Nylon Calculus: Best and worst contracts for the 2016-17 NBA season

Sep 26, 2016; White Plains, NY, USA; New York Knicks forward Carmelo Anthony (left) addresses the media as point guard Derrick Rose looks on during the New York Knicks Media Day at Ritz-Carlton. Mandatory Credit: Andy Marlin-USA TODAY Sports
Sep 26, 2016; White Plains, NY, USA; New York Knicks forward Carmelo Anthony (left) addresses the media as point guard Derrick Rose looks on during the New York Knicks Media Day at Ritz-Carlton. Mandatory Credit: Andy Marlin-USA TODAY Sports /

Given the salary constraints in the NBA imposed by the collective bargaining agreement’s (CBA) soft salary cap, there is always going to be a “money ball” element to building successful teams. Teams have to balance getting good production for their money. An albatross contract, paying big money for a player that doesn’t produce, can hamstring a team’s flexibility, particularly as the salary cap increases slow with the new TV money coming fully set in the league’s calculations. On the other hand, a productive player on a rookie contract or a star on a below market deal increases a team’s ability to fill out a roster.

Using projection numbers from my Highly Plausible Win Projections, both for player value and projected minutes played, it is possible to create a quick overview of what may be some of the best and worst contracts for this year. The calculation was simple — my Plus over Replacement Player (PORP) effectively multiplies production over a typical fringe/minimum contract player times expected minutes played.

When we look at overall best values there is heavy favoritism towards rookie contracts, which are artificially constrained by the CBA. Getting productive draft picks has out-sized value in arbitraging the CBA, accentuated by the fact that the rookie scale has not kept pace with the salary cap.

Four out of the five projected most valuable contracts are still rookie deals, the other is buying a ring (not that there’s anything wrong with that).

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There are a few expected playoff teams there based on my projections, Nick Restifo’s, and the betting lines — like Utah and Houston. Both of whom were helped in team-building this offseason by having those valuable players on inexpensive (by NBA standards) contracts. However, the window for productive rookie contracts is pretty short given that rookies and sophomores tend to struggle and restricted free agency starts after the fourth year. A truly successful team can’t be built with just players in their third and fourth years, the team has to hit on some veterans.

To capture this, I created two more value divisions, filtering out any player making less than $5 million for a NBA middle class division and $12 million for an upper class division.

First the $5 million dollar middle class division:

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Only one rookie contract player shows up here — Karl Anthony Towns. The rest are veterans signed to good value contracts, playing for teams with a serious shot to make the play offs.

But it’s a stars league so let’s look at them as well in the $12-million-and-over division. Hello Warriors:

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This is where true stars and post season difference makers begin to show up. If I had used $15 million as the minimum Chris Paul and Kevin Durant would have appeared on the list in place of Curry and Lowry who make less than that threshold.

On the other end of the spectrum are low-value contracts, player’s whose pay is significantly over what my model projects them to produce. Here again the amount of pay matters. NBA rosters often have quite a few expected low-value or even sub-fringe NBA production players, especially among young players and low-paid veterans. The chief opportunity cost for these cheaper contracts is not the money, but the roster spot and the minutes the occupied on the floor, assuming there are better options out there.

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There are always a few guys who are getting minutes despite not doing much of anything measurably well. So, for the first group I filtered on expected minutes played rather than salary. This captures a group that is at tension in my projections as minutes tend most often to go to the better rated players, particularly on offense. I call this the “Why Is He In?” group.

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This group, by the way, is one of the groups I have the least confidence in my projections due to the inherent conflict between how poorly they project and the amount of playing time they’re expected to get. There’s a decent chance one of those projections could be off. Either they play better or lose time on the court.

Lastly, there are the albatross contracts — players getting well above average contracts but projected to have below average production. Here they are filtered for $15 million contracts.

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Not surprisingly four out of five of the contracts were signed this off season as money poured into the NBA. The price of PORP, or whatever production proxy you want to use, has gone up. But older contracts do not yet reflect that reality, but at least there is one more salary cap raise coming to make the latest signings look relatively better.