A Dissenting Opinion on Gordon Hayward’s Max Contract

(Photo by Andrew D. Bernstein/NBAE via Getty Images)

Everything is awesome!  Everything is cool when you’re part of the team¹, especially when they pay you $63 million dollars!

That is pretty much the sentiment in Jazz land.²  Following the Jazz formally matching Charlotte’s $63 million offer sheet to Gordon Hayward last week, general manager Dennis Lindsey stated,  “We have always seen Gordon Hayward as a significant part of the future… [and] are pleased [he] will remain a member of the Jazz for many years to come.”  Hayward’s agent, Mark Bartelstein, spoke on behalf of his young client, saying, “It’s always a wonderful thing when your own organization values you so much that they’d match a contract like this. I think it makes a great statement to Gordon about how they feel about him and value him.”

To wrap up the love-fest, USA Basketball invited Hayward to their summer camp, where 19 of the best players in the NBA will compete for 12 slots on the US National Team.

It is a good time for Gordon Hayward, the Utah Jazz, and Jazz fans as well.  Such is the majority belief.

Even given my appreciation of Hayward, I feel differently.

Consider the competitive landscape of the modern NBA.  It’s recent dominating forces, the San Antonio Spurs and Miami Heat, illustrate the paramount importance of maximizing talent on limited expenditure.

Over the past four seasons, Miami has invested practically all its salary cap space in three players: LeBron James, Dwyane Wade, and Chris Bosh.  The return on their investment?  Three players who each earned four consecutive All-Star appearances, one of whom won two MVP awards.  That production far exceeds the player production for other teams that have made similar investments to employ the three star model, such as the Thunder (Kevin Durant, Russell Westbrook, Serge Ibaka) and Knicks (Carmelo Anthony, Amar’e Stoudemire, Tyson Chandler).

The Spurs demonstrate how to make the math work without employing the best player on the planet,³ a more realistic model for the small-market Jazz.

Tony Parker, All-NBA player and fringe MVP candidate, has a career high season earning of $13.5 million in 2010-11.  That ate 23% of the team’s salary cap.  The Jazz will pay Hayward $14.8 million in 2014-15, slightly more than 23% of the cap.  Then recall Parker was less expensive than this every other season while Hayward will make more in successive years of his deal.

Percentage wise, this Hayward contract will prove as great a hit to cap space as Tony Parker has ever cost the Spurs, and more than the reining champs typically devote to their best current player.  Manu Ginobili has never cost the Spurs more than 24% of the cap either.  The Spurs have executed contracts similar to Hayward’s for two sure-fire Hall of Fame players.  In contrast, most people would say Hayward will do well to make one All-Star game.

Post David Robinson, the Spurs have paid only one of their players proportionally more than the Jazz will pay Hayward the next four years.  Tim Duncan has made $18 million or more five times in his career, totaling 31%+ of the Spurs’ cap space in those seasons.

Spurs titles in those years: Zero.

Duncan’s average salary in the five seasons he earned a ring: about $11.5 million.⁴  He placed in the top four in MVP voting four times these seasons, winning the award once.

The Spurs have ridden three Hall of Famers to five titles by investing roughly the same cap space in each star that Hayward will absorb from the Jazz these next four years.

Maybe five rings in these specific seasons are mere coincidence.  But I think not.

Don’t mistake what I am saying.  Giving Hayward a max deal coming off his rookie contract will not, in and of itself, restrain the Jazz’s championship ambitions via their budget.  However, if the Hayward deal, both the final product and the process by which it came about, becomes a precedent that certainly will.

Consider the Jazz’s financial position prior to this contract.

First, they extended Derrick Favors for four years at an estimated $12 million a year plus unlikely incentives.  That is, by most assessments, a fair market deal with ample potential to become a bargain.⁵  In addition, the team stands in good position to extend Alec Burks for a similar fair market to bargain contract.  Somewhere in the $6 – $8 million range seems likely.

That potential $18 – $20 million for those two players represents 29% – 32% of next season’s cap.  That’s excellent budgeting, especially given their production in relation to Hayward.

Derrick Favors is the Jazz’s best player.  He was last season and projects to continue to be so going forward.⁶  There are loads of metrics more reliable than dollars that bear this out.

Hayward’s career best PER is 16.8, and he earned it playing off of Al Jefferson and Paul Millsap.  Last season, Derrick Favors posted a PER of 19.

According to Basketball-Reference’s Win Shares, Hayward won the struggling Jazz 3.6 precious games last season.  Favors, 5.1.  And numbers don’t hold up the narrative of Favors’ offensive limitations, at least not in comparison to Hayward.  Last season the big man earned more Offensive Win Shares than Hayward (2.9 to 2.2), was the more efficient offensive option (a true shooting percentage of .556 to Hayward’s .520), and posted a near-identical points per 100 possessions (Favors’ 23.2 to Hayward’s 23.4).

Favors is also a year younger and has over 1,200 fewer minutes of NBA experience.  That’s star potential in excess of Hayward’s own substantial talent.  So, the Jazz locked up their best player for $12 million a season.

Alec Burks doesn’t have the same ceiling as Favors, but there is ample evidence he may match Hayward’s overall ability as a player, or even surpass it.

Burks created 26.1 points per 100 possessions last season with greater efficiency (.547 TS%) than Hayward.  More importantly, Burks is a year younger and has only half the in-game experience of his fellow wing, which suggests he likely possesses substantially more as-yet untapped potential.

Most of all though, Alec Burks’ ability and production comes at a likely bargain price.

Combine the rookie contracts of Trey Burke, Dante Exum, Rodney Hood, and Rudy Gobert to that potential Favors / Burks tandem and the Jazz look to spend only about $27 million next season, or about 43% of the cap, on an impressive pool of young talent.  That percentage of the cap would not substantially increase for several seasons, and depending on how much the cap grows, may even stay static.

By locking up Favors and Burks without overpaying, they could have established a culture of investing more equally in a greater number of players as well as staked precedent for future contract negotiations.

Assuming the team matured into a contender, which is reasonable given that amount of young talent and cap flexibility, the franchise would have created an environment where reasonable contracts are proven to lead to success on the court.  Simultaneously, multiple young players would have developed together, reinforcing relationships and a collective investment in winning.  Such are the conditions in San Antonio, and they form the foundation upon which they have managed to retain star players on less money than they could make by moving elsewhere in free agency.

There would be no guarantee of course, and the decision as to Enes Kanter’s future would substantially affect the equation, but at least the main ingredients of the Spurs’ financial formula would be in place.

Now add the Hayward contract and watch the potential ripple effect.

First, I have no doubt that the agents for both Alec Burks and Enes Kanter will use Hayward’s deal as ammunition in negotiations to extend their contracts.  They will reference $15.8 million per year as a standard for relative comparison and dare the Jazz to risk more situations where they have to either overpay to match an offer sheet or lose a valuable player as a free agent.  The team has lost leverage in their attempt to keep these players without compromising their checkbook.

What if Favors does prove a more productive player than Hayward?  Suddenly the $47 million guaranteed the Jazz gave him transforms from an act of good faith to an obvious discount.  The team expected no such discount from Hayward; in fact, they paid above his production value to really show the love.  Favors would have every right to expect similarly excessive compensation on his next contract as proof that the Jazz prioritize him at least to the extent they do Hayward.

The same scenario may play out several times over the course of a few seasons.  The Jazz have a handful of players who could realistically develop to the point of claiming production value roughly equivalent to Hayward’s by the end of their current contracts.⁷  Which of them is likely to take kindly to lower compensation in such a case?  Why should they?

The danger of this contract is that the Jazz have proven themselves willing to overpay on a major contract. Justifying refusal to do so again in the future has become harder.

If the Jazz are serious about maximizing the talent on their roster within the salary cap, Gordon Hayward’s max contract is a step in the wrong direction.