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Why second-round NBA draft picks might get paid more than first-rounders this year

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Jordan Mickey had high hopes for the 2015 NBA draft, but his agent warned him: If you fall outside the top half or so of the first round, you’re better off going in the second round. Teams picking high in the second round offer a better fit and more flexibility.

Mickey heard the message.

He just didn’t care.

“The recognition, guys want to say they were a first-round pick,” Mickey said. “That’s something I wanted.”

“I just felt that, the way I play, I deserve it.”

Mickey slipped out of the first round to the Celtics at No. 37. Like many players, he still carries a grudge for the teams that passed on him.

“It’ll probably be with me until I’m done playing the game,” Mickey said.

What separates Mickey from other second-rounders: He received one of the biggest perks usually afforded only to first-rounders  – a higher salary – despite going in the second round.

It’s the product a salary cap increasing higher than ever imagined when this Collective Bargaining Agreement was signed, and this summer’s projected $94 million cap will intensify the effect. Expect several 2016 second-round picks to make more than some of their first-round counterparts next season.

The system

First-round picks are bound by a salary scale negotiated by the league and union into the 2011 CBA. The scale is a set amount for each pick, increasing slightly each year. Teams can pay a player between 80% and 120% of his scale amount, and 120% is so common, it’s practically the set number.

Second-round picks are free to negotiate any contract. Teams must use cap space or an exception – e.g., mid-level or minimum-salary – to sign them.

So, with the salary cap skyrocketing, the proportions for first-round picks have become out of whack. In 2011, the first year of the CBA, the No. 1 pick earned 8.86% of the salary cap ($58,044,000). If the salary cap comes in as projected this year ($94 million), the No. 1 pick will earn 6.28% of the salary cap. That same effect is felt throughout the first round.

Meanwhile, second-round picks are free to partake in the newly available TV money.

There’s an unsaid – sometimes, said – tension behind every contract negotiation between teams and second-round picks. To retain a second-rounder’s rights, a team must extend him a required tender. A required tender is a one-year contract offer, and because that’s the only requirement, it’s always for the minimum and fully unguaranteed.

Teams want to sign players to longer contracts with little to no guaranteed money. That way, if the player pans out, he’s cheap and can’t go anywhere. If he doesn’t pan out, he can be waived for minimal cost.

Second-rounders have varying interests. Some want a long-term deal with more money guaranteed or scheduled if not released. Others want to hit free agency sooner, so they can bargain with all 30 teams rather than just the one that drafted him. For most, both desires apply. Receive enough over a long-term contract, and free agency becomes far less important. Face a cheap long-term deal, and the player can always threaten to sign the required tender.

K.J. McDaniels, the No. 32 in the 2014 draft, famously accepted the required tender rather than sign long-term with the 76ers. He then signed a three-year, $6,523,127 deal with the Rockets last summer. Despite getting just the minimum his first year, McDaniels has already made more than half of the players selected in the first round ahead of him. Next season, he’ll pass a few more in earnings. Plus, he’ll either become a free agent a second time before 2014 first-rounders do so once (if Houston declines his 2017-18 team option to make him restricted) or an unrestricted free agent before scaled 2014 first-rounders (if Houston exercises his team option).

McDaniels’ plan carried risk. If he got cut in his first training camp, he could’ve walked away with nothing.

Still, there’s already a school of thought that players are better off going early in the second round rather than late in the first, that the freedom to negotiate a shorter contract trumps the lower initial salary.

Now, second-round picks can probably have their cake and eat it too – a higher initial salary and more freedom.

Precedent runs deeper than Mickey

Mickey became the first second-round pick under this CBA to sign the year he was drafted and earn more his first year than a first-round pick.

Players that were stashed overseas had done it, but their stock changed from the time of the draft – either because they developed or were ready to jump to the NBA. We’re looking at only players to sign the year they were drafted.

Mickey actually made more than four first-round picks last season: No. 27 pick Larry Nance Jr., No. 28 pickR.J. Hunter (Mickey’s own Celtics teammate), No. 29 pickChris McCullough and No. 30 pickKevon Looney.

Put another way, Mickey received 1.67% of the 2015-16 cap. The No. 20 pick Thursday will receive 1.66% of the projected 2016-17 cap.

Based on that precedent, more than third of the first round could make less next season than a second rounder.

There are deeper ways to evaluate a second-rounder’s contract than first-year salary as a percentage of the salary cap. Future salaries, length, guarantees, options and incentives all matter. But for a quick reference, we’ll go by first-year salary as a percentage of the salary cap.

Several second-round picks under this CBA – Mickey, Richaun Holmes, Chandler Parsons, Draymond Green, Joseph Young, Montrezl Harrell, Allen Crabbe, Jerami Grant, Joe Harris, Roy Devyn Marble, Kyle O'Quinn Tyler Honeycutt and Damien Inglis – have signed the year they were drafted and received a first-year salary relatively higher than what at least one first-rounder projects to make this year.

Here’s everyone on the same scale, the highest paid second-rounders colored by year with 2016 first-round picks interspersed in black:

    • 2015: green
    • 2014: blue
    • 2013: silver
    • 2012: yellow
    • 2011: red

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Previous contracts inform future contracts. If numerous second-rounders previously received starting salaries greater than 1.20% of the cap, agents will demand similar amounts this year. Those amounts will just happen to be worth more than first-rounders can receive.

A couple related factors beyond simply a higher cap conspire to boost second-round salary even further this year:

1. Nearly every team will have cap space. Because teams don’t receive an exception for second-round picks, many teams just didn’t have the ability to pay a second-rounder more even if they wanted to. That will rarely be an excuse now.

2. Many players are locked into contracts signed before the new TV money kicked in. That leaves more money for everyone else.

Well, almost everyone else. The rookie scale prevents first-rounders from enjoying the windfall.

Meanwhile, second-rounders will cash in.

The No. 30 pick will make $1,171,560 next season if he signs in the NBA. How many second-round picks can say “Give me $1.2 million (or more), or I’ll sign the required tender” and have the team acquiesce? I’m betting on several. Plenty of teams will have that much money lying around without a place to spend it, maybe even needing to spend it to reach the floor. Securing their own second-rounders seem as good a use as any.

It’s too late to change the system for this year, but either side can opt out of the CBA after next season by giving notice by Dec. 15, 2016. The rookie scale should be revisited in the next agreement.

A simple solution: Tying the rookie scale, like the cap itself, to revenue rather than ascribing a prefixed amount. Owners avoid the hassle of draft confusion, and players get more money to the players that deserve it.

“There’s no question that the contracts, the salary scale for first first-round picks is outdated,” said agent Mark Bartelstein, who represented two first-round picks who made less than Mickey last year (Larry Nance Jr. and R.J. Hunter).

But what about in the meantime?

Prepare for second-round saga in ’16

The 2016 draft is already hectic with several players having wide draft ranges. The second-round issue only adds uncertainty.

Will agents try to steer their players from the first round to the second round?

“If you’re projected to be a low first-rounder, it would be absolute lunacy not to work out with teams in that range, because you can easily fall,” said agent Keith Kreiter, who represented Richaun Holmes, the second-highest-paid second-rounder last year. “If you don’t work out for teams in the lower first and they pass on you, and some teams in the 30s end up passing on you – there’s no guarantee they’ll take you – then you’re in the 40s and 50s and you could be running the risk of straight minimums with very little guaranteed.”

Though there’s more money to be made in the high second round, there might be big downside to falling further. For players on their first NBA contracts, playing it safe makes some sense.

“A first-round deal isn’t so terrible in this world,” Kreiter said.

But there’s still wiggle room to work the system.

“One of the things I could see happening is you have a wonderful workout for a team in the 30s, high 30s, a team says, ‘Would you be willing to shut it down, and we’ll take you?'” Kreiter said. “There are some people that would maybe take that risk, although it’s a huge risk.”

Until Thursday, the question is which players this affects. Then, with everyone selected, it’ll turn into the magnitude of the effect.

How many second-rounders get more favorable contracts than first-rounders? How much more favorable? Will second-round negotiations become more contentious with more at stake?

It could become chaos, and Mickey is the trendsetter.

“It’s always a great thing to be the first at something,” Mickey said. “Hopefully, other players can do it.”

I suspect plenty will.

As Sunday winds down, Miami heats up talk of Jimmy Butler trade

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There has been much speculation over the past 48 hours about where disgruntled Minnesota Timberwolves star Jimmy Butler will end up once owner Glen Taylor finds a suitable trade partner for him. We have already discussed at length where Butler might fit best, and Sunday morning saw an influx of new teams ready to come to the Timberwolves with an offer now that it is known that Butler is on the table.

As Sunday came to a close, it became apparent that yet another team is trying to work their way into the Butler sweepstakes.

According to multiple reports, the Miami Heat have been active and are trying to get a deal done for Butler. Once thought of as a middle-of-the-pack suitor, the Heat have apparently been one of the more engaged teams as a deal for the Timberwolves guard is sought before the team opens training camp on Tuesday.

Via Twitter:

Miami joins the Washington Wizards, Portland Trail Blazers, Brooklyn Nets, Detroit Pistons, Milwaukee Bucks, Los Angeles Clippers, Houston Rockets, Philadelphia 76ers, and Cleveland Cavaliers in teams looking to exchange parts for the next season on Butler’s contract.

No doubt league GMs are trying to weigh the risk vs. reward when it comes to Butler. His contract has a player option for the 2019-20 NBA season, which he will almost certainly opt out of in order to become a free agent. That means that without a guarantee that Butler will re-sign, any team trading for him will need to be careful with what young assets they leverage for the present.

For example, one report out of Portland says that the Blazers are unwilling to give up who they see as their young main core for a one-year rental on Butler. Damian Lillard, CJ McCollum, and Jusuf Nurkic are all off the table for the Blazers.

We still don’t know what the asking price for Butler will eventually be, or how the Timberwolves prioritize getting a solid return for him vs. shipping him outside of the Western Conference. For now, we have to wait and see what happens.

At least until Tuesday.

Elton Brand on 76ers contending for a championship: ‘I think we still need a piece’

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Elton Brand last played in the NBA in April of 2016. Now, in September of 2018 he is the general manager of the Philadelphia 76ers.

The 17-year NBA veteran helms one of the best young teams in the NBA, and takes over a GM position that has previously been under turmoil. Brand has perhaps been blessed with the departure of LeBron James from the Eastern Conference, but so too will other teams try to take over that perennial top spot.

The Boston Celtics have similar assets to Philadelphia, with proven stars mixed with an excellent supporting cast and young players who could develop into stars themselves. The Toronto Raptors are a very good team who just added a Finals MVP in Kawhi Leonard. The road ahead will be tough.

But the Sixers still have cap space and they are still looking for a third star to fill a necessary role on their team. Brand said as much during a recent appearance on ESPN, and from all indications it looks like he’s not going to be shy about pulling the trigger either in free agency or in the trade market if he feels he can solidify the Sixers’ position in the east.

Via ESPN:

Everyone talks about free agency, but we may have to pull the trigger on something else before free agency. If we feel we can’t get one of those stars that I can’t name. I still think we need a piece. We’re close. If you ask Joel [Embiid] we have enough and if you ask Ben [Simmons] we have enough, because that’s the chip they have on their shoulder … they don’t want to hear that, but I think we still need a piece.

Brand went on to say that he felt like development was also important in this process, and that it’s possible that Philadelphia has their additional star in Markelle Fultz, Dario Saric, or both.

Philadelphia has reportedly been one of the teams that has jumped into initial conversations with the Minnesota Timberwolves about trading for Jimmy Butler. Whether or not Butler is the right move for the Sixers notwithstanding, that Brand appear is ready to wheel and deal certainly is interesting.

Anthony Davis picks new agent, signs with LeBron James’ rep Rich Paul

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The NBA offseason isn’t over just quite yet, so people are naturally ready to jump at any rumor they can get their hands on. On Sunday, it was announced that New Orleans Pelicans big man Anthony Davis had signed with Rich Paul’s Klutch Sports Group, and the Twittersphere exploded.

Davis, 25, has two seasons left on his current contract until he can use a player option to end his deal early and choose another location if he pleases.

Of course, the rampant speculation here — which is baseless, I might add — is that Davis could be looking to jump ship from the Pelicans, with Paul helping to create pressure for such a deal.

Via Twitter:

There is some speculation that Davis could become trade bait as soon as next summer if the Pelicans fail to meet the expectations foist upon them after their first round sweep of the Portland Trail Blazers during last season’s playoffs. New Orleans no longer has the talents of DeMarcus Cousins, although they played spectacularly without him following his Achilles injury going into the end of the year. The West got tougher, and the Pelicans will also have to play without Rajon Rondo, currently of the Los Angeles Lakers.

The coming season will be Davis’ seventh in Louisiana, and it has long been rumored that he could be a trade prospect or might want to sign in a different market. Signing with Klutch Sports Group puts Davis at the center of speculation that he could join LeBron James on the Lakers, as James is a good friend of Paul and a fellow Klutch client.

Players exchange agents all the time, and just because an agent has a specific track record doesn’t mean that anything is set in stone. The NBA is weird like that. However, It’s not completely unreasonable to raise an eyebrow at Davis joining up with Paul after leaving longtime agent Thad Foucher earlier in September. What Paul does have a rep for is getting his players paid handsomely, which is probably the main thing Davis will be looking for.

New Orleans can offer Davis the vaunted super max contract once he is up for an extension.

New lottery rules change tanking incentives, starting this season

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To paraphrase Jerry Tarkanian, the NBA is so mad at the 76ers, it’ll keep the Hawks losing another couple years.

The NBA finally enacted lottery reform that will take effect this season. The measures appeared designed to curb Sam Hinkie’s ambitious multi-year tank, but Philadelphia has already reaped the rewards of The Process. The 76ers, led by former high draft picks Joel Embiid and Ben Simmons, are one of the league’s top teams and extremely unlikely to land in the lottery. It’s the next generation of losing teams, like Atlanta, that will feel the brunt of these changes.

Generally, the new rules reduce incentives to chase the league’s worst record. The very-bottom teams face greater variance and worse expected outcomes than previously. The top six seeds in the lottery became less valuable than before, the 7-14 seeds more valuable than before.

In the previous system, the three worst teams had 250, 199 and 156 of 1,000 lottery combinations. The top-three picks were drawn then the next 11 picks were slotted in reverse order of record.

Now, the three worst teams each have 140 of 1,000 lottery combinations. The top-four picks are drawn then the next 10 picks are slotted in reverse order of record.

There’s several ways to measure the changes, but here a a few based on lottery seed in the old system (orange) and new system (blue):

Odds of No. 1 pick:

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Odds of top-four pick:

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Expected pick:

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The “big” change is the bottom three teams all have the same odds of getting drawn, creating an illusion there’s no difference between finishing last or third-to-last. But the last-place team still gets slotted ahead of the second-worst and third-worst (and second-worst ahead of third-worst) if none get drawn in the lottery.

Simply, teams are still incentivized to chase the league’s very worst record. The incentives aren’t as strong as they once were, but they still exist.

And the upside remains just as high. Top draft picks are so valuable – a chance to add elite young talent on a relatively cheap contract that comes with five years of team control that, practically, extends much longer.

So, how will teams handle this changing structure?

Decisions will be fascinating among more than just the lowest of cellar-dwellers. Several teams have traded first-round picks this season that contain protections within the lottery. The Mavericks owe the Hawks a top-five protected first-rounder. The Cavaliers owe the Hawks a top-10-protected first-rounder. The Grizzlies owe the Celtics a top-eight-protected first-rounder. The Nuggets owe the Nets a top-12-protected first-rounder. Those owing teams all face a new batch of decisions of when to give up on trying to make the playoffs and aim to keep that pick.

I mostly share the view that lottery reform won’t change much, particularly on a year-to-year basis. But the cumulative effect could be larger on some teams.

Hinkie’s 76ers were an anomaly. Few teams set out to tank for that long. Many more tanked for a season, knowing that would result in a high draft pick. With a new touted prospect in hand, those teams usually attempted to ascend.

But now, far less is guaranteed. Before, the second-worst team was likely to land a top-three pick and was guaranteed a top-five pick. Now, the second-worst team is likely to pick between No. 4 and No. 6. In that lower range, the team might get stuck with a lesser prospect who leaves it stuck losing again the following year.

At minimum, lottery reform adds uncertainty to a league that had grown familiar with the previous system and how teams proceeded within it. We can all guess how teams will act in the new system, but this season will provide much more tangible clarity.