Dwyane Wade recently agreed that NBA superstars, such as himself and LeBron James, are underpaid thanks to the current salary set-up the league has negotiated. It's a familiar refrain from league's observers, and one that the NBA lockout has brought into the sunlight. Artificial salary constraints on players at the top end of the salary scale have created a vast middle class of players making more money than they'd otherwise earn out. Teams were required to spend $2.1 billion on player salaries last season, and with max salaries in place, only so much can go to the best players. The max player cap doesn't only keep stars' paychecks down: it keeps roleplayers' salaries up.
But there's another artificial salary restraint that makes another class of player even more underpaid than superstars like LeBron and Wade: the rookie scale.
First-round draft picks are assigned a salary slot for the first four seasons of their career, with No. 1 overall picks making in the neighborhood of $5 million per season and low first-round picks making less than $1 million annually. To see just how underpaid rookie-scale players are, I ran a spreadsheet with salary and Win Shares -- as devised by Bill James and adapted for basketball by Justin Kubatko of Basketball-Reference.com. After removing "dead weight" players -- players who didn't not earn positive Win Shares due to a lack of playing time or earned negative Win Shares due to rampant ineffectiveness -- I found that the average Win Share cost $1.47 million. (Note that unlike James' baseball Win Shares, in the basketball version one Win Share equates to one win, not a third of a win. So a team that wins 60 games will have roughly 60 Win Shares to spread around.)
The top player in terms of Win Shares in 2010-11 was indeed LeBron, with 15.6. He was paid $14.5 million, which means that his salary per Win Share was $929,487, or about $500,000 per Win Share below average. This is good. According to our Win Share salary assignment, LeBron was worth $22.9 million last season ($1.47 million each for 15.6 Win Shares), and as such was "underpaid" by $8.4 million.
But that landed LeBron only at No. 9 on the league's most underpaid list. You'll sense a trend with the rest of the top 10. The number in parentheses is the amount the player was underpaid according to our formula.
1. Derrick Rose ($13.7 million)
2. Kevin Love ($13.1 million)
3. Kevin Durant ($11.5 million)
4. Serge Ibaka ($9.9 million)
5. Russell Westbrook ($9.5 million)
6. Al Horford ($9.4 million)
7. Blake Griffin ($9 million)
8. Nicolas Batum ($8.5 million)
9. LeBron James ($8.4 million)
10. Ty Lawson ($8.3 million)
Rose and Durant have double-meaning here: they are certainly superstars at this point. But they aren't near the top of this list because of max salary constraints on star players -- they are here because of the rookie scale. Durant's 2010-11 was the final season under the rookie scale -- he'll be making roughly double his '11 salary next year, whenever that is -- and Rose has one season of rookie scale left. (As such, expect him to lead this list again next year, unless Love sees another jump in production.) Nine of the 10 most underpaid players last season were on their rookie deals, with LeBron sneaking on there on his third NBA contract.
And these aren't all Roses -- Love, Westbrook, Horford and Griffin were All-Star reserves, but Ibaka, Batum and Lawson weren't even full-time starters all of last season. Further, Horford, the only one on the list besides Durant who has signed his second contract, signed for less than the max: he'll make $60 million over five years, when he could have signed for more than $70 million.
The next superstar you get on the underpaid list after LeBron is Chris Paul at No. 35 (underpaid by $5.5 million). Some of the players between LeBron and CP3: Ryan Anderson (underpaid by $8 million), Greg Monroe ($6.9 million), Stephen Curry ($6.8 million), Jrue Holiday ($6.7 million) and more. It's not just first-round picks on their rookie deals in here: guys like Landry Fields -- who happened to have the lowest salary per Win Share at $89,359 -- from the second round and cheap veterans like Chuck Hayes (paid $2.1 million, worth $9.2 million) also dot the list. But veteran superstars just ... don't.
After CP3, the next second-contract star is LaMarcus Aldridge at No. 40, underpaid by $4.8 million on his $11.5 million deal. Wade checks in at No. 48, underpaid by $4.6 million by making $14.2 million. Wade was paid $1.1 million per Win Share; the gentleman just above him on the underpaid list, Gary Neal (underpaid by $4.6 million) earned just $150,000 per Win Share.
There are really two ways to look at it. Yes, the fact that LeBron and Wade can earn more than $14 million a season and legitimately be underpaid is amazing. Signing one of these players in their prime is heaven. But there are better deals out there ... better deals than even LeBron. The best deals tend to be found in the first round of the NBA Draft, but you can find great deals among veterans, too.
Given how unlikely it is to pick up a grossly overpaid first-round pick -- Hasheem Thabeet was the most overpaid player on a rookie deal outside of inactive players like Greg Oden; Thabeet was overpaid by $4.3 million -- the lesson of this data is that it typically makes no sense to trade a draft pick. Consider the L.A. Clippers, who sent an unprotected lottery pick to the Cleveland Cavaliers in the Baron Davis-Mo Williams swap. The Clippers wanted to rid the locker room of Davis and save some money. We don't know how the eventual pick that traded hands -- Kyrie Irving -- will work out. But based on how other top-10 picks have performed, he could end up overearning his rookie deal by tens of millions of dollars over four years, outgaining any salary savings the Clippers picked up. Rookie deals are precious, and teams ought to hang on to as many as possible.
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