4 Themes from NBA Free Agency

LaMarcus Aldridge and Marc Gasol led a star-studded free agent class (Photo Credit: Brandon Dill/Associated Press)

LaMarcus Aldridge and Marc Gasol led a star-studded free agent class (Photo Credit: Brandon Dill/Associated Press)

The NBA just completed arguably its most successful season ever from a financial standpoint with a new $24 billion TV deal, record viewership numbers, strong merchandise sales, and global sponsorship expansion. With teams bringing in so much money, players pursued larger contract offers, which this year’s free agent class received. Teams have already dished out over $2 billion this free agency period alone, and unsigned players like Tristan Thompson should continue to drive that figure up before training camp begins.

Stars like Anthony Davis, Damian Lillard, Marc Gasol, and Kevin Love each re-signed with their respective teams for over $100 million, while quality big men such as LaMarcus Aldridge, Tyson Chandler and Greg Monroe all signed slightly cheaper deals elsewhere. Over 30 players have signed new deals this offseason that will pay them at least $10 million per year. With so much action happening, here are four primary themes of the 2015 NBA Free Agency:

PLAYERS WANT SECURITY

Some of the rising stars from the 2011 NBA Draft, most notably Kawhi Leonard and Jimmy Butler, faced a critical decision at the beginning of this year’s free agency. Should they opt to maximize their earning potential by signing a qualifying offer before the salary cap skyrockets, or should they secure between $90-100 million in guaranteed money now and risk losing between $20-30 million over the next five years? In a perfect world, Butler and Leonard could have signed a cheap one-year deal before entering unrestricted free agency next season, when virtually every team will have unlimited cap room. Then, these two players could have signed 5-year max contracts with over 10 different teams for 25% of a team’s annual cap space, which amounts to a $22.5 million annual salary.

Instead, Butler and Leonard recognized that we live in an extremely imperfect world where NBA careers can dissipate in a moment; both Leonard (Spurs) and Butler (Bulls) signed maximum 5-year contracts worth between $90-95 million, an average annual salary of approximately $18.5 million. With their interchangeable skill sets, elite perimeter defensive abilities, and a growing offensive game, both players deserve to earn as much as the best players in the NBA. However, they recognized that a catastrophic injury, such as Wesley Matthews’ ruptured Achilles suffered last season, could severely derail anybody’s career. They wanted to make sure that they secured their financial future as soon as possible.

Both players have clear justifications for their desires for long-term security. Butler was the 30th overall selection in the 2011 Draft, so he signed an extremely low-value rookie deal worth a total of $5.2 million over four years. As the 15th selection in the 2011 Draft, Leonard made slightly more lucrative 4-year/$8.23 million rookie contract. Both players grossly over-performed their deals, as average NBA salaries during this span have ranged between $4-5 million per year, peaking at $4.99 million for the 2013-14 season. After seeing what their peers make, Leonard (2014 Finals MVP, 2015 Defensive Player of the Year) and Butler (2015 NBA Most Improved Player) had every reason to secure their money now and if they remain healthy, they can opt out of their new deals after the 2018-19 season and sign another lucrative contract.

Jimmy Butler had earned less than $1.5 million per year in each of his first four seasons in the league (Photo Credit: Bill Smith/Chicago Bulls)

Jimmy Butler had earned less than $1.5 million per year in each of his first four seasons in the league (Photo Credit: Bill Smith/Chicago Bulls)

Other free agents from the 2011 NBA Draft class secured monster contracts after finishing their rookie deals. Enes Kanter (4 years/$70 million), Brandon Knight (5 years/$70 million), Reggie Jackson (5 years/$80 million), and Tobias Harris (4 years/$64 million) all re-signed with their respective teams. Tristan Thompson is expected to receive a contract near what Jackson received for Detroit.

Almost all players with four years or less of experience prefer financial security at this stage of their careers to taking a discount to play for winning teams. Thus, even 2012 Draft stars Damian Lillard (5 years/$120 million) and Anthony Davis (5 years/$145 million) inked these lucrative deals even though the Pelicans and Blazers (especially after the departure of Aldridge) have long ways to go before competing with the likes of the Warriors, Spurs, Thunder, Clippers, Rockets, and Grizzlies.

In addition, the more seasoned players also opted to sign for more years and guaranteed money, instead of going the LeBron James route of signing one-year max deals. Players with 7 years of experience currently can take up to 30% of a team’s salary cap, while players with 10 years of experience can make up to 35% of a team’s cap. 35% of the reported $90 million salary cap for the 2016-17 season amounts to a $31.5 million annual salary. 35% of the reported $108 million for the 2017-18 season equals a $37.8 million annual salary.

While Kevin Love, like most of his peers, opted to take a guaranteed 5-year contract, LeBron is the rare star who is signing a  year-to-year contract in order to maximize his potential earnings (Copyright 2014 NBAE, Photo by David Liam Kyle/NBAE via Getty Images)

While Kevin Love, like most of his peers, opted to take a guaranteed 5-year contract, LeBron is the rare star who is signing a year-to-year contract in order to maximize his potential earnings (Copyright 2014 NBAE, Photo by David Liam Kyle/NBAE via Getty Images)

Players like LaMarcus Aldridge, who has played 9 full seasons, could have received a salary of over $30 million for the 2016-17 season if he decided to sign a one-year deal. Instead, he chose the safer option of a 4-year/$80 million max agreement with San Antonio, potentially costing him tens of millions of dollars. Kevin Love has played 7 full seasons, so he could have received salaries north of $22.5 million if he went the year-to-year route. Coming off a gruesome shoulder injury, though, Love chose to re-sign with Cleveland for 5 years/$110 million.

Now, next year’s much anticipated free agency bonanza will have far less star power than anticipated, since most of the best players chose security over risk. With a grueling 82-game schedule on top of an intense 2 months of playoff action, most players did not want to take the chance of not cashing in when they had the chance. How can you blame them?

Look no further than last summer, when Paul George cracked his leg in half in a summer exhibition game. Had George not signed his contract extension prior to his injury, he could have potentially lost out on millions. Athletes have finite playing careers, most of which last no longer than 10 years. When they have an opportunity to make enough money to last multiple lifetimes, most players have chosen to eliminate the risk of waiting for a larger payday; they want the money now.

TIME TO ELIMINATE MAX CONTRACTS

True superstars make the difference between winning championships and merely contending for the playoffs. Look no further than LeBron James. When he left Cleveland in 2010, Miami went on to win two championships and appeared in four consecutive NBA Finals from 2011-2014, while the Cavaliers missed the playoffs every year during this span. Once LeBron returned to Cleveland, the Cavaliers reached the NBA Finals while the Heat missed the playoffs in the lowly Eastern Conference.

The Heat added quality players such as Luol Deng, Josh McRoberts, Shabazz Napier, Goran Dragic, and Hassan Whiteside to play with the remaining core Heat players outside LeBron (including championship holdovers Dwyane Wade, Chris Bosh, Mario Chalmers, Norris Cole, and Chris Andersen); yet, the Heat could not even make the playoffs in the East, where the 6th seed Milwaukee Bucks finished with a 41-41 record.

Before quantifying any player values, LeBron illustrates the exceptionally wide gap between the true superstars and middling players. Unlike any other major sport, the best basketball players can dominate both ends of the floor at all times throughout the course of the game. Superstars put role players in a position to succeed, which makes secondary players worth more than they should be. Remember how JR Smith and Iman Shumpert fell off the map in New York, then suddenly became competent players when they teamed up with LeBron?

Dwyane Wade and Erik Spoelstra led the Miami Heat to a disappointing 37-45 record in the team's first year following LeBron's departure (Photo Credit: Steve Mitchell/USA Today Sports)

Dwyane Wade and Erik Spoelstra led the Miami Heat to a disappointing 37-45 record in the team’s first year following LeBron’s departure (Photo Credit: Steve Mitchell/USA Today Sports)

The Oklahoma City Thunder, despite a historic effort from Russell Westbrook, just missed the playoffs after Kevin Durant sat out most of the season with a foot injury. With Durant, the Thunder had finished with at least a .700 record the previous three seasons in an extremely competitive Western Conference. The Houston Rockets missed the playoffs for three straight seasons prior to James Harden’s arrival in 2012; since then, they have steadily evolved into a legitimate contender.

Ultimately the best players win championships and make coaches like Mike Brown and Scott Brooks appear more than competent. Without Durant or LeBron, Brooks and Brown had their struggles coaching, leading to their eventual departures.

Yet, if you strictly look at player contracts, the salary divide does not fully correlate with player values on the court. Take a look at some of the players who signed for big bucks this offseason and their values from the 2014-2015 season, per Basketball Reference:

Player PER Win Shares Box Plus/Minus Contract
LeBron James 25.9 10.4 7.4 1 year/$23.49 million
Anthony Davis 30.8 14.0 7.1 5 years/$145 million
Jimmy Butler 21.3 11.2 4.7 5 years/$90-95 million
Kawhi Leonard 22.0 8.6 6.1 5 years/$90-95 million
Reggie Jackson 17.2 4.9 0.8 5 years/$80 million
Tobias Harris 16.7 4.8 -0.3 4 years/$64 million
Iman Shumpert 11.4 1.5 -0.4 4 years/$40 million
Al-Farouq Aminu 14.4 3.3 2.4 4 years/$30 million
Jae Crowder 13.9 3.9 0.6 5 years/$35 million

All of these numbers correlate with players’ values to their particular teams. The bottom five players on the list resemble replacement-level players, who do not add significant on-court value to any particular team. Their win shares and plus/minus while on the court amount to well below to what the best players produce. The average basketball fan probably has not heard of the below 5 players; yet some of them, such as Harris and Jacksons, are paid just about as well as some of the most valuable players in the league.

Statistics like points, rebounds, or assists do not necessarily correlate with added win totals with the team. For instance, Jackson’s usage rate, which measures how often a player is involved with the team’s offensive plays over the course of a game, climbed from 21.3% during his time with the Thunder to a team-leading 28.6% with the Pistons. As a result, he had the ball in his hands far more often, which helped him average career highs of 17.6 points and 9.2 assists per game with the Pistons. He also averaged 3.5 turnovers per game and ranked as a below-average defender according to SportVU. The Pistons went 11-16 with Jackson leading them, yet Detroit decided to pay him $80 million to lead the team going forward.

Reggie Jackson and Tobias Harris earned massive paydays this offseason (Photo Credit: Kim Klement/USA TODAY Sports)

Reggie Jackson and Tobias Harris earned massive paydays this offseason (Photo Credit: Kim Klement/USA TODAY Sports)

If players like Jackson, who ranks as a mediocre and possibly slightly above-average player, can earn $16 million per year, superstars like LeBron James, Anthony Davis, Kevin Durant, James Harden, Stephen Curry, and Chris Paul should make at least $35-40 million per year. Since elite players have such a monumental impact on a team’s performance – these five players are each worth approximately 20-25 wins per season – they should earn a substantial portion of the team’s salary cap to match their true value to their respective teams.

One model the NBA should re-consider adapting involves the salary cap structure of the 1998 Chicago Bulls, which won the championship that season:

Player Salary
Michael Jordan $33,140,000
Ron Harper $4,560,000
Toni Kukoc $4,560,000
Dennis Rodman $4,500,000
Luc Longley $3,184,900
Scottie Pippen $2,775,000
Rest of Team $8,610,500

Michael Jordan accounted for 55% of the team’s salary cap, and he was worth every single penny, leading the Bulls to their 6th championship of the decade. Take Jordan off of that team and the Bulls may not have even reached the playoffs, let alone win the championship. Jordan got paid his due salary, especially relative to what the rest of the league earned, and he proved his worth.

Superstars today have similar impact to their teams and should earn what Jordan made relative to the rest of his team. Players like Chris Bosh, Kevin Love, and Kyrie Irving have “star” labels attached to their names yet none of these three players has even REACHED the playoffs without LeBron James on their team. Blake Griffin and DeAndre Jordan have not reached the playoffs without Chris Paul. Stephen Curry, the most criminally underpaid player in the NBA, helped revitalize the entire Golden State Warriors franchise and just led them to a championship. Kevin Durant, when healthy, makes the Oklahoma City a championship contender; without him, the Thunder could not even reach the playoffs this past season. These kinds of players have proven that they deserve more money from their respective teams, especially compared to what their teammates earn. Thus, the NBA should revert to the old salary cap system to appropriately compensate the most valuable players in the league, who are worth exponentially more than the league’s role players.

ROSTER BUILDING COUNTS MORE THAN MARKET SIZE

The New York Knicks, Boston Celtics, and Los Angeles Lakers, arguably the three most recognizable NBA franchises in the world, all had the cap room to sign difference-makers this season. Judging by last season’s performance – Knicks finished with 17-65 record, Lakers finished with 21-61 record, and Celtics got handily swept by the Cavaliers in the 1st round – all three teams needed major help to even come close to contending. The Lakers, Knicks, and Celtics attempted to make a run at marquee free agents, such as Greg Monroe, Jimmy Butler, and LaMarcus Aldridge, but all three failed to deliver in an embarrassing way.

New York signed Carmelo Anthony to a 5-year/$124 million deal last offseason; he only played in 40 games this past season. The Knicks went 10-30 with Melo on the floor and 7-35 without their star. After dealing Iman Shumpert, Amare Stoudemire, Pablo Prigioni, and J.R. Smith during the season, the Knicks finished the season with a starting lineup of Langston Galloway, Tim Hardaway Jr., Jason Smith, Lance Thomas, and Cole Aldrich. Only Galloway and Thomas will return to this team next season, both signing minimum-value contracts.

Outside of Melo, the Knicks had no one occupying any sort of cap space, so they had plenty of room to sign quality players. However, most of the premier free agents spurned the Knicks, who have one of the most poorly constructed rosters in the league. Aldridge canceled his meeting with the Knicks; Greg Monroe rejected the Knicks for Milwaukee; most of the rest re-signed with their respective teams. The Knicks ended up signing secondary players Robin Lopez, Derrick Williams, Arron Afflalo, and Kyle O’Quinn to multi-year contracts. Williams and O’Quinn played off the bench for losing teams; Afflalo has had his struggles on defense; Lopez will have to prove he can control the paint without Aldridge alongside him.

The Lakers faced a similar conundrum this offseason as they faced the difficult task of managing a legend’s last chance at contention and building for the future. Los Angeles will essentially have two Top-7 draft picks play as rookies next season – D’Angelo Russell and Julius Randle – and a third promising youngster in Jordan Clarkson. However, all three players need much more NBA seasoning to become legitimate factors in the league. It took Durant and Westbrook multiple years of losing before elevating the Thunder to the top of the league. Ditto with Stephen Curry and the Warriors, John Wall and the Wizards, and Anthony Davis and Derrick Rose and the Bulls. All endured multiple losing seasons before blossoming into superstars and leading contending teams.

Over the past couple season, Kobe and Melo have had a difficult time luring star free agents to play with them (Photo Credit: Getty Images)

Over the past couple season, Kobe and Melo have had a difficult time luring star free agents to play with them (Photo Credit: Getty Images)

NBA bodies and skills take time to develop and without a strong, veteran-laden cast around youngsters, like San Antonio and Chicago’s teams, most rookies cannot sustain excellence over the course of a long season. This brings us to the Lakers, who are attempting to build for the now (Kobe) and the future. Thus, they desperately needed a legitimate big man, like Shaq in the early 2000s and Pau Gasol later that decade, to compliment Kobe. Like the Knicks, the Lakers virtually struck out and could not land anyone significant for a third straight offseason. They presented a poor presentation to Aldridge, lost out on Monroe to Milwaukee, and had virtually no shot at landing Love or DeAndre Jordan.

Unlike the Lakers and Knicks, the Celtics showed promise last season and catapulted up to the 7th seed in the East. However, they did not possess any golden assets and currently only have three players – Isaiah Thomas, Jae Crowder and Avery Bradley – signed to guaranteed free agent deals past the 2015-16 season. The rest of the roster is filled with veterans on expiring deals or rookies on their first contracts, so Boston’s future will hinge on the development of their youngsters. The best free agents passed on Boston this offseason due to the uncertainty of their future but if many of their youngsters develop well, the Celtics will have plenty of intriguing assets. Danny Ainge proved in 2007 that capable assets could lead to trades of established stars (Ray Allen, Kevin Garnett), which would allow several free agents to play for Boston at a discounted price (such as David West’s minimum contract with San Antonio).

Ultimately, a big market alone cannot allure free agents to the largest cities. With a 24/7 social media landscape, every single player can globally market himself, no matter where he plays. Look no further than the viewership numbers for the NBA Finals, featuring Cleveland and Golden State; these two teams with little history and relatively small markets compared to LA and New York, attracted the largest viewership audience this millennium. The lack of market size did not prevent the visibility of the players on the biggest stage.

Thus, Cleveland and San Antonio, two of the smallest NBA markets in the country, have become the two premier destination spots for free agents to land this offseason. With the new salary cap structure, the big market teams just cannot simply out-spend every team to attract the best players. Otherwise, they will face a steep luxury tax penalty, which Brooklyn learned the hard way. Roster building counts more than ever, as players do not want to end up like Carmelo Anthony, who is a great individual talent stuck on a middling team.

To achieve great roster building, a team must draft well and acquire a foundational star via the draft. The Clippers did that with Blake Griffin; Warriors and Curry; Pelicans and Davis; Heat and Dwyane Wade; Mavericks and Dirk Nowitzki; Cavs and Kyrie Irving. The list goes on and on. The drafting of the superstars will naturally allow teams to surround their talent with the best pieces possible. If teams fail to build a strong roster around their star player, they will risk losing their stars – like Cleveland in 2010 with LeBron and Portland in 2015 with Aldridge.

David West took a massive pay cut to sign with the Spurs (Photo Credit: Howard Smith/USA Today Sports)

David West took a massive pay cut to sign with the Spurs (Photo Credit: Howard Smith/USA Today Sports)

Nonetheless, teams who draft elite players will have a wide margin for error in supporting their stars with capable talent. They have multiple years to assemble a good team. It takes a poor organization – like Minnesota’s regime during the Kevin Love and Kevin Garnett eras – to fail miserably and cause their stars to leave town quickly. Players like Steph Curry, who originally did not want to play for Golden State when he got drafted, will naturally grow into the environment if the team supports the star well.

San Antonio has brilliantly transitioned itself to contend for years to come, even when the team’s ageless superstar Tim Duncan retires. They drafted Kawhi Leonard and fully developed Danny Green and Patty Mills over the last few years to form a strong young nucleus. This allowed players like David West and Aldridge to sign with San Antonio on a discount.

Big-market teams must focus on the development of their own stars, not the hope of acquiring players via free agency, in order to form a contending team. Top draft picks are valuable and will give teams multiple opportunities to snag foundational players; Philadelphia has conceded multiple years of futility just to have a higher chance at acquiring a star via the draft. The 76ers may not ultimately succeed with this strategy since they have gone quite overboard with their pursuit of tanking, but Philadelphia wants to control its own destiny, not rely on outside circumstances. Teams like the Lakers and Knicks must take this lesson to heart and first ensure that they form a strong nucleus within the organization before expanding outwards and acquiring free agent talent.

TEAMS HAVE SMALL WINDOW OF OPPORTUNITY TO WIN

Poor Indiana and Portland. Just 17 months ago, both teams were primed to contend for several years. Indiana, coming off a valiant effort against Miami in the 2013 Eastern Conference Finals, secured the top seed in the East behind a tremendous season from Paul George. Portland, coming off a strong 2013-14 season, had one of the steadiest starting fives and the second-best record in the West. Then, everything collapsed.

Paul George suffered a gruesome leg injury in an exhibition game last summer, causing him to miss almost all of the 2014-15 season. Lance Stephenson, who emerged as arguably the second best player on the team the previous season, bolted for Charlotte. The Pacers missed the playoffs, and both West and Hibbert have departed the Pacers this offseason.

Wesley Matthews ruptured his Achilles in early March, and the Blazers – 41-19 prior to Matthews’ injury – went 10-12 in their final 22 games, dropped to the 4th seed, and got routed in five games in the first round. 80% of their starting lineup – Robin Lopez, LaMarcus Aldridge, Wesley Matthews, Nicolas Batum – left the team this offseason. Even after re-signing Lillard to a $120 million extension, the Blazers are completely rebuilding their roster.

Portland has lost 80% of its starting lineup from last season (Photo Credit: Sam Forencich/NBAE/Getty Images)

Portland has lost 80% of its starting lineup from last season (Photo Credit: Sam Forencich/NBAE/Getty Images)

Times change quickly in the NBA and the risk of injury can close teams’ opportunities to contend faster than they could have ever predicted. These two examples serve as a cautionary tale to the entire league: when you have a chance to win, go for it. Do not just plan for the future; go for the championship this year. As the Pacers and Blazers just proved, next year is never guaranteed.

The Clippers and Spurs understood that message clearly this offseason. In addition to handcuffing DeAndre Jordan at his home to ensure he re-signs with the Clippers, Doc Rivers also brought in veterans Paul Pierce, Josh Smith, and Lance Stephenson. Chris Paul turned 30 in May, and point guards that rely on speed tend to slow down quicker than the bigger, stronger point guards like Jason Kidd. Paul has entered his prime, and he may only have a couple of truly elite years left in him. The Clippers have attempted to maximize this opportunity by deepening their perimeter firepower. After re-signing Austin Rivers, they Clippers now have Paul, J.J. Redick, Rivers, Pierce, and Stephenson in the perimeter with Josh Smith as a hybrid. Depth, which cost the Clippers in their series’ collapse against Houston, should not be as big of an issue this season.

LAC’s upgrades still may not be enough to eclipse San Antonio this year. The rich have officially gotten richer. The Spurs’ starting frontcourt now features Danny Green, Tim Duncan and LaMarcus Aldridge. David West and Boris Diaw become the first two forwards off the bench. Tony Parker, Kawhi Leonard, Patty Mills, and Manu Ginobili will occupy the backcourt. This 8-man rotation arguably ranks as the best in the league, as the Spurs are now suited to play any style of action. The addition of Aldridge propels the Spurs as championship contenders for as long as Duncan plays.

OKC, which had arguably the team with the “brightest future” just a mere three seasons ago, is now at a crossroads. They must do something special this season. Otherwise, 2016 Free Agent Kevin Durant may bolt elsewhere next offseason, while Serge Ibaka and Russell Westbrook become free agents in 2017. That’s why the Thunder overpaid to keep Enes Kanter (4 years/$70 million) and Kyle Singler (5 years/$25 million) on the roster. The Thunder are all-in this season; they must capitalize on this opportunity, or this entire franchise may turn upside down.

2015 Free Agency has separated the contenders from the pretenders. While LeBron’s Cavaliers should remain as overwhelming favorites to reach the Finals from the East, any of the West’s top six teams – Golden State, San Antonio, Oklahoma City, LA Clippers, Houston, Memphis – has a realistic shot to represent the West in the NBA Finals. Unlike last year, let’s all just hope that the stars stay relatively healthy all season because this season may contain more stacked teams than ever before. Many of the league’s best players have decided to play with each other, leading to multiple star-laden teams. Hopefully, this will result in some of the greatest matchups we have seen in recent memory.