Jordan Clarkson is as good a second-round pick as you’ll find. The Lakers guard had an impressive debut season — he was named to the All-Rookie First Team — and his strong play continued into Summer League. Sure, he just turned 23; he’s older and more developed physically than most of his Las Vegas competition. But at 6-foot-5, he possesses the size, skill and athleticism to excel as a combo guard for the better part of the next decade.
Jordan Clarkson is also on the last year of his contract, diminishing some of his value and making him a potential liability after this season. After being selected 46th overall, the Missouri guard inked a two-year deal totaling $1.35M that expires this offseason. If he continues to progress, he’ll be one of the most sought after free agents next summer, demanding a salary 10 times the size of his current six-figure deal. As ESPN Insider’s Kevin Pelton ($$) noted, the first two years won’t exceed the mid-level exception due to the “Arenas provision.” The third year, though, could see an Omer Asik/Jeremy Lin-esque jump to $20-plus million. Even with a salary cap expected to surpass $100 million, that’s a massive price tag.
Right now, Clarkson is a solid rotation player with a borderline all-star ceiling, but his value is less in his production than his $845,059 salary that takes up 1 percent of Los Angeles’ salary cap. Though his impending raise shouldn’t impact his on-court value, it could limit the Lakers’ flexibility, pushing them that much closer to the salary cap as they look to bring in other high-profile players through trade or free agency.
So, what does this have to do with the Sixers? Yesterday, RealGM’s Shams Charania reported that Philly signed second-round pick Richaun Holmes to a multi-year deal, with the first two years “significantly guaranteed,” according to Jake Fischer of Liberty Ballers. It’s another Hinkie special¹; a fringe NBA player is offered about $1M annually usually over four seasons, with only a portion of the money guaranteed.
The Sixers have at least seven players on this type of contract, including Holmes, Robert Covington, Jerami Grant, Pierre Jackson, JaKarr Sampson, Hollis Thompson, and Scottie Wilbekin. (Full details on T.J. McConnell’s haven’t been reported). Each of those aforementioned players are cheap, potential contributors. They’ll earn less than $7M combined if they remain on the roster through the end of the 2015-16 season.
Not all of the Hinkie specials will turn out. In fact, there has already been a few that haven’t. Similar contracts were signed by including the since-waived/traded Jarvis Varnado, Drew Gordon, Malcolm Lee, and Brandon Davies. But the cost of bringing them in was minimal; just a temporary roster spot and a tiny fraction of the salary cap, as the contracts weren’t guaranteed.
The Hinkie specials that do work out, though, could turn into significant assets. Though some established veterans took discounts to play on winning teams (Gerald Green, David West), the market rate for rotations players like Jae Crowder (5/35M), Iman Shumpert (4/40M), Patrick Beverley (4/25M), Brandon Wright (3/18M), Kyle O’Quinn (4/16M) and Cory Joseph (4/30M) ranges from 4M-10M annually. Those salaries are likely to rise with the salary cap, which is $70M this season and projected to increase to $89M in 2016-17 and then $108M in 2017-18.
This makes it all the more imperative that the Sixers start spending soon. To date, Sam Hinkie has expressed no interest in putting a winning product on the floor, prioritizing draft picks and cap flexibility over wins. It’s an unorthodox, although totally reasonable team building strategy that’s netted the franchise a several high-upside prospects — Jahlil Okafor, Nerlens Noel, Joel Embiid, Dario Saric — along with a slew of future picks and young players locked into team-friendly contracts. But the advantage of the latter group — the Thompsons, the Covingtons, the Sampsons, the Holmeses — isn’t in their upside or production. Role players are always available through trades or free agency. Hell, the Sixers got a first-round pick, Nik Stauskas, and two pick swaps just to take on the contracts of Carl Landry and Jason Thompson.
The advantage, instead, is the cap flexibility they provide. Converting on a few of the second-round/undrafted rookie gambles could cut bench costs to about $10M, leaving more money for productive, high-upside players — the types that are plucked immediately in free agency.
But take another look at the Hinkie specials currently under contract. Thompson, signed prior to the 2013-14 season, is entering Year 3 of his four-year deal. He doesn’t do much, but he’s a versatile defender who can hit 3-pointers. At his current salary, $947K, his production far exceeds his cost, though that won’t be the case when he signs his next contract. While his on-court value might be on the rise, his off-court value is dropping as he approaches free agency.
The same goes for Covington, who signed early last season. He’s arguably the most productive Sixer, which is to say he might be an average NBA player. He too is outplaying his contract, but the margin becomes smaller as we get closer to 2018.
Jerami Grant, meanwhile, produced at replacement levels in his rookie season, as did JaKarr Sampson. But there’s a market for athletes with upside; K.J. McDaniels just signed a three-year, $10M deal (Year 3 team option) after putting together a rookie season not all that different from Grant’s and Sampson’s. It’s not clear how much these unproven sophomores would command if they reentered free agency, but it would likely exceed their current deals.
And yet, those contract “wins” will be all for naught if the Sixers don’t take advantage of them. They’ll add some on-court value and make the in-game experience a bit more palatable for the fans, but the players themselves won’t be any more productive than the ones readily available in free agency.
What the Sixers have going for them, though, that these players are signed to four-year deals, not two. The demand for four years of team control might be irritating some agents and limiting his free agent/second-round pick pool. (It cost the Sixers McDaniels). But it’s also extended the window for which they can capitalize on their cheap production. But now in Year 3 of the rebuild, time is running out on the first crop of Hinkie specials. While it’s not a disaster if their production-exceeding contracts go to waste, it wouldn’t be the asset maximization we’ve grown accustomed to.
(Really, though, this was all an excuse to post this).
1. No, the Hinkie special isn’t immoral. Nor is it some form of indentured servitude. As with any deal, there are pros and cons. Pros: an NBA roster spot, exposure, guaranteed money. Con: flexibility is limited, free agency is delayed.