Reminder: The LeBron Free Agency Circus Is The NBA's Fault

Reminder: The LeBron Free Agency Circus Is The NBA's Fault

We're watching the rubber band snap on LeBron free agency coverage. We waited all year to see what would happen, and now that it's happening, there's... rather a lot of coverage, isn't there? But remember, whatever hysterics into which teams and Twitter and ESPN have been thrown were created by the owners' best attempts to avoid exactly this.

A number of people have chimed in recently about how dumb the max salary is—Tom Haberstroh today at ESPN Insider and Zach Lowe at Grantland, off the top of my head—and we ran some basic numbers ourselves recently, which you can read in full below. But in short, based only on his on-court performance, and thereby leaving out all the peripheral merchandise and other revenue he generates, LeBron is worth about $45 million per year in basketball value—nearly double what he's expected to be eligible to earn at 30 percent of this year's salary cap.

Haberstroh sources one GM who figured that in a true open-bid system without a salary cap, LeBron would make nine figures per year. This might be a stretch, or it might not, given the James Dolans and Mikhail Prokhorovs of the league. But certainly, for all the "Jordan and Bird would have never teamed up" hardliners out there, the removal of this entirely arbitrary max salary would go a very long way toward encouraging the very best players to play on different teams. Remember, in his final two seasons in Chicago, Michael Jordan made salaries of $31 and $33 million; roughly adjusted for inflation, that comes to $46 and $48 million in 2014 dollars—remarkably similar to the projected numbers for LeBron without a max salary but retaining a salary cap. Yes, Scottie remained underpaid, but MJ didn't team up with others because the dollars didn't make sense.

The max salary wouldn't just force free agents to consider options beyond teaming up to rule the world, it would force the league to pin down a rational market for its stars based on production rather than a social hierarchy based on whether or not a guy is a "max" player, which is what gives birth to contracts like Joe Johnson's or Rashard Lewis's. (Neither of those is as disastrous as they're often taken to be, given that Johnson comes close to producing at a level commensurate with his pay and Lewis's Magic went to the Finals and wouldn't have without him, but outliers at the high extreme will always be more noticeable than Stan Van Gundy losing his mind and spending $19.5 million on Jodie Meeks.)

Maybe letting the Nets sign LeBron for 95 percent of its cap and then go into the luxury tax for the rest of its roster would rule out a bunch of teams from competing for his services. But as it stands now, those teams aren't just ruled out from LeBron, they're ruled out for all the other talented players LeBron's team can afford while he remains so comically underpaid.

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Pending approvalOriginal post by Kyle Wagner on Regressing

How Much Is LeBron James Really Worth?

How Much Is LeBron James Really Worth?

LeBron James is going to be a free agent again. Exactly how much is the best player on the planet worth? Maybe more than you'd think.

Because the NBA has a max salary, this isn't quite like the Mike Trout situation, where the nerds are sitting there trying to grasp how projections that he will be worth north of $500 million can possibly reconcile with real world dollars. We know what LeBron will be paid, unless he takes another pay cut. And because of the way the maximum salary works, a "pay cut" to finagle something like the original Heat Big Three is asking even more.

But how much? Frankly, the NBA's salary structures are a mess. The "max" varies based on how long you've been in the league and the salary cap, which itself is based on a number of things, but mainly league revenue. When LeBron was a free agent back in 2010, the most he could receive was around $18 million. But for a player like the LeBron of today, who has 10+ years of service, the maximum is 35 percent of the cap—about $58 million last year—which would have been around $19 million for last season.

But the thing is, the maximum salary is completely artificial, in a league where a punishing luxury tax already keeps an artificial ceiling on total salaries. If players were truly paid what they're worth, even under a salary cap, you would see players like LeBron and Kevin Durant, who are transcendent, paid in scale with their production. Think of it as all the NBA player salaries going into a pool (that's essentially how a CBA works); now how much of that would you say LeBron should get? Probably more than the max, right? We thought we'd take a look.

How Much Is LeBron James Really Worth?

To get a clear picture of the league's salary pool, we included not just the payrolls of the teams, but the total paid into the luxury tax. (If you're willing to go into the tax for players, reason stands that you'd be willing to pay them the combined weight of those additional tax dollars.) We came up with $2.38 billion, with about $276 million of that in luxury tax dollars. Yes, there are specific efficiencies and inefficiencies involved with navigating the tax, and we can't be sure if the pool would actually grow larger absent a maximum, but definitionally, this is the actual figure that teams paid for the right to have the players on their roster play for them.

From there, we have to figure out how much of that pool would go to LeBron in an unrestricted market. But how to judge LeBron's performance was a bit harder, especially since, as a rule, catch-all stats that belch out one number are kind of shitty, even the good ones.

We decided to run with WAR, and used ESPN's calculations. If you add up all the WAR in the league last year, you get 867.98. LeBron had 20.06 (the league average is just 2), accounting for 2.31 percent of all WAR. Apply 2.31 percent to the league's salary pool and James was worth $55 million. That's more or less what Mike Trout looks like on paper. But using a statistic with a replacement level is tricky, because it dips into negatives. At -4.53 WAR, Tim Hardaway Jr. owes the Knicks $12.38 million for last season by these figures; that does not seem exactly right.

The problem is that players under a certain threshold are shown in stats as being obviously harmful to their teams when they play, and generally very bad. This is true, but you can't fine poor Kendrick Perkins for being awful at basketball. That's why the veteran's minimum exists; at a certain point, GMs just say, Aw, shit, we just need a warm body. Anyone have Juwan's number? And if we aren't accounting for that in figuring out how an actually efficient NBA salary structure might work, we're missing a big part.

To correct for that, we took all players who were projected to be worth $1 million or less (a cutoff of about 0.45 WAR) and accelerated them to $1 million, which we're using as a proxy for the league minimum. The actual minimum salary rules are based on years of service, but generally settle around that million-dollar mark. The cutoff for our "replacement level veteran's minimum" was Hedo Turkoglu, if you were wondering. There were 209 players1 below that cutoff, so we subtracted $209 million from the league salary pool, leaving about $2.17 billion. This method essentially argues that the players who did not generate enough WAR to be at the veteran's minimum are all more or less interchangeable.

By this measurement, LeBron's 20.06 WAR is 2.06 percent of the new above-minimum total of 975.32 league-wide WAR. (The total went up because we zeroed out negative WAR performances like Hardaway's.) This means Lebron was worth $44.75 million for just last year, when he was paid $19 million.

Jose Calderon, at precisely 1 WAR, is our unit of measurement. (His 1 WAR was 0.1 percent of the new total of 975.32, or $2.17 million.) Kevin Durant's 17.59 WAR was worth $39.11 million, or just more than 18 Calderons. Of the free agent and trade bait class, Carmelo's 8.93 WAR would put him at $19.99 million, just short of the 21.49 million he made; Kevin Love and his 13.54 WAR were worth $30.2 million; Eric Bledsoe, in just 43 games (WAR is a cumulative stat), was worth $12.82 million, and can only make 25 percent of the cap ($14.5 million last year).

An interesting thing here is that unless you're in serious consideration for the MVP, once you're past your first deal, and especially once you've got six years in the league, you can more or less expect to make what you're producing. Carmelo is paid more or less fairly, as is Chris Bosh. Dwyane Wade was moribund for most of the year, but managed to put a dent into his salary. It's only when you get up to Chris Paul and LeBron James that you see where the league finds room to subsidize expensive, shitty benches.

There are other ways to do this calculation, of course. By Win Shares, LeBron came in second last year to Kevin Durant, 15.9 to 19.2. James accounted for 1.27 percent of the Win Shares in the league, and Durant 1.53 percent, which would net them $30.25 and $36.44 million, respectively. Using Real Plus Minus and the same replacement-level adjustments that we used for WAR above, LeBron comes out to $57,268,441. When the WSJ took a look back in 2010, it came up with around $43 million for that year; and Planet Money talked to some economists who figured it was around $40 million.

Because basketball projections aren't quite as mature as the ones out there for baseball, it's harder to say how much LeBron will be worth going forward. But to cut just a few corners and take his projected salary under WAR for this past year, $44,754,753.65, and add a five percent rate of inflation built in to account for a growing league, you'd see either a four-year deal for $193 million, or a five-year $247 million contract for LeBron. Which is to say, about half what the Knicks would end up offering, and a whole lot less than he's going to get wherever he signs.

Chart by Reuben Fischer-Baum

1Because we didn't take into account how many of these players were on 10-day or non-guaranteed contracts, this is probably a conservative estimate on the size of the remaining pool.

Correction: Post originally used the luxury tax figure instead of the salary cap figure to calculate max salary ranges.

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