By Christopher R. Deubert, Senior Writer
For about a decade, James Harden has been one of the better players in the NBA. During the same time period, Daryl Morey has been one of the better executives in the NBA, first with the Houston Rockets and currently with the Philadelphia 76ers. The two are now locked in a heated dispute with interesting implications under the collective bargaining agreement and contract law.
On August 14, 2023, Harden told a group of reporters that “Daryl Morey is a liar, and I will never be a part of an organization that he’s a part of.” Harden’s position was quite a change from 18 months earlier when Harden said he was “excited” to join the 76ers after Morey had traded for him.
The dispute of course generates from Harden’s contract situation. Prior to the 2022-23 season, Harden signed a one-year contract for 2022-23 at a salary of $33 million and which included a player option for 2023-24 at a salary of $35.6 million. In signing the new contract, Harden forewent a $47 million player option he had for the 2022-23 season – a $14 million pay cut intended to help the 76ers sign other quality players.
In June 2023, Harden exercised his option for the 2023-24 season. He now claims that he only did so based on Morey’s promises to trade him, a promise he says the 76ers have now broken.
The NBA responded by fining Harden $100,000 for violating a prohibition against public trade demands. The NBPA has announced its intention to challenge the fine through a grievance arbitration.
The NBA though was not solely concerned with quieting Harden. It had concerns that the 76ers might have violated contract and salary cap rules by having a secret agreement with Harden. Indeed, the NBA had recently disciplined the 76ers for such acts. With the money the 76ers saved from Harden’s new contract prior to the 2022-23 season, the 76ers signed veterans P.J. Tucker and Danuel House. The NBA determined that the club had negotiated with those players and reached agreements in principle with them before they were permitted to do so. In other words, the 76ers had engaged in tampering. Consequently, the NBA took away the club’s 2023 and 2024 second round draft picks.
In the Harden situation, the league was likely concerned that the 76ers had made oral promises to Harden when he signed his new contract or when he exercised the option. Such a situation has precedent. In 1999, then NBA-star Joe Smith agreed to a secret future contract with the Minnesota Timberwolves to allow the club to save money and salary cap space in the short-term. The NBA took away five first round picks from the Timberwolves as a punishment. Alas, the NBA’s investigation here reportedly did not find any impermissible secret promises.
The 76ers have leverage against Harden’s professed refusal to play. The collective bargaining agreement declares that if a player in the last season of their contract withholds their services for more than 30 days, the last season of the contract shall be deemed not to have been played – depriving the player of free agency. The 76ers’ training camp is scheduled to begin on October 2. Harden reportedly is planning to attend. He has little immediate choice.
Harden’s most interesting defense may lie in common law. The standard NBA player contract, like any well-written contract, contains a merger clause declaring that the agreement is the entire agreement and overrides any prior agreements, written or oral. One of the rare avenues for escaping such a clause – and the agreement of which it is a part – is in arguing fraudulent inducement. Harden could theoretically allege that he only exercised his player option based on a misrepresentation from Morey that he would thereafter trade him and that as a result, the contract is unenforceable. A principal issue in any such claim would be whether Harden’s reliance on Morey’s alleged representation was reasonable. Harden is experienced in NBA contract negotiations and is represented by sophisticated counsel. They arguably should or would know that Morey could not guarantee Harden would be traded. Perhaps this issue will be resolved as part of the grievance.
As of right now, the 76ers seem well-positioned to force Harden to play. At the same time, he has stated that the relationship is beyond repair. The 76ers do not want such an attitude in the locker room but they also do not want to trade him on the cheap. Something has to give.
Deubert is Senior Counsel at Constangy, Brooks, Smith & Prophete LLP.