Wednesday, June 4, 2014

When to Sign an NBA Player to the Max

By Nate Silver

The Cleveland Cavaliers won the lottery on Tuesday and will make the NBA’s No. 1 overall draft pick for the third time in four seasons. There’s a lot riding on whom they choose. Earlier this week I looked at the value produced by first-round NBA draft picks. These players, especially the highest draft picks, are valuable assets while they’re still on rookie-scale contracts. The average No. 1 overall pick produces the equivalent of $63 million in value during his first five NBA seasons, based on the number of wins he generates for his club. Yet the player drafted first overall this year can be had for about $35 million in salary. These averages, of course, conceal a wide range of outcomes — from LeBron James to Anthony Bennett — but the odds of acquiring a valuable player at a discount are stacked in the team’s favor.
Edges like those aren’t easy to come by in the NBA, however. And the Cavs’ most difficult choice this summer may not be between Andrew Wiggins and Joel Embiid, but what to do about Kyrie Irving, their No. 1 overall pick three drafts ago. They’ll need to determine whether to offer Irving a maximum extension, which would kick in during the 2015-16 season and pay him around $90 million through 2019-20.
These decisions can easily go wrong. 

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