The Los Angeles Lakers are all in on expensive star power with the trio of LeBron James, Anthony Davis, and the newly acquired Russell Westbrook. They join the Milwaukee Bucks, the Brooklyn Nets, the Golden State Warriors, and the Philadelphia 76ers as the five teams with three players on their roster making max money — 25 percent or more of the salary cap.
The number of teams that fit this criteria could rise to as many as seven within a year. The Denver Nuggets and Phoenix Suns are both in position to offer a max salary to each of their respective third stars (Michael Porter Jr. and Deandre Ayton). Meanwhile, the Miami Heat and Boston Celtics aren’t far off with each team boasting their own expensive-but-not-quite-max-money triumvirate.
This is the era of stars and scrubs roster construction. Where title contenders are shelling out big bucks for high-end talent and using the remainder of their cap space on rookie deals, bargain contracts, and veteran minimums. As you can see in the chart below, the middle class — especially the upper middle class — of NBA players has begun to thin out as a result.
(Sidebar: I prefer to express annual salaries as a percentage of the salary cap. These dollar figures are getting so big that they’re becoming almost impossible to conceptualize for a yokel like me.)
This trend is most stark when we look specifically at the lack of players who are earning just below the max, which I’ll define as within five percentage points of a max contract for players with 0-6 years of service. This group consists largely of players that are on their first big contract or their last one. The John Collins’s and Kyle Lowry’s of the NBA. These are the guys that are good enough to command a sizeable salary, but not good enough to get max money at the current stage of their career.
Ten years ago, there were 24 players earning annual salaries within five percentage points of a max. Five years ago, the number was 16. Heading into next season, the number stands at seven. They include:
Al Horford (24 percent of the cap)
Kyle Lowry (24 percent of the cap)
DeMar DeRozan (24 percent of the cap)
Jaylen Brown (22 percent of the cap)
Draymond Green (21 percent of the cap)
Nikola Vucevic (21 percent of the cap)
John Collins (21 percent of the cap)
When Dennis Schroder turned down an extension from the Lakers last season that would have paid him about 18 percent of the salary cap he was hoping to earn a salary that would make him the 8th member of this group. Instead, he found that teams were uninterested in paying anywhere near top dollar for his talents. This week, he accepted a one-year offer from the Celtics that will pay him around five percent of the cap. As teams continue to build around stars and scrubs Schroder’s story could become even more common.
Up until a few years ago, teams were handing out max contracts and near-max contracts at somewhat similar rates. But as the chart below shows, the number of players belonging to each group has widened over the last two seasons.
One reason for this trend can be traced back to the cap spike during the summer of 2016. Players that signed max contracts the season before were suddenly making considerably less as a percentage of the salary cap. For instance, Kyrie Irving went from making around 23 percent of the salary cap in 2016 (the maximum salary for players with 0-6 years of service at that time) to just 19 percent in 2017 after the salary cap increased by more than 24 million dollars.
All the contracts that were signed before the cap spike have since expired, meaning there are no more bargain deals on max players. Those few extra percentage points of salary cap space might seem small, but NBA championships are won on the margins. Having access to just a little extra room in cap space is the difference in being able to sign a player like Bobby Portis and not.
Is an increased reliance on stars and scrubs good for the NBA? I don’t really care. But I do think it has some interesting unintended consequences. For one, trading for expensive players is more difficult without these upper middle class players whose salaries a team can combine with other bargain contracts to facilitate trades. Without them, the only option is for a team to trade their expensive player for someone else’s expensive player. And chances are if a team is trying to move off their expensive player they don’t want another one in return. That’s part of the reason why one-for-one trades involving two max-money stars are so rare.
The NBA goes in cycles and this era of roster construction probably won’t last long. Especially when some of these teams realize it doesn’t guarantee a trip to the Finals. Next year, the teams with the best odds to win the championship are essentially the same teams that will be paying out the ass in luxury tax. I don’t think there are many owners that would be excited to foot a nine digit tax bill for anything less than a Finals appearance.