Where’s the Beef?

The first ever $300 million NBA contract has raised some interesting questions...and possibly made the Knicks look even better.

Good morning! Happy to report that I had a successful move over the weekend, and that this newsletter is the first (hopefully of many) editions penned in my new friendly confines. On the downside, my life is still a sea of boxes, and after several dozen trips up and down the stairs from my old fourth floor walkup over the weekend, I can no longer feel my legs. Good times.

🗣️ News & Notes ✍️

🏀 Congrats to Jalen Brunson and Isaiah Hartenstein on their respective weddings this weekend. There may be a Knicks newsletter out there providing full coverage of both affairs, but this is not that newsletter (or at least not this Monday, it isn’t). Check out New York Basketball’s Twitter account for tons of great pics though.

My advice to both new couples: always laugh, never let go of the rope, don’t let kids change what makes you special as a couple, and never, ever go to bed mad. I’d say “don’t take the other person for granted,” but inevitably you will. Whenever you catch yourself doing so, tell them you love them, preferably with flowers. Lastly, always look at things from the perspective of your partner, especially when it feels impossible to do so.

Oh, and marriage is better when the Knicks are winning. Take my word on that one.

Where’s the Beef?

We start off the new week with an “Ask Macri” from KFS’ own Ray Marcano:

I feel like I saw this or some version of this sentiment from a lot of Knick fans in the immediate aftermath of the Brown signing.

For those who may have missed it early last week, Boston’s Jaylen Brown signed a five-year, $304 million supermax extension, making him the first NBA player to cross the $300 million mark on a single contract. The extension starts in the 2023-24 season at $52 million and is slated to pay Brown $69.1 million in 2028-29, the final year of the new pact. He was eligible for a supermax by virtue of extending with the team that drafted him¹ and making All-NBA last season, which bumped him up from the normal max of 30 percent of the salary cap for players with 7-9 years of service time to the 35 percent normally reserved for players who have played at least nine seasons. Thanks to a significant increase in the cap from last year to this year, and the fact that no one else meeting supermax criteria was a free agent or eligible to sign an extension this summer, Brown will remain the league’s only $300 million man until at least next July.

With that out of the way, let’s get back to Ray’s question, which I’m going to answer in full over the course of the next few days. To do so, we need to zoom out and gain some perspective, not only to put the Brown contract in context, but all NBA contracts throughout the modern history of the league.

To help us with this task, I thought of an analogy. Fair warning: it’s incredibly silly. But stick with it; I promise it’ll end up getting somewhere.

Imagine a television cooking competition with 30 participants. The task is to create the most delicious dinner possible, which is judged on a nightly basis. There can only be one winner.

Every night, competitors have the chance to bid on new ingredients, which they will then have access to for up to five days. Among the challenges is that not every type of ingredient comes up for bid every night, and there aren’t nearly enough of every ingredient for every competitor.

There’s also an event at the start of every night where competitors get to “draft” ingredients at relatively inexpensive, set price points. To help keep things fair, competitors who scored the worst in the previous night’s competition receive the ability to draft first the next night. Moreover, if a competitor drafts an ingredient, they inherit the ability to outbid everyone else when that ingredient comes back onto the market after four years.

Another part of the challenge is that the competitors at these drafts are operating with limited knowledge. They can see each ingredient from afar, but only after they win the bid can get up close and personal with it - to smell it, touch it, and of course, taste it. Unfortunately for them, not all ingredients are created equal. The best looking asparagus might spoil after only a day or two, while a tarnished peach might actually be the juiciest piece of fruit in the world.

While these drafts feature much jockeying between the competitors, there is one inevitable reality each and every night, which is that the proteins go early. The reason, simply, is that without a protein, there is no meal, and there are a limited number of proteins available at any given time. Like all foods, they spoil (no freezers are allowed in this competition, by the by). Moreover, they are the scarcest of resources come draft time.

This leads to an inevitable reality: more often than not, the competitors who end up with the best proteins wind up winning at least one competition, and usually more than one. For example, during one stretch in the 90’s, a competitor won six competitions in eight nights because they drafted the finest Japanese wagyu known to man (after two other competitors passed on it, no less! They might have won eight in a row had the steak not taken two years off to play in a different cooking competition).

Here’s the rub though…even when a competitor ends up with a protein that is of far lesser quality than the five star Japanese wagyu - say, a piece of meat that would be more likely to wind up on a buffet line at the Golden Corral - they still usually do everything possible to keep it until it spoils. Again: no protein, no meal, and there are a finite number of proteins available.

Often times, this results in competitors paying outlandish sums of money to retain their protein when it comes up to bid on the market for the first time. Why? Because for every competitor trying to dress up a stanky piece of piece of salmon with enough spices to make it edible, or surround it with enough high quality side dishes to balance out the meal, there’s another competitor staring a sack of potatoes and wondering how the hell they’re supposed to turn them into a main course.

Sometimes, a competitor becomes so convinced that their protein will never be good enough that they let it go in the hope that tanking a few competitions will reward them with a precious filet or lobster tail, but even this path carries no such guarantee of success. A competitor might let go of what they feel is an uninspiring piece of chicken only to end up with an even more uninspiring pork chop. Just ask the Chicago Bulls about this possibility.

Most competitors don’t operate like this though. Instead, they become conditioned to draft and hang onto proteins at all costs, because even an imperfect protein (and ideally, multiple proteins) gives you a shot at winning…

…which is how you end up with Jaylen Brown getting the first $300 million contract in NBA history.

Again, not my best analogy. If this were an analogies draft, it definitely slipped past the first round, and probably wound up signing an Exhibit 10.

But you get the point.

If the NBA were perfect, players - like meals at a restaurant - would go for what they’re worth. For example, on my 40th birthday, my wife and I went to a steakhouse where I treated myself to 3 oz of the best Japanese wagyu I’ve ever had in my life…and it only cost me the equivalent of a one-month lease payment for a midsize luxury sedan.

But the NBA doesn’t work like that. Unlike soccer, football or baseball, where teams can pay the best players whatever they choose, the NBA has limits on both years and dollars, which we know as max contracts. Shohei Ohtani’s upcoming free agency could yield a contract totaling half a billion dollars. If the NBA operated the same way and Nikola Jokic or Giannis Antetokounmpo hit the market right now, some NBA team would be tempted to spend the majority of their cap space on either one. Could you imagine if every team had the ability to bid on Victor Wembanyama? Steve Balmer would have dropped 10 figures on a 10-year contract without blinking an eye.

With max contract limits though, those level of stars don’t get what they’re worth. But just because someone like Jokic makes about half of what an unrestricted bidder might be willing to pay in a league without max contract limits doesn’t mean that someone not nearly as good as Jokic - Jaylen Brown, for instance - will have his salary arbitrarily deflated. Put a different way, if Brown is, say, 60 percent as valuable as Jokic, and Jokic will earn $51 million during the 2023-24 season, logic would dictate that Brown should earn something around $31 million.

But that’s not the case. Instead, a year from now, Brown will earn slightly more than the reigning Finals MVP. This concept is what has floored many observers in response to Brown’s deal. There’s no way the 18th or 20th or 23rd best player in the league should be making as much as the best guy, especially when the best guy (or best couple of guys in some years) offer such a competitive advantage over the rest of the field.

But Brown is making as much as Jokic, because proteins always get paid, whether they’re great, good, or just edible.

What defines an NBA protein? You kind of know it when you see it, but in short, its usually the combination of a certain volume of shot creation at a certain level of efficiency. Lots of other stuff matters - age, defensive ceiling and versatility, playmaking, elite off-ball shot-making, etc - but generally speaking, the guys who get the ball in the last five minutes of a close game are always going to be the ones who get paid.

Brown, for all his warts, is in the 96th percentile for usage at his position, in the 86th percentile for shot creation², and in the 63rd percentile for efficiency. He’s 26 and won’t ever get played off the court because of his defense or because opposing teams don’t guard him. He was arguably his team’s best player in the Finals a year ago.

In short, he’s a bone-in Ribeye from Outback.

Is that worth $300 million though? This is where we have to zoom out a bit.

By my calculation, next season there will be 42 players in the league that are either on a max contract or signed a max extension that hasn’t started yet. In other words, there are 42 protein-level stars that the NBA deems worthy of paying the most money possible to get the right to cook with. This makes sense when you consider that about four or five players from each draft class wind up signing max deals, and a max player’s prime will usually last through their second contract. That adds up to somewhere between 40 and 45 max deals cycling through the league at any given time.

Who decided that between 40 and 45 players were worth the max, as opposed to 20-25 or 60-70? The market, obviously. Going back to Brown, there’s a reason that no one who covers the NBA for a living was surprised in the slightest that this deal got done. He might not be the top-15 player that an All-NBA inclusion is supposed to represent, but the consensus is that he’s well inside the top 40 if not the top 20. If the Celtics balked at paying Brown the max, a dozen protein-starved teams would have been chomping at the bit to sign him a year from now.

That’s the other reason Boston went all in. If they find that the whole “two steaks” thing can’t work and they need to trade one of their All-NBA wings, they know they’ll find a taker for the deal, even if the value might not be great.

In the end, they didn’t really have a choice. All things considered, looking at the wide spectrum of players who wind up with max contracts, it could be worse. For proof of that, look no further than the player who received the NBA’s first $100 million contract and compare him with the guy who got the first $200 million deal.

When Juwan Howard inked a $100 million deal with Washington in 1996 after a contract kerfuffle with the Heat, he was a 22-year-old coming off an All-Star appearance. He wasn’t MJ or Shaq, but beggars can’t be choosers, and the Bullets were as starved for a protein as any team in the league.

Steph Curry was quite a different story. When he inked his $200 million deal in 2017, he was coming off his second title, had already won multiple MVP’s and cemented himself as the greatest shooter who ever lived. As far as proteins go, Curry was about as premium an ingredient as you could imagine, while Howard turned out to be a canned ham.

And therein lies the reality of the NBA. In a league where kinda-stars, All-Stars, superstars, and all-timers all get paid the same because supply and demand dictates as much, there’s nothing more valuable than lucking into the right star. To answer the first part of Ray’s question, someone will ink a deal that is scheduled to pay them $75 million in a single season as soon as the cap allows it - probably two years given current projections. We’ll see the first $100 million figure for a single season as the fifth year on someone’s supermax extension when the cap goes over $200 million, probably less than a decade from now. Victor Wembanyama is probably the safest bet to ink that deal as he nears the end of his second NBA contract, just like Brown is now.

As for the second part - whether Jalen Brunson will be a steal on his next contract, almost certain to be a max that starts at 30 percent of the cap - and how advantageous of a position this puts the Knicks in, I’ll tackle that question tomorrow.

🏀

That’s it for today! If you enjoy this newsletter and like the Mets, don’t forget to subscribe to JB’s Metropolitan, or his hockey newsletter, Isles Fix. Also, a big thanks to our sponsor:

See y’all soon! #BlackLivesMatter

1. If a team trades a player while still on their rookie contract, they also maintain supermax eligibility.

2. Percentage of his made shots that are unassisted, per Cleaning the Glass.