I wrote the article below in the beginning of 2010 – before LeBron disappeared in the playoffs against the Celtics and later escaped to Miami with Bosh and Wade. I wrote it when teams were hording cap room all in a failed attempt to land LeBron or one of the other big stars who were set to hit the open market in the Summer of 2010. Obviously this piece was also written before the lockout – a lockout which hypothetically could have changed the league, but in reality seems to have done very little to change anything.
All this background aside, the important ideas in this piece remain exactly the same – that it is vital to assign a monetary value to every player in the league, particularly players that are paid high salaries. This article underscores several of the key concepts that are essential to good roster management.
When I use the words “salary management” I mean to say this– in general, NBA teams don’t give specific values to their players. Having large amounts of cap room – as the Heat, Nets, Knicks etc. are planning to have this summer – should always be a good thing. But we know frequently it is not. That is because executives are usually wishy-washy when it comes to the specific monetary value of a player. This is why teams with cap room blow it recklessly – they don’t correctly measure what one player’s worth is compared to another. It is vital to assign each player a specific value before offering them a contract. If you don’t do this you are too likely to rationalize yourself into overpaying somebody. The degrees of waste might differ, but the results are all negative. With a potential hard cap looming (and abolition of max salaries?) that could hold even more truth.
In today’smarket, maybe more than in the past, a player should have to be very, very good to make big money. You need to be at least a near All-Star to deservingly make more than $10 million a year. You need to do this for each year you get paid your high sum. And if you don’t you will be grossly overpaid. To generalize what I’m saying: you should have a PER over 18 to even be considered worthy of $10 million annually. That is a preliminary cutoff; the only exceptions would perhaps be if you were an all-world defender (examples of this are very few, if any.)
Why do executives need to be so stingy with their money? Because only the great players are worth paying. And only the megastars are worth anything approaching max salaries. For instance, let’s look at Kevin Pelton’s WARP statistic from last year. LeBron James was worth 27 more wins than a replacement player. Dirk Nowitzki, an indisputable All-Star, was worth 11 wins more. And Joe Johnson, another All-Star, was worth 8 wins more. Why is that relevant? All those players will potentially be free agents this summer. The reports are they will all get max or near max money. There is a chance Johnson will actually make more than James next year, because he has been in the league longer. Who would you like to be giving your money to?
Some people will have trouble with Pelton’s statistic, just as some people will have trouble with John Hollinger’s PER or Estimated Wins Added(EWA) stats. But I have trouble with most of these people – it is hard to find a simple single stat which nails a player’s worth as accurately as these three usually do. No, it’s not perfect, but it is perfect in what it implies.
And what it implies is that the league’s salary structure is a mess. No shock there. But we need to look deeper – and here is where most people do not tread. This is Hollinger’s Estimated Wins Added leaders as of February
1. James 19.8
2. Wade 14.9
3. Durant 14.4
4. Bosh 13.1
5. Bryant 12.3
6. Duncan 11.5
7. Paul 11.3
8. Howard 10.7
9. Nowitzki 10.4
10. Nash 10.3
20. J. Smith 7.9
30. Landry 6.6
50. Ginobili 4.9
75. Dalembert 3.9
125. Gooden 2.1
175. Amundson 1.2
250. D. Jordan 0.1
This list shows us what most NBA fans intrinsically understand: that the brunt of a team’s wins, and how good they are, depends largely on its two or three best players. All the other players are virtually interchangeable because their values are so similar. There is only one LeBron James, but there are fifty Louis Amundsons. It would make sense if the NBA’s salary structure followed this paradigm. But, of course,it doesn’t.
65 players in the league are due to earn at least ten million dollars this year; every squad has at least one except for Oklahoma City and Portland. Of these 65 perhaps half are worth what they are paid – and that might be generous. For laughs and quick insight here is a partial list of terrible contracts that are at least eight figures:
-Tyson Chandler $11.9 million
-Shaquille O’Neal $20 million
-Zydrunas Ilgauskas $11.5 million
-Kenyon Martin $15.4 million
-Tracy McGrady $23.2 million
-Jermaine O’Neal $23 million
-Michael Redd $17 million
-Bobby Simmons $10.6 million
-Peja Stojakovic $14.2 million
-Larry Hughes $13.7 million
-Eddy Curry $10.5 million
-Rashard Lewis $18.9 million
-Samuel Dalembert $11.4 million
-Richard Jefferson $14.2 million
-Andrei Kirilenko $16.5 million
Some of these contracts seemed (relatively) reasonable at the time they were signed(McGrady and Jermaine O’Neal), some were silly rationalizations (Shaq), and many were just plain stupid. The aforementioned are obviously overpaid this season – but there are plenty of other big-moneyed players we could argue do not produce up to the high standards such a salary should require.
What is often misunderstood by even good GMs is that a very solid player is not that much more valuable than a simply mediocre one. Take for example Joe Dumars. Ben Gordon and Charlie Villanueva are both nice players. They are useful and productive – Gordon can be an absolutely devastating scorer, and Villanueva is extremely skilled offensively for a big man. Dumars was “happy to add both these young guys,” giving them five year deals, Gordon’s totaling approximately $55 million and Villanueva’s $35 million.
Even to sharp minds these deals made sense logically. Unable to pull in a star free agent, Dumars quickly went out and got the best of what was left at salaries that were similar to several players of that caliber. But what Dumars didn’t consider is what else was out there for much less than $90 million. Ramon Sessions is a different player from Gordon (and was a restricted free agent), but only ended up costing the Timberwolves $16 million dollars over
four years. Another restricted free agent, Nate Robinson, signed a one year deal for $4 million. Both Sessions andRobinson had a higher PER than Gordon last year. Or if Dumars wantedto stay away from restricted free agents and was looking for a comparable player he could have easily turned to Earl Boykins. Boykins might not be on Gordon’s level – but he is less than a tenth of his cost, and would be only on the hook for a year.
You may think Sessions, Robinson and Boykins are not as good as Gordon. But Gentle Ben is much more similar to those players than Steve Nash, Chauncey Billups or Manu Ginobili. And Gordon is paid like those All-Stars. It could be overly simplistic to think this way – but I doubt it. The truth hurts – Gordon is a very good basketball player, but closer to a solid role player than an All-Star. His contract resembles the latter.
Villanueva’s situation is more of the same. Brandon Bass signed a four year, $18 million deal, Hakim Warrick a one year contract for $3 million, and Channing Frye a meager two year deal worth less than $4 million total. Can we honestly say Villanueva is all that much better than any of those three? Dumars made a mistake that would be fatal if it weren’tall too common: he made a large long term commitment when nothing of the sort was necessary.
It’s pretty easy to see Dumars’ logic: if Detroit didn’t pay these guys someone else well might have, there was no big-shot star to throw all your cash at, and the Pistons got two of the better players on the open market. But rationalizations like these don’t make bad signings justifiable. Dumars would have been much better served to make a trade to fill up his cap room (being so far under the cap he could potentially have poached a star or draft picks from a team wanting to cut salary) or he should have signed cheaper alternatives such as those just mentioned. In the NBA flexibility is a godsend, and the Pistons frittered it away.
They have plenty of company. Dumars is widely considered one of the better executives in the league, and his silly big signings were just business as usual in NBA circles. R.C. Buford, who is held in the highest esteem by many of his peers, traded for Richard Jefferson last summer and was widely hailed for making such a move. No one is praising himfor it now.
When executives make such foolish moves regularly it is natural to come to the conclusion that something is seriously wrong with how talent is valued. We are all so used to miserable contracts being coveted, with the standard explanation of adding a“valuable piece.” Bullocks. True valuable pieces are rare, so let’s stop making things up. That ship has sailed, especially with a new salary order right on the horizon. The future is now, whether executives
acknowledge it or not.