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The Importance of Undervalued Contracts for NBA Superteams

| July 5, 2018 12:00 am PDT
NBA Superteams

The NBA is the strongest and most popular basketball competition in the world. Obviously, one of the main reasons is that the league is the home to most of the finest talent from all over the globe.

However, there’s another factor that contributes. The salary cap in the NBA and the draft lottery are designed in a way that creates an extremely competitive environment.

Event franchises in smaller markets can compete with the teams from cities like LA and Boston. They have access to enough talent, and the financial power of the richer teams is limited. This has been working well ever since the salary cap was introduced in 1984.

And yet, in the modern NBA times, there are so-called superteams that have some exceptional talent on their roster. By default, this shouldn’t happen, so what’s the main reason?

I would argue that sometimes the opportunities exist for some franchises to sign players for less than what they contribute. As a result, some teams can afford to build an exceptional roster.

Of course, the personnel working on those deals is of great importance. The general managers of the NBA teams are the ones responsible for that, and sometimes they don’t get enough credit. However, a good GM that is capable of balancing the present and the future of a certain franchise is as important as top players and coaches. Sometimes even more.

Let’s take a deeper look at the main situations where undervalued contracts are possible and create the chance for certain NBA franchises to build a superteam.

Max Contracts of Generational Talents

As the name suggests, the max contracts in the NBA are largest possible deals a player could get according to the rules of the organization. They allow the teams to keep their top performers and reward them with a huge salary.

To expand further, the max NBA contracts also depend on the number of years a player has been active. The guys who have been around for longer have a higher maximum compared to the rest.

In theory, all superstars of the NBA are supposed to contribute rather equally to their team’s success. We all know that’s not the case, as there is always a difference. The top 5 or top 10 players in the league earn as much as the next 10-20 players but are arguably better than them.

A quick look at the max contracts for the 2017-2018 season is a good example of that. LeBron James had a salary of roughly $33 million for this year. At the same time, Paul Millsap was on $31 million, and Blake Griffin on $29.50 million.

I think it’s quite obvious which of those contracts represents the most value.

If there was no max contract rule in the NBA, LeBron could’ve probably made more than $50 million. However, under the current rules, he will be making pretty much the same as players that are obviously not as good as him.

This is crucial when you’re trying to build a superteam, as you will eventually need at least one or even two players on a max contract. If they are among the generational talents in the NBA, the value you get from your max deals will be exceptional.

Gambles on Players with Injuries

There are certain injuries in basketball that could ruin the career of a certain player. Torn ligaments and ruptured Achilles tendons are a couple of examples of such. When this happens to a player, his value drops significantly.

You never know if a guy will be the same after a year out. As a result, such players don’t have many options to sign a large contract. Certain franchises are willing to gamble on them, but usually, they offer small contracts.

In some cases, the player comes back and instantly hits the same level or close to it. When this happens, the franchise gets enormous value and a vital piece for a superb price.

A good example of such a gamble is DaMarcus Cousins. He ruptured his Achilles in 2018, which is one of the most devastating injuries.

Still, the Golden State Warriors decided to sign him, and his contract is worth $5.3 million. If Boogie is close to what he was before the injury, this would be simply exceptional.

At the same time, it’s reported that the Lakers had the chance to sign him on a similar deal. It’s curious to see how this unfolds.

Either way, this is the perfect example of a superstar joining a superteam on the cheap. If it works, the Warriors will hit the jackpot.

Rookie Scale Rules

Another large group of contracts that is artificially restricted by the NBA rules is the deals of the rookies. There are a couple of aspects that determine how much the new guys in the league can make. Both the round and their position in the draft impact their salaries.

The main concept is that the top picks in the draft presumably have better potential, so they earn more. The lower a player is on the ranks, the smaller the contract he could hope for.

This creates opportunities for smart teams who draft wisely.

If a couple of franchises miss on a solid player and you get them later in the draft, you could recruit someone who can immediately start contributing for peanuts.

A perfect example is Donovan Mitchell. He was drafted by the Denver Nuggets as the 13th pick and was immediately traded to Utah Jazz. The guard has been one of the best rookies in the 2017-2018 season and was pivotal in the late run of his team.

Mitchell was also exceptional in the playoffs and averaged some crazy numbers. He had almost 25 points, 6 rebounds, and 4 assists per game, which is on par with some of the top players in the NBA.

You would expect such a contributor to be making somewhere around the $20 million mark. However, Mitchell’s salary during his first season was just over $2.1 million. This is insane value, and this example is probably a bit extreme, but there are other similar situations in the NBA.

Obviously, getting such a player for that kind of money is a large step towards creating a true superteam. Especially since most of the rookie contracts are signed for 4 years. As a result, plenty of championship teams in the past have benefited from the rules.

The best example of this is the ultimate superteam – the Golden State Warriors.

In the 2014-2015 season, the Warriors became NBA champions for the first time since forever. Their roster had as many as three players on a rookie contract. Klay Thompson, Draymond Green, and Harrison Barnes costed the franchise peanuts but were vital pieces of the team. Their combined salary was under $5 million for the season, which was absurd!

There’s another mind-blowing example of this. In 2014, Finals MVP Kawhi Leonard was still on a rookie contract worth $1.8 million. Sure, he wasn’t the complete player he is today, but this was still enormous value for the Spurs.

Simply put, if you draft well and get some top talent, you have a couple of years in which he could cost you peanuts. This is why a solid scouting team and a smart GM are so crucial when you want a stacked roster.

Players Picking the Chance for a Ring over Money

I would say that the NBA players have two main drives. One of them is to make money, and the other is to win as much as possible. Some put a priority on the first one, others on the other.

Obviously, the players who want a ring and are hunting mostly for glory are sometimes willing to take a pay cut for the sake of the team. This leaves room for the franchise to sign other pieces and build a better team with a higher chance of success.

Once again, the Golden State Warriors are a great example of such a situation. Kevin Durant has been one of the best players in the NBA for a while, but he wasn’t able to win a ring with the Thunder.

As a result, he joined the Warriors and took a pay cut of nearly $10 million ahead of the 2017-2018 season.

It was a controversial move, and many accused him of betraying his team. At the end of the day, Durant did win his championship, and the Warriors’ roster included 4 all-star players this year.

Of course, the other example of such a magnitude is LeBron James, who joined Dwayne Wade and Chris Bosh in the Heat. They instantly became a super-team, and this is how the King got his first ring.

The trio was leaving a total of $15 million on the table per season to stay together and compete each year.

Conclusion

As you can see, every time you manage to get a player for less than what he’s worth, you are one step closer to building an NBA superteam.

It takes smart management, a lot of good decisions, exceptional hunches, and of course, a pinch of luck to succeed.

Do you think there are other ways to get players on undervalued contracts in the NBA? If you believe I missed something, I would love to see it in the comments section.

Jerry Summer

Jerry Summer has a wide-ranging interest in gambling and the gambling industry. He's made a living out of both playing poker and betting on sports.

The English Premier League and the NBA are among Jerry's primary areas of expertise. He's knowledgeable about many other sports, too, along with poker and several casino games.

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