By Bryan Toporek
As the Oklahoma City Thunder learned last year and the Utah Jazz recently confronted, it’s often difficult for small-market teams to retain All-Stars once they become unrestricted free agents. To combat that, the NBA’s latest collective bargaining agreement created the Designated Veteran Player Exception (DVPE), or the so-called “supermax” contract, which allows teams to offer certain players up to 35 percent of the salary cap rather than the typical 30 percent.
While supermax deals give incumbent teams even more of a financial advantage over opposing suitors, they also come with a host of unintended consequences. Outside of a few select cases, owners may largely come to regret pushing for such a contractual mechanism in the wake of Kevin Durant’s departure from OKC.
To qualify for a supermax, a player needs to have eight or nine seasons under his belt when he starts his new contract. He also must either be on his original team or have been traded while still on his rookie deal. Beyond that, the only players eligible for the supermax are those who a) are on one of the All-NBA teams in the most recent season, b) won Defensive Player of the Year either the past season or the two preceding seasons, or c) won the Most Valuable Player award in any of the previous three seasons.
That restrictive criteria narrows the player pool eligible for such a deal at any given time, as many of the All-NBA honorees, DPOYs or MVPs won’t be up for new contracts or have the requisite number of years of experience. For perspective, only Russell Westbrook, James Harden, John Wall and Stephen Curry met the supermax criteria this past year. (All but Westbrook have since signed supermax deals, and Westbrook may not be far behind.)
Meanwhile, since Gordon Hayward and Paul George each missed out on an All-NBA nod, it prevented the Jazz and Indiana Pacers, respectively, from offering them supermax deals. Had either qualified for a supermax, they would have been in line for roughly $27.5 million more over the next four years (not factoring in the extra fifth year Utah or Indiana could have given them, worth north of $45 million). Would Hayward still have signed with the Boston Celtics had Utah been able to hand him more than $200 million over the next half-decade? Would the Pacers have felt pressured to trade George in advance of his 2018 free agency if he qualified for the supermax this summer? We’ll never know.
Are supermaxes backfiring?
Owners are quickly realizing that supermax contracts present a new set of unexpected problems.
In mid-February, Bleacher Report’s Ric Bucher reported Sacramento Kings owner Vivek Ranadive was “uncertain” about whether he’d be willing to offer DeMarcus Cousins a $200 million extension. Less than 72 hours later, the Kings opted to ship Cousins to the New Orleans Pelicans for a pupu platter including Buddy Hield, a top-three-protected 2017 first-round pick and salary filler. The Chicago Bulls went through the same song and dance with Jimmy Butler, according to Vincent Goodwill of CSN Chicago, before deciding to trade him and the No. 16 pick to the Minnesota Timberwolves during the 2017 draft for Zach LaVine, Kris Dunn and the No. 7 pick.
Why would the Kings and Bulls be so reluctant to make long-term commitments to multitime All-Stars such as Cousins and Butler? As ESPN.com’s Kevin Pelton noted in January, “While truly elite superstars will still be undervalued even at 35 percent of the cap, second-tier stars like Cousins will no longer provide as much additional value.”
Had supermax contracts been in place since the 2005 CBA, Pelton determined only three of the eligible 14 players—LeBron James, Dirk Nowitzki and Chauncey Billups—would have returned positive value on such deals. Three others—Carmelo Anthony, Pau Gasol and Dwyane Wade—would “have been fairly paid at 30 percent of the cap and slightly overpaid at 35 percent,” according to Pelton. The remaining eight “would have been mistakes ranging from merely bad to ruinous,” he wrote.
Injuries undermined the likes of Elton Brand (Achilles and shoulder), Amar’e Stoudemire (knees) and Yao Ming (foot), while Gilbert Arenas sewed the seeds of his own professional demise by bringing guns into the Washington Wizards’ locker room and threatening a teammate. Manu Ginobili, Tony Parker, Shawn Marion and Joe Johnson remained integral parts of their respective squads, but none produced at a level meriting anything close to a supermax contract.
Where might Butler, George and Cousins have fallen along that spectrum? Historical precedent and probability suggests only one of the three (at most) would have lived up to a supermax contract. Team construction also plays a huge role in whether such deals are sound investments, and in all three of their cases, the answer was a resounding no.
The Pacers and Bulls were each Eastern Conference contenders earlier in George and Butler’s careers, but both fell off the map in recent seasons as the cores of those teams disintegrated. Pace-and-space proved to be the foil to Roy Hibbert’s dominant verticality. Derrick Rose was never the same after tearing his ACL during the 2012 playoffs. When George broke his leg in a 2014 Team USA scrimmage, it spelled an end to that iteration of the Pacers. The Bulls rebooted soon thereafter, shipping Rose to the New York Knicks and allowing Joakim Noah to walk in free agency.
The Kings, meanwhile, found themselves mired in dysfunction for much of Cousins’ tenure in Sacramento, undermining whatever progress they’d make. From a rotating series of coaches (Keith Smart to Mike Malone to Ty Corbin to George Karl to Dave Joerger) to an internal front office power struggle that caused then-general manager Pete D’Alessandro to flee to the Denver Nuggets, chaos reigned for the Vivek Ranadive-owned Kings. Following D’Alessandro’s departure, the Philadelphia 76ers ransacked new GM Vlade Divac, agreeing to absorb the contracts of Carl Landry and Jason Thompson for future draft considerations that have already paid dividends.
The Pacers, Bulls and Kings therefore each likely realized that with or without their respective stars, they had no plausible route to championship contention. Without any other All-Star-caliber talent on the roster, all three lacked the strong complementary cast needed to make a supermax investment worthwhile. Kickstarting a rebuild by trading George, Butler and Cousins was a wise play for each, even though all three received relatively underwhelming packages in return.
Will supermaxes kill the Big Three model?
Given salary-cap constraints, it’s damn near impossible to construct a cohesive, championship-caliber team around three max-contract players without running into exorbitant luxury-tax bills. The Big Three-led Miami Heat hemorrhaged its complementary cast throughout LeBron James’ four-year tenure with the team. The Los Angeles Clippers ran into the same issues while building around Chris Paul, Blake Griffin and DeAndre Jordan. James’ Cavaliers are currently projected to pay a whopping $78.2 million in taxes this upcoming season after signing Derrick Rose to a one-year, veteran’s minimum deal, per ESPN’s Adrian Wojnarowski and Brian Windhorst, which explains why they’ve been attempting to salary-dump Iman Shumpert for much of the summer.
Supermax contracts only further complicate matters. With one player gobbling up 35 percent of a team’s cap space, teams with three max-contract players have few viable options of acquiring additional talent beyond the mid-level exception. Even if a team already has those players on its roster—and is thus allowed to exceed the salary cap to re-sign them via Bird rights—it’s prohibitively expensive to build around someone on a supermax contract.
With Wall, Bradley Beal and Otto Porter Jr. all now signed to max or supermax contracts, the Wizards are next in line to prove that point. When Wall’s supermax deal kicks in during the 2019-20 season, Washington will have more than $92 million tied up on those three alone. Add in the final year of Ian Mahinmi’s ghastly four-year, $64 million contract ($15.45 million), and the Wizards have nearly $107.6 million in guaranteed salary on their books that season with only four players under contract. With the cap tentatively projected to be $108 million that season, per RealGM, the Wizards will have no available cap space after factoring in incomplete roster charges. If Marcin Gortat or Markieff Morris depart in free agency that summer, Washington will only be able to replace them with players signed via cap exceptions.
Barring another unexpected leap in the salary cap, supermax deals will only grow more painful as each season progresses. Based the salary-cap estimates from RealGM, supermax deals signed this summer will jump from consuming 35.0 percent of a team’s cap space next year to 37.7 percent in 2022-23.
|Year||Salary Cap||Supermax||% of Salary Cap|
The Golden State Warriors didn’t bat an eye before offering Curry a supermax, as they have their core of the future already in place with Kevin Durant, Klay Thompson and Draymond Green alongside him. If they keep all four on their roster beyond 2020, however, they’ll be facing unprecedented luxury-tax bills. The current CBA all but guarantees the Dubs will have to part ways with either Thompson or Green (likely the former) within the next three years.
Few teams have the riches of Golden State, both in terms of talent and owners willing to delve that deep into the luxury tax. As such, the supermax may wind up doing more harm than good in terms of helping teams build championship contenders around All-NBA-caliber talent.
Who’s worth a supermax?
That begs the question: Which players may wind up returning positive value on a supermax?
Using a metric called “consensus plus-minus,” which draws upon real plus-minus, box plus/minus, win shares and player efficiency rating, Nate Silver of FiveThirtyEight evaluated the caliber of top players on average championship-winning teams and divided them into “alphas” (the best player), “betas” (the second-best player) and “gammas” (the third-best player). Based on that metric, only six players project as alphas during the 2017-18 campaign: Curry, Westbrook, Harden, LeBron James, Kawhi Leonard and Kevin Durant. While a career-altering injury could affect the trajectory of their long-term outlook, all six would be relatively safe bets for a supermax (if eligible).
Butler and Cousins slotted in as betas, according to Silver, while George fell between DeMar DeRozan and Mike Conley in the gammas category. Wall likewise projects as a gamma, as do Beal and Porter. Drastic internal improvement could cause those projections to fall short—as is, Butler wasn’t far off from alpha territory already—but second- and third-tier players such as these will have a far more difficult time returning positive value on a supermax, especially if they aren’t already surrounded by the requisite All-Star talent.
Who might be next? Anthony Davis looms large as a glaring supermax question mark in a few years’ time. While his talent suggests he’d be a no-brainer for such a deal, his lengthy injury history casts doubt on whether he’d live up to that price point. If Cousins departs as a free agent next summer,the New Orleans Pelicans will also be restricted in their ability to bring in more top-tier talent given Jrue Holiday’s enormous new five-year, $126 million contract.
Giannis Antetokounmpo appears to be a safe bet for a supermax contract in the early 2020s—regardless of whether he develops a three-point stroke—as does Karl-Anthony Towns. Silver’s consensus plus-minus metric suggests only a half-dozen or so players at any one time will be worth that hefty of an investment, though. That means teams with players who qualify for a supermax (such as Wall) may be forced to overpay those stars or likely lose them in free agency.
Once a few supermax contracts go south, owners may regret ever lobbying for them in the first place.