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Principles vs. particulars in overpaying in NBA free agency

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Is it ever okay to "overpay" for a free agent? We explain how all big-money contracts are not created equally.


For 24 hours, the Sacramento Kings reportedly had a four-year deal worth $52-56 million on the table for Andre Iguodala. The Kings rescinded that offer Tuesday night, as they needed an immediate answer from Iguodala and didn't get one.

But while the offer was valid and public, it echoed one of the more interesting debates around NBA free agency: is it ever okay to overpay?

The Kings' historic list of non-incumbent free agent signings looks like this: Brad Miller in 2003, Vlade Divac in 1998, Bobby Jackson in 2000 and Shareef Abdur-Rahim in 2005. The Kings do not compete in free agency. Most of the teams' best players were drafted by the franchise or acquired via trade. That's how it goes for most non-glamour teams. The free agents tend to sign with teams in big markets who have chances to compete for a title. When star players do sign in smaller non-incumbent markets, it's typically all about the money.

So to win big-name free agents, these teams need to win the money battle. Which usually means overpaying. Is that ever acceptable when trying to build a team in a salary cap league?

Reaction to the pulled offer: Sactown Royalty Denver Stiffs

I'll paraphrase an excellent point my friend Kevin Pelton raised during the Iguodala discussion on Tuesday: the principle that one should not overpay always matters because that overage on one player is money you can't spend elsewhere. The cap is a cruel mistress, and overpaying a player $3 million per year essentially reduces your cap line (or luxury tax line, in reality) by that amount. That could be an even bigger problem for smaller markets who would need to overpay in the first place, as the tax is typically a non-starter.

Do any circumstances merit breaking that principle? I think the Kings can make a compelling case in the now-defunct Iguodala deal. As noted, Sacramento never pulls free agents of note. The city just saved its team. New owners are in place. Fans are scooping up season tickets with hopes that this will truly be a new era of Kings basketball. The new arena is scheduled to open in three years. There is a palpable excitement for the team, and a pretty crazy need for a defensive-minded small forward. (The Kings finished No. 29 in defensive rating in each of the past two seasons.) The Kings have gobs of cap space if they let Tyreke Evans walk. At 29, Iguodala is a bit older than you'd like on a deal of that size ($13-14 million per year, on average), but he was otherwise a flawless fit.

Do those circumstances justify overpayment? I'd argue they would, though the amount of overpayment is highly debatable. (In Iguodala's 2016-17 season under the now-dead deal, he'd be making $15 million at age 34. That's a little frightening, I'll admit.) That was the issue with Rudy Gay, as Memphis needed to keep him when he was up for a new contract, but had to overpay massively to prevent him from signing an onerous offer sheet. And now Gay is overpaid by at least a third, or $6 million. (He's due $18 million this season.) That's a huge amount of money.

But would the $3 million or so Iguodala might be overpaid hurt as much? No, not really, unless his athleticism left him quickly and he became highly overpaid early in the deal.

Again, it's all moot in this particular situation, but the debate will pop up again. Heck, it applies to the New Orleans Pelicans' wooing of Tyreke Evans, too, though that deal is as much about projecting potential as anything else. (The list of NBA players with Evans' numbers at this age is incredibly short and impressive.) It's something front offices have had to and will have to grapple with for a long, long time. Is it ever okay to overpay? Sacramento was ready to say "yes," at the very least.

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