When Smith signed with Minnesota in January 1999, the club submitted a one-year contract worth only $1.75 million to the league. But the NBA said it was aware of the deal. The league has long suspected the existence of such secret agreements, but no team has ever been trapped like the Timberwolves. 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. “He wants his owners to make more money by forcing them to respect the collective agreement,” said the union official, who spoke on condition of anonymity. In one of the most draconic penalties in professional sport, NBA Commissioner David Stern on Wednesday, the Minnesota Timberwolves accosted their next five first-round picks and $3.5 million for signing Joe Smith to an illegal clandestine contract. 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 National Basketball Association yesterday fined the Minnesota Timberwolves $3.5 million and stripped the team of its first-round draft picks for the next five years for violating salary caps. N E W Y O R K, October 26, 2000 — NBA Commissioner David Stern came the Minnesota Timberwolves for their secret pay arrangement with Joe Smith, took five first-round picks from above the team and you did a $3.5 million penance. 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. Dam, the arbitrator, ruled last week that the Timberwolves had indeed reached an illegal agreement with Smith, and Stern was free to raise any penalty he deemed appropriate on the club and its officials, in accordance with the NBA Constitution. The beginning of the illegal agreement came when Smith`s agent, Andrew Miller, left the sports marketing company under the direction of Eric Fleisher and retained Smith and Garnett as clients.