Why NBA Teams are Overpaying and How to Solve the Problem

“Gordon Hayward leads the Celtics to an impress victory with 35 points while shooting 78% from the field.” While this was a recap of the Celtics recent victory over the Minnesota Timberwolves, Celtics fans have rarely gotten such impressive performances out of Gordon Hayward so far this season, performances that many hoped would be routine. A more typical recap for him this season would be, “Hayward finishes having played 32 minutes and totaling 9 points on 10 shots from the field”. Fans and media members alike this season have started to question whether the one-time all-star was worth the max contract the Celtics gave him in the July of 2017.

Gordon Hayward certainly hasn’t lived up to his max contract this year, averaging just 11.2 points per game. Photo by Getty Images

The reality of today’s NBA is that several players are getting overpaid. Many NBA players who are good, but by no means even all-star caliber, are now being compensated similar to the best in the game. Others who are all-star caliber are being paid as if they are on equal ground as someone like Kevin Durant or Stephen Curry. Players such as: Chris Paul, Gordon Hayward, Andrew Wiggins, Al Horford, Otto Porter Jr., and Hassan Whiteside are all making well above what their perceived value would be to any NBA team. So why do teams end up paying players well over what they are worth to join their team? There are a couple of reasons.

 One reason actually comes from success. Teams that are considered quality playoff contenders, such as the Rockets last year or the Wizards in 2017, are forced to keep their cores intact to ensure the team remains in contention. This explains how a player like Otto Porter Jr., who is aquality, starting caliber NBA player, ends up being the highest paid player on the Wizards after inking a 4-year/$106.5 million deal in the summer of 2017. Porter is a solid player, arguably the best player the Wizards have after John Wall and Bradley Beal, but does he deserve to be paid more than both of his all-star teammates? No. Often contenders fear that if they let key contributors walk in free agency, they won’t be able to replicate the success of the previous season.

Otto Porter’s numbers have dropped off in 2018-19 after signing a big deal with the Wizards in the offseason. Photo by Will Newton/Getty Images

This is also true of the Rockets in this past offseason. While it is possible the Rockets thought that Chris Paul wasn’t worth the 4-year/$160 million contract they dolled out to him, they were between a rock and a hard place. They could either overpay Paul and remain a contender or let him walk in free agency and allow their team, who led the league in wins in 2017-18, to lose its second-best player.

In retrospect, the Rockets should have likely opted for the latter. After coming off of an injury to his hamstring late in the playoffs last year, Paul hasn’t looked like the same player this season. in 2018-19 he’s averaging a career low in points per game (15.6), field goal percentage (41.5%), and free throw percentage (81%), while tying his career high for turnovers per game (3.0). He is also now injured again indefinitely and will turn 34 before the end of the season.

Chris Paul could be a huge cap in the coming years for the Rockets without much future value. Photo by Troy Taormina-USA TODAY Sports

The main dilemma for teams such as the Rockets who overpay to keep their core intact is that their financial flexibility is significantly limited, and they’re forced to gamble on the buyout market in hopes of improving. The buyout market is when teams release players midseason and other teams acquire them by offering minimum contracts in hopes said players offer significant contributions for little pay in a low-risk, high-reward situation. Last season, major contenders such as the Rockets and 76ers were players in the buyout market. The Rockets looked to add wing depth by acquiring Joe Johnson and Gerald Green, while Philly looked to add shooting by bringing in Marco Belinelli and Ersan Ilyasova. While the 76ers got the most of their acquisitions, both Johnson and Green contributed minimally to the Rockets. That exemplifies the unpredictability of the buyout market though, and is not an ideal situation for a contending team to be in.

One of the other main reasons players are getting overpaid these days is because of potential. The poster child for this is Andrew Wiggins. At the beginning of the 2017-18 NBA season, Andrew Wiggins and the Timberwolves agreed to a 5-year/$147.7 million extension. That deal was classified as a max contract, the terms of which change every year. To clarify, a max contract for players coming off of their rookie deals is either 5 years at 25% of the current salary cap (what Wiggins received), or 5 years at 30% of the cap. The 30% bump is for players who have made all-star appearances, gotten on an all-NBA team, or won MVP before their rookie contract is up.

Andrew Wiggins has shown flashes of potential, but certainly hasn’t lived up to his max contract status. Photo by Hannah Foslien/Getty Images

So why did Wiggins receive a max extension when he inefficiently scores roughly 20 points a night while contributing to his team in nearly no other way? Potential. The Timberwolves hope in signing Wiggins to that contract was that he’ll continue to grow as a player and eventually earn the massive contract he is on and live up to the “next Tracy McGrady” hype surrounding his potential. The fear of teams in not signing players such as Wiggins, Whiteside, or Porter Jr. to these massive extensions would be that these you, potential stars leave the team and then tap into whatever potential they are perceived to have.

An example of this situation is Joe Johnson. While with the Suns, Johnson was a young, promising, player. He was a significant contributor to the 2004-05 team that led the NBA in wins and made the Western Conference Finals. Even though Johnson was good for 17 points a night on good shooting splits that season, the Suns refused to overpay for him when his contract was up at season’s end and actually low-balled him. He ended up bolting for Atlanta and was an all-star in seven of the next nine seasons. Meanwhile Phoenix was unable to duplicate their regular season and postseason success to the same degree as before. The downside to signing these players based on potential is that if they never live up to it, teams end up like the Wolves, Heat and Wizards – overpaying decent players as if they were perennial all-stars.

Joe Johnson’s had big-time success after leaving Phoenix. Photo by Barry Gossage/NBAE via Getty Images

What is the solution to this problem of overpaying players? Simply avoid overpaying at any cost, especially for a team without much hope of making an NBA Championship run (editor’s note: which is nearly every NBA team with Golden State’s current roster). This seems easier said than done, but in some situations it is. A good example would be the Milwaukee Bucks and Jabari Parker. Parker, much like Wiggins, was a high draft pick in 2014 (second after Wiggins in fact), has shown flashes of being an outstanding player in the NBA, receiving at lot of hype (“the next LeBron”) surrounding his potential. Also, much like Wiggins, Parker hasn’t lived up to the hype yet. While showing he can be a gifted scorer, Parker hasn’t elevated his game significantly since entering the NBA and perpetually misses time due to injury. So, much like the Wolves, the Bucks were faced with a decision concerning Parker upon his rookie contract expiring after the end of last season. They could either overpay him and hope he lives up to his potential, or let him walk and risk missing out on a future star.

Jabari Parker’s 2018-19 performance has shown that the Bucks made the right choice. Photo by Kamil Krzaczynski-USA TODAY Sports

The Bucks opted for the latter. Parker eventually inked a deal with the Bulls that will pay him $20 million this season and another $20 million next season, if the Bulls pick up the option. Early into this season Parker has shown he still isn’t worth the money. He is shooting the worst field goal percentage of his career so far (45.1%) while averaging less than 15 points a game, while also playing lackadaisical defense. He has already been exiled to the bench and isn’t seeing nearly as much playing time as was initially expected for him. In the Bulls’ last ten games Parker has only seen action once and scored a measly four points in that game. Meanwhile the Bucks used the money they would’ve spent on Parker to acquire George Hill, Ersan Ilyasova, and Brook Lopez. That trio of signings has resulted in three useful rotation players whose contributions are helping the Bucks to the NBA’s second best record.

Brook Lopez has been a top-notch rotation player for the Bucks with a cap hit of just over three million. Photo by Getty Images

In conclusion, are max contract inherently bad and should they never be given out? No. Max contracts can be well earned and are good incentives for teams to win over players with. Many marquee players such as LeBron, Durant, and Harden are all earning the exuberant amounts of money they make. What teams should ask themselves is whether players are truly worth the pay they are demanding in negotiation. If they are not, it’s simply not worth signing them, regardless of potential or keeping a core intact. Otherwise we end up with a league where a declining, injury prone Chris Paul is the highest paid player and also makes more than three times as much as Kemba Walker and twice as much as Kyrie Irving.

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