The NBA is broken. There’s nothing else that you can say about it. The system, intended to create parity and competition, has instead created a system where there are literally two competitive teams, fifteen marginal teams, and thirteen overtly terrible teams. Even worse, the bad teams have no clear way to improve and become competitive other than by sucking so bad that they get lucky and draft a transformational player.

European soccer has similar problems with competition. Since the teams are each individual entities, not franchises, some teams have vastly more resources than others. In Spain, Real Madrid and Barcelona have won all but four of the last twenty seasons. In Germany, Bayern Munich alone has won thirteen of the last twenty championships. How are these leagues so popular, despite the lack of competition? Simply put, all of the teams are given something to play for. While winning the league is certainly an accomplishment, it is not the only accomplishment. Teams compete for slots in the European tournament, a tournament that has seen no less than eleven different winners in the last twenty years, and has not seen a repeat champion since 1990. Lower level teams compete to get into secondary tournaments, such as Europa. The bottom rung teams are competing to stay in the top division. Even amongst the middle level teams, there is a large differential in prize money based on where they finish. It matters if you come in 10th place, rather than sixth place.

In the NBA (and most American sports for that matter), there is no value in finishing anywhere but first. This is perhaps most egregiously obvious when you hear some fans claiming that it is better for their team to be terrible, and get a lottery spot, than get a low seed in the tournament and get knocked out in the first round. People sneeringly point out that teams like the Clippers, who are in their best period of existence ever, have only won a few more playoff games than the historically terrible Lakers. At least the Lakers have a future.

How did it get like this? Part of it is just the nature of our league. Remember, that at its start, the NBA only had eleven teams. It wasn’t outlandish that the Celtics could dominate nine out of ten years, when they were competing in a twelve team league. In 1967-68, four of the twelve teams have .600 winning percentages and could be seen as viable, realistic championship contenders. Now that we are up to thirty teams, six of the thirty have .600 winning percentages and realistically, only four of the teams had any shot at a championship. That means there are twenty-six fan-bases that have pretty much nothing to root for.

The bigger problem, though, lies in the NBA’s misguided attempts at parity in the league. Since there is so little value in any other position than first in American sports, it becomes critically important that every team have a shot at competing for that top spot. Each sport has dealt with this problem differently, but ultimately, since the inception of free agency, the leagues have regulated the player markets to encourage parity. Unfortunately, the NBA particularly fails to recognize that teams are not just purchasing players. They are purchasing wins (or perhaps purchasing better opportunities for wins). In a true free market, all wins should have similar value. Leagues regulate these markets to prevent the big market teams, who might have multiple times the revenue of the smaller teams, from just buying up all of the wins and dominating the league (see: The Yankees in the 1990s).

Of course, compiled into this problem is the issue of player evaluation. If we are purchasing wins, the team that can deduce the best way to generate those wins for the least cost will be successful. Thus you get the moneyball era in Oakland or the analytics movement in the NBA. All of the teams are battling over getting the most win for their buck.

Presuming we could analyze (generally) how many wins a given player would bring a team, a fair market would set a price on those wins. To prevent teams from overspending, leagues establish salary caps that prevent the big markets from bullying the small and overpaying for wins. This is most effectively demonstrated in the NFL, with its hard cap and non-guaranteed contracts. However, this system works so well in the NFL because the distinction between a top of the line player and a solid starter is actually quite small. Teams need to balance all of the different positions, depth on their bench, etc., with picking up top of the line players. With the exception of the quarterback, few positions can be upgraded and instantly take a mediocre team and make them contenders. If you throw half your cap at a top quarterback, you end up sacrificing wins from other positions. The team that can best balance this equation is the team that ends up winning championships. Thus (and I hate to praise this team), the Patriots have dominated football by figuring out how to make the most out of the least. Less intelligent teams dump money on star quarterbacks, particularly in the draft, and find themselves still floating outside the playoffs. The cap doesn’t prevent teams from buying wins; it forces teams to budget where they are going to get these wins effectively.

MLB used to have huge parity issues, but they have mostly resolved these problems in an even simpler fashion: A punishing luxury tax. Big market teams can buy wins, but ultimately they will pay a higher and higher premium for those wins. The Dodgers inflated their payroll for a few years to try to become contenders, but have recently started cutting payroll, due to the penalties. Again, teams are encouraged to build teams in a smart manner, rather than just throwing money at the problem. Teams that consistently win big (see the Giants, the Cardinals, etc.), tend to not have many big stars; instead, they invest across the board and have very few problem spots on the team dragging them down. Since in baseball, a single player cannot carry a team, it is more valuable to patch all of the holes on your team than to have a stud in the middle of the lineup or at the front of the rotation, and then gaps all the way down.

The NBA has a problem that a cap can’t really solve, though. In the NBA, top players determine the team. The difference between a Kevin Durant or Lebron James and a good player like Damian Lillard or Jimmy Butler is colossal. According to basketball-reference’s VORP stat, Lillard and Butler (3.8 and 3.7 VORP respectively) were worth less than half as much as Lebron James (7.6 VORP). A team headlined by Lillard, all other things equal, would win ten less games than one headlined by James. To contextualize this, Lillard has the 14th highest VORP in the league. James has the third. I intentionally didn’t choose Curry’s freakish 9.8 VORP, in case it’s a statistical outlier. So the difference between having one of the fifteen best players in the league and one of the three best players in the league is the difference between the third seed and the eleventh seed in the East.

Obviously, there are a limited number of superstar players in the league. How can you create parity when the acquisition of just one player can produce that many wins? Obviously, the teams with these players would have a great advantage and that’s the way it should be. If you get lucky and score a champion, well, then you win championships. What if you’re a bad team, though? How can you improve?

In a free market, the problem would resolve itself. Star players are a valuable commodity, so you’d have to pay a premium to get them. Buying a Lebron James would cost so much that the team might not be able to afford great players to surround him. Thus, a team without a star could stock up on solid players and compete with Lebron + Junk. Don’t have a superstar? Be smart, and you can still play deep into the playoffs or maybe even win (see 2004 Pistons, whose best player was a defensive specialist and best offensive player was named Chauncey).

By establishing a team cap, the only restriction would be that the huge market Lakers, Knicks, and Bulls couldn’t just drown the opposition. The cap prevents limitless spending, but teams were still forced to make decisions about how to build a team. The Lakers tried to make a “super team” in 2003-4 by acquiring Gary Payton and Karl Malone, but ended up having to play Deveon George for nearly 2000 minutes. Spend a lot on stars, and pay the consequences on the bench.

The individual cap is the root of most of the problems. By capping the total salary a single player can earn, the NBA has established an uneven market for wins. Superstars are severely undervalued. Players on rookie contracts are undervalued. Mid-level players are overvalued. It’s as simple as that.

Let’s go back to that earlier comparison of Damian Lillard to Lebron James. Damian Lillard is worth 10.26 wins over a replacement player, according to basketball-reference. James is worth 20.52 wins more than a replacement player. Imagining every player were suddenly free agents, though, Lillard and James would cost pretty much the same. Teams don’t need to sacrifice to get a superstar. They pay the same amount as pretty much any other good player in the league.

So if Lebron James and Damian Lillard (and Michael Conley for that matter) are all going to be paid the same amount, what sacrifice does a team have to make to get one of the stars? What do they have to give up? Thus, the Warriors, who have a few guys on very friendly contracts, can sign Kevin Durant and give up what? Harrison Barnes? Andrew Bogut?

You can’t even blame the players. Durant and Lebron both know that they are worth way, way, way more than the max contract. How are they going to get that money? If you were going to be paid the same amount to fail consistently in one city or win in another (knowing that a championship will increase endorsement deals, etc.), what would you do? These players are employees just like the rest of us. They want to be paid what they’re worth and to feel like they’re succeeding. If they can’t get paid their value, shouldn’t they at least try to find success?

Since these amazing players are so undervalued, smaller teams are forced to give bigger and bigger money to middling players. Forget Damian Lillard. Michael Conley just got a max deal. Michael Conley, whose 1.7 VORP makes him the 69th best player in the league last year. To exacerbate this problem even more, the league established a salary floor and a moving cap, both of which encourage big contracts for middling players, without the ability to cut talent like you can in the NFL.

How can a bad team get better? They won’t be able to woo a big time free agent, because all they can offer is the same amount of money as everybody else. They won’t be able to woo a middling free agent, because those players earn just as much as the big timers. They can’t trade for star players, because they risk sending away any assets they might have in exchange for a player who will bail the second their contract is up. What can they do?

They tank to get high picks in the draft. The only way a team can succeed is by drafting a superstar and getting them tied up with a low-cost rookie deal. Golden State had to draft Curry, Thompson, and Green. Cleveland drafted Andrew Wiggins (who they turned into Kevin Love) and Kyrie Irving. The much lauded Spurs still drafted Leonard, Duncan, Ginobli, and Parker. The Clippers drafted Blake Griffin and Deandre Jordan. OKC drafted Durant, Westbrook, and Harden. The draft is the only way a bad team can get a good player.

The problems with this system are multiple. As has been pointed out ad nauseum, the “system” running in Philadelphia has created a series of terrible, unwatchable teams that still haven’t succeeded. Most draft picks don’t live up to the hopes of the teams. For every Blake Griffin, there’s a Greg Oden. As these teams get worse and worse, their ability to recruit even marginal players gets less and less.

Not only does this system encourage teams to play horribly, but it is brutally unfair for players who are stuck on rookie deals. Karl Anthony Towns, the fourth best center in the league last year, despite only being 20 years old, is getting paid 1/3 as much as Al Jefferson. This will not change for years. KAT could win three championships for Minnesota and then bust his knee and never earn more than the tiny rookie deal. He was the first overall pick at that, so his contract is substantially more than most draft picks. What if you were Deandre Jordan, who was picked in the second round? This system makes getting paid when you’re a UFA even more important, at the detriment of loyalty.

So by establishing a player contract cap, a team cap, and a team salary floor, the NBA has created a system that creates super teams at the detriment of the rest of the league. Two thirds of NBA teams have literally nothing to play for, and tons of reasons to lose. The system feeds upon itself, and prevents poor teams from ever getting out of their rut. Best case scenario, a bad team turns itself into the Milwaukee Bucks or the Memphis Grizzlies, perennial playoff also-rans. Worst case, you get the Knicks, who keep dumping young assets on aging stars, hoping to create a landing spot that might draw a big FA.

How can this problem be fixed?

First and foremost, get rid of the max contract. It’s anticompetitive and unethical. If you want to sign a superstar, be prepared to pay them their value. If this prevents you from getting other free agents on your team, this is the sacrifice you have to make.

Second, use team record to determine what share of the NBA TV money a team gets. Currently, the teams share the broadcast revenue. Instead, do something similar to what European soccer does, and give the better teams a larger share of the revenue. This will hopefully hedge teams considering tanking.

Third, fix the lottery. There have been a lot of proposals on how to make the lottery better. I personally like the wheel idea (every team rotates when they draft, making their final record unrelated to draft position), but there have been lots of good ideas on this.

Fourth, fix rookie deals. Perhaps put annual options on the contract, allowing a very successful rookie to bail on their deal early, so they can get paid. Don’t force a player to play for the same team for years at a fraction of their market value.

Fifth, and I’m not totally sure about this one, but maybe institute something similar to the NHL and MLB “supplementary draft” system if you lose a free agent. If you sign a big player away from a team, perhaps you will have to sacrifice an upcoming draft pick and the losing team gets a post-first round pick. These things aren’t worth a ton, but they should at least be enough to make a team think before they throw money at free agents.

Players are entitled to make as much money as they can using their spectacular and rare skills. They shouldn’t be punished for wanting to make money in their career, but the league is weighted down by rules that sacrifice a player’s ability to earn in the name of parity. People angrily complain about Lebron and Durant, but not the system that makes their decisions no-brainers. The problem is not the players: It’s the league.

The NBA (the company, not the league) needs to think about what their purpose as a company is: To create entertaining, competitive basketball. For years, David Stern was under the sway of small market owners who instituted a bunch of rules intended to prevent the big market teams from pushing them out of the league. Those rules have now become a bar preventing a competitive league. If rules about this don’t change soon, the super-team problem will get worse and worse.

This year, only two teams appear seriously competitive for the title (with SA as a possible dark horse). For the other twenty-seven fan-bases in the league, we need to start making noise or run the risk of losing the sport we love.

EDIT TL;DR: Without an open market for free agents, the league will eventually become two or three super teams and twenty seven Philadelphia 76ers. Simple changes to the cap can solve this problem.