday that the Timberwolves had signed a secret deal with star forward Joe Smith in January 1999 worth US$86 million over seven years. At the time of the deal, the team could not afford to pay Smith what he was worth on the free market without breaking the league`s salary cap. Imagine a world where Minnesota Timberwolves owner Glen Taylor did not enter into an illegal agreement with then-free agent Joe Smith. Suppose the Timberwolves were not fined $3.5 million and allowed to retain four of their next five first-round picks. Timberwolves owner Glen Taylor acknowledged through reporters that he signed the secret agreement, but said the team`s vice president for basketball operations, Kevin McHale, and coach Flip Saunders were not involved. The Commissioner has the power to suspend for one year anyone involved in the agreement.
The league was tough against the Timberwolves. They fined the team $3.5 million and suspended Taylor and Vice President Kevin McHale. The deal includes a 10-year agreement under which Taylor agreed to sign Smith with three one-year, $1.75 million, $2.1 million and $3.6 million contracts, the Times reports. The Timberwolves` covert tactics reflect a widespread problem in the league, N.B.A. officials said. The hefty penalties announced yesterday should send a message to team owners and player agents who are trying to under-confront the wage cap system negotiated under the current collective bargaining agreement, league officials said. The dispute will be before referee Kenneth Dam. The NBA said that if it confirmed a secret deal, Stern could impose multimillions of fines, loss of draft picks, cancellation of player contracts and suspension of team personnel. The league found out that the Timberwolves were guilty of contracting under the table with Smith.
The illegal deal said that if Smith signed three one-year contracts, if Minnesota signed him an extension of up to $86 million as soon as they retained his bird rights at the end of the third deal. But until the Smith case, the league had never found a piece of paper to prove the existence of a secret arrangement. In September, the league received copies of Smith`s two contracts — the one-year contract and the secret seven-year deal. The arbitrator, Kenneth Dam, ruled on Monday that the undisclosed agreement amounted to a binding contract that broke the salary caps. NBA Commissioner David Stern said Thursday that the “shocking” fraud by the Minnesota Timberwolves forced him to impose a record fine on a secret contract for star forward Joe Smith. Salary caps have been part of the collective bargaining agreement between the league and the players` union since 1983. The cap is determined by the distribution of 48 percent of the league`s annual revenue, minus the benefits for players, among the 29 teams.