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Big NBA Contracts Come at a Price

You don’t have to look around the NBA for long to notice the growing value of contracts being signed. In a league where Dirk Nowitzki’s $8 million per season pact is less than half of what new teammate Wesley Matthews will make in 2015-16, despite coming off an Achilles tear, it’s obvious that the shifting landscape is causing most teams — except the Sixers — to alter their approach in spending.

Because the salary cap is projected to rise considerably moving forward as a result of the NBA’s lucrative television deal, teams have displayed an increased willingness to overspend now in favor of a potential bargain later.

DeMarre Carroll, who carved out a fierce reputation as a 3-And-D nightmare on a startlingly good Atlanta Hawks team last season, had the Toronto Raptors toss $60 million in his direction as an unrestricted free agent. Carroll, who’s played in the league since the 2009-10 season, has made less than $8 million combined heretofore in his career. Matthews, despite rupturing his Achilles tendon late in the regular season, received an eye-popping four-year, $70 million deal from Dallas after the DeAndre Jordan fiasco concluded. Omer Asik, who didn’t look good alongside franchise building block Anthony Davis last season, received a five-year contract north of $50 million to remain on the New Orleans roster.

Plenty of players were (over)paid this summer. As it relates to market value, supply and demand plays a huge role in the NBA’s economic market. You’re paid what someone — and some team — thinks you’re worth, and that value is going to be volatile across those interested clubs. As a result of those teams knowing that they’re going to have more money to blow, players are presented offers they can’t refuse now in order to be locked in at a (theoretical) bargain later.

But that’s not always how it’s going to work. Bad contracts will still be signed, agreements still won’t work out as expected and the pressure to overspend will exist from various parties in the pursuit of winning.

If a team shells out $20M per season with an $80M cap and it doesn’t go as expected, there’s no questioning it’s going to hurt the team’s performance and chances of building a competitive roster. But if a team doles out the same cash on a $100M budget and the same scenario unfolds, it’s still going to be a problem and present the same hurdles as what’s behind Door A. Might it be a bit easier to work around as 20 percent of the pie instead of 25 percent? Of course. But to act like a contract signed now is some grand bargain that mitigates risk later is seriously flawed thinking.

That’s the same line of logic that provides a path to nothing but despair.

Look at the slew of people who’ve taken a step back because of bad investment decisions. It’s not just the one big investment that can hurt the investor; a string of bad investments can be just as damaging. In some cases, small losses can almost be brushed aside because of their relative non-importance at the time, but it all adds up when the bottom line is calculated.

Perhaps the most interesting part of the complicated picture is the giant puzzle piece that’s being overlooked. New contracts and contract extensions are viewed through a right-now lens despite it being a bet on the future. With all of the factors both on and off the court that could impact how the contract is judged, there’s no such thing as a safe bet when it comes to inflating salaries. It’s always going to make sense to pay for stars in the NBA, but the risks being taken on the tier two (or below) talent is what can make or break the direction of a franchise and its future.

Even when the deals work out and bets go well, the results should never validate the process. NBA teams will circle the names “worth” overpaying for as an annual part of the summer process, but that same process often changes based on the results from the previous campaign — not leaving it the same at all.

Just because it looks like a good deal now doesn’t mean it’s going to be a steal later. Imitators can enter the marketplace, new talent can emerge and priorities can change.

Every investment comes at a price, and NBA teams are playing in a multi-billion dollar industry.

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