In the age of Twitter and analytics, NBA front offices are under more scrutiny than ever. Free agency deals and trades are often announced before the paperwork even reaches NBA headquarters, and grades on deals are published by most major sports media outlets within an hour or two. Analytics-focused evaluators use a variety of metrics to pinpoint how each player has performed in his career thus far and what he projects to do in the next few years, trying their best to map value and take as much of the gamble out of each transaction as possible. In this manner, players are converted into expected monetary value for the length of their deal, or discussed in relation to the players they were traded for. When a transaction’s perceived value is more than the price paid, it’s considered a steal, and the front office responsible becomes the recipient of widespread praise. On the other hand, when the price exceeds the expected return, sportswriters gleefully expound on how the paying team was shortsighted, or how the player’s agent or the opposing executive “fleeced” the other team.
None of this comes as a surprise, nor should it. The limits of team salaries and the intricacies of the Collective Bargaining Agreement lend themselves to finding and capturing market inefficiencies, squeezing out value, playing hard ball, and otherwise “winning the deal.” After all, each contract signed to a team becomes an important piece of the pie, and the pie is only so large. Each deal is inevitably interconnected with the other contracts on the team, and finding or losing value in one can have repercussions for the rest of the roster.
There are certain instances, however, where the NBA community at large can become overzealous in the details of a transaction and lose sight of the bigger picture. The discourse can often get hyper-focused, as if every extra dollar a player earns will lower his on-court performance. Players aren’t simply pieces on a chessboard or a puzzle, however, and the best monetary deal does not always equate to the best move a team could have made. In these instances, the team “losing” the deal from an expected value or asset management perspective can still manage to be a big winner when all is said and done.
So the question becomes: when does it make sense to lose the deal, and how can we as analysts and fans be more cognizant of its inherent value? There are three factors for front offices to consider when engaging in a losing transaction:
- Timing of the deal,
- Available alternatives, and
- Range of outcomes
Using these factors, we can examine a deal made this off-season that received widespread scrutiny for being an overpay: Chicago’s deal with the San Antonio Spurs to acquire DeMar DeRozan on a 3-year $82m contract in exchange for Thaddeus Young, Al-Farouq Aminu, a 1st round pick, and two 2nd round picks. Was this the right move for them? Let’s look at why they did it.
The first factor to consider in evaluating a transaction that appears, on its face, to be an overpay is whether the timing of the deal makes sense. One of the most prominent positive examples of this is when, less than a year ago, the Milwaukee Bucks traded for New Orleans’ Jrue Holiday in exchange for three unprotected 1st round picks, two additional 1st round swaps, and a series of players and other picks that ended up being involved in a 4-team deal. The deal was universally considered an overpay from a pure value standpoint: while Jrue is a wonderful 2-way player, the type of assets being traded for him were commensurate with a player of higher stature. However, almost everyone agreed that given the circumstances the Bucks found themselves in, the deal made a lot of sense. Their team had just been eliminated by the Miami Heat in a gentleman’s sweep months before, and the team was in a precarious position, as their reigning MVP Giannis Antetokounmpo was poised to make a decision on whether to sign a supermax deal with the Bucks that would lock him up long term. If Giannis failed to sign the deal, Milwaukee’s years of work to build a championship-contending squad around him would be quickly undone.
Given the circumstances, a deal to show Giannis that the Bucks meant business was critical to their future success. As we know, Giannis signed the supermax shortly after the deal was complete, and the Bucks went on to win the championship that season in large part due to the on-court contributions provided by the “overpaid” Jrue Holiday.
In a similar light, we can examine the DeRozan deal. The Bulls, in some sense, also find themselves at a critical cross-roads as a team. Their up-and-coming star Zach LaVine will be a very sought-after free agent after this season and, at only age 26, his best days seem to be ahead of him. After years of failing to put any semblance of talent around LaVine, as well as failing to draft and develop other potential stars, the Bulls revamped their organization and made wholesale changes to the roster this off-season. Their objective has been clear: maximize the talent around LaVine and persuade him to commit to Chicago long-term.
While Chicago is certainly not expected to compete for a championship this season, the expedience to retain their best player and give the city a team worth rooting for is clear. To that end, adding proven talent that fits the team’s needs is imperative because the outcome of losing Zach LaVine for nothing in free agency would be disastrous for the organization. In that sense, it’s easy to see how adding a player of DeMar’s caliber at this time makes a world of sense. DeMar is a veteran talent that has playoff experience and has been a leader on successful teams, something the Bulls have had very little of in the past half-decade. There will be plenty who will argue that DeMar’s actual on-court impact won’t move the needle for the Bulls, but there’s little doubt that the timing of this transaction makes sense for what the team wants to achieve this season.
One of the concepts that we as appreciators of basketball often fail to, well, appreciate, is that the free agent market is limited and not very liquid. It’s easy to preach that your favorite team should sign a high-level creator that can also shoot and defend, or find a complementary 3&D wing, or an athletic big that can cover a bevy of mistakes, but the truth is that those players very often just don’t exist in the marketplace. With the recent trend of “player empowerment,” we are seeing more high-end players choosing to sign extensions and foregoing free agency altogether because when it really comes down to it, they have a good chance of being moved if they desire it. Even if they do make it to free agency, there is no guarantee that your favorite team will have the in-road to acquiring them.
We saw examples this very off-season with Kyle Lowry, who signed with the Miami Heats minutes into the start of free agency and left several teams that needed his services empty-handed. Or in the Jrue Holiday case, the Bucks were forced to pay out the nose in assets because there was nobody else remotely available on the market that could replicate what Jrue could do for their team. Or the Clippers, when they pried Paul George from the Thunder for a king’s ransom because their ability to acquire Kawhi Leonard depended on it. It’s just extremely rare for a team to get their top target at the price they want. Overpaying is the name of the game in free agency, outside of those few instances where a quality player’s market gets squeezed (think Dennis Schröder) as the available team dollars dry up.
In the case of DeRozan, the Bulls had a very specific need for a high-level half-court creator. For all of Zach LaVine’s growth as a creator last season, his shooting and finishing talents had not been fully optimized because the Bulls tasked him with too many on-ball responsibilities, especially in clutch situations. In addition, the Bulls ranked dead last in free-throw attempts and 27th in turnovers. For Chicago to take a step forward into respectability (and keep Zach around), they needed starting-level players who applied rim pressure, created easy opportunities for teammates, and could share the scoring load late in games. As a team projected to have no cap space in free agency, the Bulls were limited in their options to acquire said players.
In DeMar DeRozan, the Bulls found someone who could do all three. DeMar got to the rim and drew shooting fouls in the 99th percentile for his position this season, according to Cleaning the Glass. He was 100th percentile in assists, 96th in AST:Usg, and 90th in turnovers for his position while averaging 21.6 points, 6.9 assists, 2.0 turnovers on 59.1 TS%. In addition, DeRozan has been the most efficient isolation scorer in the entire league the last two seasons. Having just turned 32, DeMar also fit the timeline of providing short-term help as Chicago’s younger players develop. Unfortunately, a player of that caliber will not only not come cheap, but also be highly sought after in the market. As we saw it play out, the Bulls were one of several teams (a couple of them with significant cap space) with interest in his services, and ended up paying a hefty price to acquire him.
Notably, amid the various criticisms of the deal there was little offered as an alternative to the Bulls’ transaction. The main refrain was simply that the Bulls shouldn’t have paid him that much, or given up so much to get him, as if the Bulls had decided on the price by throwing darts at the asset board while blindfolded. Much of the inner workings of teams in these transactions remain unreported (not in small part due to the slightly illegal but necessary timing of the discussions), but it’s safe to say that Chicago only paid what they felt they had to pay to obtain DeRozan’s services.
The bigger concern: what other options were there for Chicago? With Lonzo Ball clearly in the Bulls’ sights at PG, their remaining weaknesses were better covered by someone on the wing, and there was nobody on the market in that position that approximated DeRozan’s skills. Simply not signing DeRozan has been suggested, but doing so would have maintained the major holes in the Bulls’ offensive game while putting undue pressure on LaVine (as well as Ball and Coby White) to play in a role he’s not best suited for, and signing one of the other point guards on the market would have left the Bulls with no starting caliber small forward. With the rest of the East improving, the risk of missing the play-in and losing LaVine would have been too great to simply stand pat.
In addition to looking at the downsides of not doing a deal, executives (and observers) also have to look at the various possible outcomes of completing the transaction and decide if it’s worth the risk. The worst-case one is pretty simple: if it all crashes and burns, how hard will it be to get out from under the wreckage? Looking back again at the Jrue Holiday deal, a total of five 1st round picks and swaps would have been a very difficult hole to get stuck in if, for example, Jrue immediately got a season-ending injury and then walked in free agency. Maybe Giannis then asks out of Milwaukee and it all goes down the drain. The Bucks had to decide if that was a worse outcome than not doing the deal, possibly have Giannis not sign the extension, or ask out, or lose again early in the playoffs and miss out on the chance to further improve the roster. At the end of the day, they rolled the dice and went all-in. I’d say it went fairly well for them up to this point. And what if it didn’t?
In 2013, the Brooklyn Nets decided to test this worst-case-scenario theory, trading three unprotected 1st round picks and several players to the Boston Celtics in return for some great players who were past their prime. It failed. So poorly, in fact, that the Nets were forever doomed. Okay, actually they had a few rough years and then made the playoffs again in 2019, were likely a big toe away from a championship in 2021, and are now the clear title favorites for 2022 (pending Kyrie Irving’s vaccine research).
Perhaps this is a lesson to us that nothing is certain in the NBA, and that even the worst trade or free agent signing might end up not being a big deal, and the worst contract in the NBA is probably still moveable anyway. While there have been some pretty costly mistakes in NBA history in regards to drafting the wrong guy, for the most part, the ramifications of an individual poor team decision are short-lived. The real trouble comes when you have executives that consistently make bad decisions, but that’s a subject for another day.
So let’s assume the DeRozan deal flops badly, the Bulls miss the play-in, and Zach LaVine walks at the end of the season. DeRozan is going to make $26m this season, $27m in 2022-23, and $28m in 2023-24. If DeRozan’s play is anything like it was the last few seasons (when, by the way, he was making nearly identical money), does anyone believe it’s not fairly easily moveable? If instead the contract becomes completely dead money due to injury, there are teams like the Oklahoma City Thunder that can probably absorb it into their space while continuing their quest to own every pick in the draft.
The high-end and middling outcomes also need to be brought into focus. Many have mocked the assumed high-end outcome, which has been described as the Bulls getting into the playoffs and losing in the second round at some point over the length of the deal, as unworthy of the 1st round pick it cost to get DeRozan. To that I’d say: go ask the Kings or the Timberwolves how thrilled they would be to lose in the second round of the playoffs at the cost of a 1st round pick in the 20s and a $27.5m-per-year contract. The reality is that most teams would make that exchange, and for a big-market team like Chicago that has mostly been in the wilderness since Michael Jordan’s retirement, making the Bulls a long-term destination for free agents is likely as important a goal as getting their current team into the playoffs. Chicago can’t do that unless they show that they are perennially in the playoff mix. Overpaying a quality free agent might be their best path to relevancy in the last decade. And if it pans out somewhere in the middle, I doubt many fans in Chicago will be complaining about the sheer improvement in watchability of this team over the versions of the previous few years. At the cost of a 1st-round pick, there’s little downside for all parties.
Was the DeMar DeRozan deal an overpay in terms of the combination of assets and money to acquire an unrestricted free agent? Most likely.
Was it the right move? Time will tell.
The beauty of this discussion is that you can have the answer to both questions be a resounding yes. There will be more deals that fall under this framework going forward, and I’m confident that the media and fans will continue to assign wins and losses to them as quickly as they did with this one. But there’s no guarantees in the NBA. Looking back at what is now considered one of the worst trades in NBA history between the Celtics and Nets in 2013, there were many at the time who believed this was a big win for the Nets. You can say the same for many other trades and draft night grades that eventually got turned on their heads. Sometimes even the best deals on paper turn out to be terrible in practice, and the human element in sports is always a major factor (see the current Ben Simmons and Kyrie Irving situations as further proof of that).
And when it comes to overpaying, sometimes losing the deal can be the right move.