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I wrote about the red herring that is competitive balance last week. And then Tom Haberstroh came along and did it way, way better.
Thanks to the rookie scale that keeps salaries artificially depressed for several years, the Thunder paid Kevin Durant, the NBA’s leading scorer, about a third of what the Jazz paid for Andrei Kirilenko last season. Similarly, the Bulls paid Derrick Rose, the league’s official MVP, about a third of what the Magic paid Gilbert Arenas, the league’s unofficial LVP.
Paying Durant $6 million is an enormous competitive advantage on its own, but the real benefit here is that it frees up Oklahoma City GM Sam Presti to spend money elsewhere when he needs to. The opportunity cost of paying Arenas is that you forfeit the chance to use that money on other things (like a James Harden or a Serge Ibaka or a Russell Westbrook).
This concept isn’t unique to NBA general managers. Do you pony up $30,000 for a fancy car or do you buy a slightly less fancy car and deposit the leftover cash into a savings account to help send your child to college? NBA teams face a similar choice when choosing to spend their money. With a soft cap on payroll, it becomes imperative to spend your money wisely, and if you study successful franchises, those who spend money wisely seem to be bargain shopping at the draft. Keep Reading…