Not every $99M is created equally. Though every NBA team has the same amount of money to spend on its roster, not everyone does so with the same intelligence. That’s capitalism. (Although the NBA is very socialistic, especially as a result of its revenue sharing to ensure no team can lose money). If you haven’t already guessed, yes, this is an academic(ish) historiography(also ish) of the economics of team-building in the NBA.
Being the best team in the NBA involves manipulating the complex market and finding what the inefficiencies are. There are four types of contracts in the NBA: minimum deals, rookie deals, maximum contracts, and everything else (the middle class). As new collective bargaining agreements are signed, each type of contract becomes increasingly underpaid or overpaid according to performance. This isn’t new, and in 2015 Neil Paine for 538 brilliant charted how each type of contract changed in relative value over the 2000s.
One upshot is that maximum players have long been considered underpaid, both by stars like Kobe Bryant and LeBron James, and by analysts such as Neil Paine. Paine predicted this would remain true following the unprecedented spike of TV money in 2016-17: “In other words, the max player is once again a far better deal than his middle-class peers.” He predicted the three most underpaid players would be Kawhi Leonard, Jimmy Butler, and LeBron James (remember, this was written in 2015).
Winning a championship generally requires fielding a best player who makes less money than he deserves. Steph Curry was the perfect example of this, as his $12M deal (a result of his glass ankles early in his career) allowed the Warriors to spend extra money not just on talented role players, such as Andre Igoudala and Shaun Livingston, but also on another superstar, Kevin Durant. They beat the Cavaliers in 2016-17 seemingly with ease. The salary cap similarly contributes to LeBron James always making the finals; he contributes so much more value to a team than the maximum possible 30% of the money that he is paid. LeBron + four minimum level guys could probably make the playoffs. He’s that good.
The expected value added of a max contract seems to be changing. As Kevin O’Connor recently highlighted, superstars are perhaps taking up too much of their team’s budget. The new supermax deal allows one player to make 35% of his team’s budget, or approximately $35M per year (that will rise to $45M in four years, or on the last year of the contract, as the cap rises). Teams are afraid of committing so many of their eggs into one player’s basket. Sacramento traded DeMarcus Cousins instead of paying him. Indiana did the same to Paul George, and Chicago the same to Jimmy Butler. Actual signees like John Wall and Mike Conley Jr. must perform like LeBron James or Steph Curry to make sure they are still helping their teams while being paid lavishly on their new contracts. Injuries to a supermax player can be disastrous to the team that signs him.
Paying a star what he is worth can create a hard ceiling for a team. Remember, every team has the same money to spend, so if you spend it fairly, another team will find a way to out-maneuver you and underpay its own players. Stars like Marc Gasol ($22M), Jrue Holiday ($25M), and Kevin Love ($22M) play well and help their teams, but at such a high proportion of their team’s budget, their contracts forbid their teams from adding a wealth talent beside them. They are paid adequately, but adequacy doesn’t win championships.
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So where can value be found in the new market? We are finally, 500 words into a Raptors Republic column, ready to delve into the Raptors.
The Raptors decided that they didn’t need to find extra value from their max contracts as long as those players performed up to their deals. DeMar DeRozan and Kyle Lowry have done just that. Nate Silver of 538 ranked stars on consensus plus/minus, “a combination of Real Plus-Minus, Box Plus/Minus, Win Shares and player efficiency rating”, and found that Lowry was a solid second-best player for a championship team and DeRozan a solid third-best player. DeRozan has likely played his way into a higher tier this year, performing even greater feats than his career year last calendar turn. Despite incredible play, neither is arguable as a top-5 player in the league. And yet the Raptors are a title contender. They are both higher paid and better performing versions of Jrue Holiday. So where does the value come from?
The Raptors can afford to pay their stars what they are worth because they have found so much added value from their young players. Dan Rosenbaum wrote all the way back in the pre-Twitter dark ages of 2003 that players on rookie deals were vastly underpaid. This has always been true, and it is consistent with Neil Paine’s and Kevin O’Connor’s more-modern research. The Raptors have found incredible play from every roster position:
Team Depth Visualized
Projected BPM Wins Created by each player's rank on their own team#TORONTO pic.twitter.com/hrDmzLz5l9
— Nathan Walker (@bbstats) February 1, 2018
This chart underscores Toronto’s depth, as the team boasts contributors playing in the top 4, league-wide, in every roster spot from 5th best player to 12th best player. Value is added across the roster. To put into on-the-floor playing terms, the Raptors can trust their level of play will stay high no matter who is on the court. In fact, their bench beats up on opposing benches; the team’s highest net rating belongs to golden god Fred VanVleet.
The Raptors’ approach to team-building makes sense when you divide every player on the Raptors into the four types of contract: minimum, rookie, middle class, and maximum.
Lowry and DeRozan are max contract players, and as stated above, they perform well, if not Curry- or LeBron-level well, for that money. The only middle class players are Serge Ibaka ($20M), Jonas Valanciunas ($15M), and C.J. Miles ($8M). Every other roster position is filled by a rookie deal or a minimum salary, in the cases of Fred VanVleet and Alfonzo McKinnie. And the value coming from the lowest-paid players is what allows the Raptors to be contenders.
Using Real Plus/Minus (RPM), which of course is flawed, but still helps contribute to the discussion, Toronto’s value added from the young guns is enormous. Fred VanVleet (3.52 RPM wins added at $1.3M), O.G. Anunoby (3.16 added at $1.6M), Pascal Siakam (2.65 added at $1.3M), Delon Wright (2.52 added at $1.6M), and Jakob Poeltl (2.06 added at $2.8M) contribute to a total of 13.91 RPM wins added at only $8.6M. Together, they make less per year than noted rat man Matthew Dellavedova but add more wins than any single player in the league (Jimmy Butler is in first at 10.46 added). That’s value.
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Toronto is building a new kind of championship-contention team. Having such incredible play at such cheap prices means that Toronto can afford to splurge on middle class players like Ibaka and Valanciunas. Norman Powell will be making middle class money starting next year ($11M), which he may well earn through defense. Per Nate Silver’s study of consensus plus/minus, the only championship teams since 2000 with top players as average as Toronto’s best two were the 2014 Spurs, the 2010 Lakers, and the 2004 Pistons. Those teams were still top heavy, with their best players shouldering much of the load during the season.
The Pistons had talented bench players in Lindsay Hunter and Mehmet Okur, but no starter played fewer than 30 minutes per game. The Lakers similarly had a super sub in Lamar Odom, but their bench only played to fill the gaps. The 2014 Spurs, on the other hand, succeeded from the bottom: their strength was their bench, including Boris Diaw, supersub Manu Ginobili, Tiago Splitter (who led the team in playoff box score plus/minus), and Patty Mills (who Nate Silver’s consensus plus/minus ranked as the team’s 3rd best player, ahead of one Tim Duncan). The Raptors are building a similar team.
This can backfire in the playoffs, for the simple reason that rotations shorten. Added value from the 9th-12th roster spots mean nothing if they don’t see the floor. However, the 2014 Spurs used it to their strengths. In the playoffs, the Spurs were able to shorten their rotations and play 9 players double-digit minutes a game, but they used their depth situationally. Aron Baynes and Matt Bonner split time as situational 10th-man bigs. The Raptors can use their depth similarly, as a situational tool in the playoffs.
Of course, the 2014 Spurs also had a young Kawhi Leonard. He was a defensive wizard in only his third year in the league, seemingly tailor-made to defend LeBron James. He won finals MVP while being paid only $1.9M that year. Even in 2015, about to begin a contract worth $19M+ per year, Neil Paine estimated him as the league’s most underpaid player. The Spurs won a championship as a result of his value added on a rookie deal, and they would again be contenders (if he were to be healthy) with Kawhi Leonard adding value on a max contract.
In that sense, the Raptors are not following the path of the Spurs. No one on the team projects to be as valuable as Kawhi Leonard, and not even Kyle Lowry or DeMar DeRozan are as good as Tim Duncan was in 2014. The Raptors never had a chance to snag a top-5 guy, so Masai Ujiri decided to add value a new way. The league’s largest market inefficiency is the best 5 players making the same as the next-best 50, but barring that, the largest inefficiency is rookie deals. So the Raptors got an army of valuable rookie contributors. They have several quality rotation guys, would-be starters on the right teams, making less combined than one middle class player. That probably won’t be enough for a championship, as the Golden State Warriors have spent their $99M+ on an unfeasible machine of basketball destruction, but at least the Raptors have spent their money well and forged a creative path to contention in the process.
