New York NBA commissioner David Stern came down hard on the Minnesota Timberwolves for their secret salary agreement with Joe Smith, taking five first-round draft picks away from the team and fining them $3.5 million.
Possible suspensions for owner Glen Taylor and general manager Kevin McHale have not yet been decided, the NBA said in a statement Wednesday.
The penalty is one of the stiffest in league history and reflects how seriously the NBA considered this offense.
Stern also voided Smith's contract, making him a free agent. Under an arbitrator's ruling announced Monday, Stern had the right to void Smith's one-year, $2.5 million contract. Stern went even further, voiding Smith's last two contracts and thereby stripping Smith of his Larry Bird rights, which would have allowed him to sign a lucrative extension with the Timberwolves next summer.
"They don't have the ability to do that. They're definitely trying to rewrite the arbitrator's ruling," said Smith's agent, Dan Fegan.
The NBA also asked the players' association to "impose appropriate discipline" against Eric Fleisher, Smith's former agent. A hearing must be held to determine which Timberwolves' personnel had knowledge of the secret agreement.
Although 28 other teams are free to negotiate with Smith, it seemed he was ready to re-sign with Minnesota if Stern voided his current one-year, $2.5 million contract.
Now, Smith has no financial incentive to remain in Minnesota. He would have to play there for three more years to regain his Bird rights.
"I like it here, I've been here two years, and a month of training camp, and it would hurt both of us if I just up and leave," Smith said after an exhibition game in North Carolina on Tuesday night.
Smith made a big financial blunder earlier in his career when he turned down an extension from the Golden State Warriors worth tens of millions of dollars. He went on the market as a free agent and drew little interest before signing with the Timberwolves for $1.75 million prior to the 1998-99 season.
The Timberwolves said they were "assessing the ruling" and had no immediate comment. The players' union did not immediately comment. NBA arbitrator Kenneth Dam found that Smith and the Timberwolves entered into a separate, secret agreement that guaranteed Smith a lucrative long-term deal beginning with the 2001-02 season.
The league has long suspected that such secret agreements exist, but no team had ever been caught like the Timberwolves.
"This (penalty) reflects the seriousness of a finding of circumvention," NBA attorney Joel Litkin said.