Continuing the journey towards understanding the effect of large veteran contracts on team building, here we look at what is fair value for a contract, and why some work out and some don’t.

Value Over Salary Expectation (VOSE)

In the previous article we defined VOSE, an attempt to measure surplus/deficit value for a single season player salary. We first established the cost of buying a point of VORP and came up with this rule of thumb:

1 point of VORP costs 11% of the salary cap, $16.75m last season

A team of fair value salaries yields about 11 VORP, but contenders’ (OKC, SAS, NYK, DET) salaries yielded at least double that. We looked at the kinds of player salaries that generate significant surplus:

• The very best players in the game (Wemby, SGA, Jokic, Doncic)
• Young stars on their max second contracts (Cunningham, Barnes, Maxey)
• Players outplaying their rookie contracts (Thompsons, Chet, Knueppel, Duren)
• Bargains (Pritchard, Avdija, Gillespie, Champagnie)

We also looked at the players that generated the worst deficits:

• Players on large salaries missing games (AD, Trae, Haliburton, Tatum, etc.)
• Young players on tanking teams (Carrington, Ace Bailey, Dillingham, etc.)
• Mid-money busts (DeAndre Hunter, Patrick Williams)

Value Over Contract Expectation (VOCE)

A surplus value contract is one made up of surplus value season salaries. We can call this “Value Over Contract Expectation” or VOCE. Maybe we have to pronounce it the Italian way for it to sound different from VOSE. Let’s look at the ones that have generated the largest surplus over the last decade:

Player	Age	Span	% Cap	% Avail	Exp VORP	VORP	VOCE
Nikola Jokić	23	2018/5	24%	94%	11.6	48.0	36.4
Stephen Curry	25	2013/4	17%	96%	6.2	35.9	29.7
Shai Gilgeous-Alexander	24	2022/4*	25%	88%	9.2	33.9	24.7
Nikola Jokić	28	2023/3*	35%	87%	9.9	33.8	23.9
Giannis Antetokounmpo	23	2017/4	23%	88%	8.6	30.6	22.0
Luka Dončić	19	2018/4	6%	85%	2.7	22.9	20.2
James Harden	27	2016/3	28%	94%	8.6	28.6	20.0
Chris Paul	28	2013/5	32%	82%	14.2	33.3	19.1
Damian Lillard	26	2016/5	26%	92%	12.7	30.2	17.5
Luka Dončić	23	2022/4*	30%	76%	11.0	27.7	16.7
Kawhi Leonard	24	2015/4	24%	66%	8.3	24.9	16.6
Giannis Antetokounmpo	27	2021/5	35%	75%	16.0	31.7	15.8
Karl-Anthony Towns	20	2015/4	8%	99%	2.8	18.3	15.5
Anthony Davis	23	2016/4	24%	85%	9.3	24.7	15.4
Jayson Tatum	23	2021/4	25%	90%	9.1	24.5	15.4

Jokic’s second contract returned an incredible 36 VORP surplus. Curry’s bargain 17% cap contract returned almost 30 VORP, and Shai’s and Jokic’s current contracts may do the same. Below that we have young Giannis, rookie Luka, and heliocentric prime Harden. The remainder of the list is top-50 all time players (plus rookie Towns!), in the heart of their twenties. The overarching pattern here is really good players, in their 20s, not getting injured. Only Kawhi was good enough to miss a bunch of games and still make this list.

If we divide the VOCE by the length of the contract to compare average per-season surplus, it’s even more stark:

Player	Age	Span	% Cap	% Avail	VOCE	Per Year
Nikola Jokić	28	2023/3*	35%	87%	23.9	8.0
Stephen Curry	25	2013/4	17%	96%	29.7	7.4
Nikola Jokić	23	2018/5	24%	94%	36.4	7.3
LeBron James	32	2016/2	33%	95%	13.7	6.9
James Harden	27	2016/3	28%	94%	20.0	6.7
Shai Gilgeous-Alexander	24	2022/4*	25%	88%	24.7	6.2
Giannis Antetokounmpo	23	2017/4	23%	88%	22.0	5.5
Russell Westbrook	28	2016/2	28%	98%	10.6	5.3
Luka Dončić	19	2018/4	6%	85%	20.2	5.1
Kevin Durant	29	2017/1	25%	83%	5.0	5.0
Kevin Durant	28	2016/1	28%	76%	4.3	4.3
Victor Wembanyama	20	2023/3*	9%	74%	12.6	4.2
Luka Dončić	23	2022/4*	30%	76%	16.7	4.2
Nikola Jokić	20	2015/3	2%	93%	12.4	4.1
Kawhi Leonard	24	2015/4	24%	66%	16.6	4.1

Most of this list is players flirting with the all-time top 20. We also have Harden and Westbrook in their primes, in completely maxed-out roles. All three Jokic contracts are on this list. Even Denver couldn’t help winning one championship with the Joker spinning off so much surplus value. Seeing rookie contract Luka and Wemby here supports the idea that the clock starts immediately when you draft an elite star. The Spurs did the right thing taking advantage of Vic’s contract surplus right away, and it paid off. It’s notable that there is only one contract signed by an age 30+ player on this list, and it is a GOAT candidate.

The Biggest Losers

The other side of this is the contracts that generated the largest production deficit, relative to expectations:

Player	Age	Span	% Cap	% Avail	Exp VORP	VORP	VOCE
Derrick Rose	24	2012/5	28%	47%	13.7	1.1	-12.6
John Wall	29	2019/4	35%	18%	12.9	0.4	-12.5
Klay Thompson	29	2019/5	30%	45%	14.4	3.1	-11.3
Chris Bosh	30	2014/5	33%	39%	14.0	4.0	-10.0
Chandler Parsons	28	2016/4	24%	32%	8.9	-0.2	-9.1
Ben Simmons	24	2020/5	28%	42%	13.0	4.4	-8.6
Andrew Wiggins	23	2018/5	25%	80%	11.9	3.7	-8.2
Bradley Beal†	29	2022/4	35%	63%	10.8	3.0	-7.8
Bismack Biyombo	24	2016/4	18%	87%	6.5	-1.0	-7.5
Carmelo Anthony	30	2014/5	36%	81%	14.4	6.9	-7.5
Brandon Knight	24	2015/5	17%	43%	7.0	-0.5	-7.5
Gordon Hayward	30	2020/4	26%	61%	9.2	2.1	-7.1
Ian Mahinmi	30	2016/4	17%	57%	6.1	-0.8	-6.9
Evan Turner	28	2016/4	17%	75%	6.6	-0.3	-6.9
Allen Crabbe	24	2016/4	20%	75%	7.1	0.3	-6.8
Gary Harris	24	2018/4	16%	69%	6.1	-0.6	-6.7
Nicolas Batum	28	2016/5	22%	77%	10.8	4.1	-6.7
Matthew Dellavedova	26	2016/4	10%	70%	3.7	-2.9	-6.6
Luol Deng	31	2016/4	19%	35%	6.2	0.0	-6.3
Jordan Poole	24	2023/3*	20%	75%	5.7	-0.4	-6.1

† Beal's contract doesn't include his dead money for 2026-27, so his deficit will increase to about -11.7 VOCE

The top of the list contains some sad stories, with seasons missed to serious injuries, and even careers ended completely. Eight of the 20 players on this list played fewer than half of their team’s games. Rose, Wall, Klay, and Bosh all generated deficits worse than 10 VORP over the lives of their contracts, on the back of devastating injuries.

Availability Versus Performance

Availability problems are the headliner, but let’s look at how well these players performed when they actually played. We can break down the VOCE deficit into performance and availability components, where the performance component is based on per-game values, and the availability component counts lost production due to not being on the floor. This includes dead money from being bought out or waived.

Player	Age	Span	% Cap	% Avail	Performance	Availability	VOCE
Derrick Rose	24	2012/5	28%	47%	-7.6	-5.0	-12.6
John Wall	29	2019/4	35%	18%	-1.9	-10.6	-12.5
Klay Thompson	29	2019/5	30%	45%	-5.8	-5.5	-11.3
Chris Bosh	30	2014/5	33%	39%	-0.8	-9.2	-10.0
Chandler Parsons	28	2016/4	24%	32%	-4.1	-5.0	-9.1
Ben Simmons	24	2020/5	28%	42%	-2.9	-5.6	-8.6
Andrew Wiggins	23	2018/5	25%	80%	-9.3	+1.2	-8.2
Bradley Beal	29	2022/4	35%	63%	-5.4	-2.4	-7.8
Brandon Knight	24	2015/5	17%	43%	-4.6	-2.9	-7.5
Carmelo Anthony	30	2014/5	36%	81%	-6.3	-1.2	-7.5
Bismack Biyombo	24	2016/4	18%	87%	-8.7	+1.2	-7.5
Gordon Hayward	30	2020/4	26%	61%	-5.6	-1.5	-7.1
Evan Turner	28	2016/4	17%	75%	-7.1	+0.2	-6.9
Ian Mahinmi	30	2016/4	17%	57%	-5.5	-1.4	-6.9
Allen Crabbe	24	2016/4	20%	75%	-6.9	+0.1	-6.8
Nicolas Batum	28	2016/5	22%	77%	-5.0	-1.7	-6.7
Gary Harris	24	2018/4	16%	69%	-6.3	-0.4	-6.7
Matthew Dellavedova	26	2016/4	10%	70%	-6.4	-0.1	-6.6
Luol Deng	31	2016/4	19%	35%	-1.8	-4.5	-6.3
Jordan Poole	24	2023/3*	20%	75%	-6.3	+0.1	-6.1
Total				59%	-108.4	-54.1	-162.5

What’s striking is that not a single player on this list played above contract expectation when they actually played. In fact, the performance deficit was twice the availability deficit on aggregate. There is no denying that it is difficult to perform playing injured, and while missing the continuity of playing healthy for long stretches. But still, what’s happening here? How good were these players going into these contracts? Can we see some clues by looking at their age and performance leading into their contract?

Four Types of Bad Contracts

Let’s look at these bad contracts in groups, bolding positive signals, such as being young or prior seasons with VORP up to the level of the upcoming contract. Seasons in italics were played after the contract was signed.

Player	Age	Contract	% Cap	Prior 3 seasons VORP	Price/yr	VOCE
Andrew Wiggins	23	2018/5	25%	0.5, 0.2, -0.3	2.4	-8.2
Bismack Biyombo	24	2016/4	18%	0.2, 0.3, 1.2	1.6	-7.5
Allen Crabbe	24	2016/4	20%	-0.1, 0.3, 0.7	1.8	-6.8
Matthew Dellavedova	26	2016/4	10%	0.1, -0.5, 0.3	0.9	-6.6

These are young players who had never played to the performance expectations of the contract they were about to sign. Wiggins was a nothingburger (who amazingly eventually became a somethingburger), Biyombo and Crabbe may have benefitted from a fetish for rim protectors and 3-and-D wings, and Dellavedova was possibly rewarded for his floor-slapping intangibles. None of these looked like good bets to pay off, and they didn’t.

Player	Age	Contract	% Cap	Prior 3 seasons VORP	Price/yr	VOCE
Klay Thompson	29	2019/5	30%	1.7, 1.4, 1.7	2.9	-11.3
Gordon Hayward	30	2020/4	26%	0.0, 1.4, 2.1	2.3	-7.1
Evan Turner	28	2016/4	17%	-0.8, 0.6, 1.1	1.7	-6.9
Ian Mahinmi	30	2016/4	17%	0.2, -0.1, 1.4	1.5	-6.9

The second group is older players who had not played to the performance expectations of their upcoming contract. Klay was maybe a special case, underrated by VORP, and an important part of an all-time team. Hayward suffered a terrible injury, but maybe also wasn’t good enough to sign to a large contract in his 30s. Turner and Mahinmi, like Biyombo and Crabbe, were in-fashion role players who just weren’t that good.

Player	Age	Contract	% Cap	Prior 3 seasons VORP	Price/yr	VOCE
Derrick Rose	24	2012/5	28%	3.0, 8.2, 3.0	2.7	-12.6
Ben Simmons	24	2020/5	28%	4.9, 4.4, 2.8	2.6	-8.6
Brandon Knight	24	2015/5	17%	-0.5, 0.9, 1.9	1.4	-7.5
Gary Harris	24	2018/4	16%	0.7, 1.2, 1.7	1.5	-6.7
Jordan Poole	24	2023/3*	20%	0.4, 2.4, 0.0	1.9	-6.1

The third group is young players who had shown enough performance prior to signing their contracts, but where something went wrong. Rose has a career limiting injury, Simmons had a career limiting mental break, Knight had injury troubles (and suffered an all-time poster), Harris’ nice start may have been dependent on his role next to Jokic, and Poole’s career seemed to fall off the rails after the feud with Draymond. These were more defensible, but they didn’t work out.

Player	Age	Contract	% Cap	Prior 3 seasons VORP	Price/yr	VOCE
John Wall	29	2019/4	35%	5.8, 2.3, 0.8	3.2	-12.5
Chris Bosh	30	2014/5	33%	1.9, 2.8, 2.5	2.8	-10.0
Chandler Parsons	28	2016/4	24%	2.8, 2.0, 1.8	2.2	-9.1
Bradley Beal	29	2022/4	35%	2.5, 3.1, 1.0	2.7	-7.8
Carmelo Anthony	30	2014/5	36%	3.0, 4.5, 5.3	2.9	-7.5
Nicolas Batum	28	2016/5	22%	4.6, 2.5, 2.0	2.2	-6.7
Luol Deng	31	2016/4	19%	1.4, 1.2, 2.3	1.6	-6.3

This group is the most interesting, and the contracts are the most damaging. They are post-prime players who had performed to the level of their upcoming contract at some point in the prior three seasons. These are good players, but were they good enough to sign to those contracts? Wall was a really good player, but could he really have performed to the level of a 35% contract? Maybe just, but not enough to cover the injury risk. Bosh was a third star, paid like a superstar, and Parsons was a reach to fill a hole. The Beal contract looks the most insane, peaking at All-Star level, but paid like one of the game’s best. Melo had been improving into his contract, but only the very best players keep it up in their 30s, and he wasn’t and didn’t. Batum and Deng were overpaid role players on the downside of their careers.

The Risk of Post-Prime Max Contracts

Looking at the last group as a whole, they were good, but not great players on the wrong side of the aging curve. Only all-time greats can be expected to return good value on a max contract in their 30s. Players in their 30s are in performance decline, but also more at risk of losing time to injuries. User u/CxEnsign makes this point:

The point I would like to highlight is how much health impacts the surplus value of a player. You want to be careful not to over-index on ex-post injury data when evaluating ex-ante contract decisions.

I.E., a player's contract at signing should account for injury risk. If a player does not get injured, their contract should look team friendly.

The max or near max contracts where a player gets to 0 VOSE without a major injury are terrible contracts. In the best case scenario you're a play-in team, and with injuries (and you should expect someone to miss time with injury at some point) you're deep in the lottery.

Keep that in mind when estimating a 'fair' contract for a player coming off a fully healthy season.

In this light, those contracts were very optimistic, with not nearly enough upside to account for the downside risk. When the injury occurs, everyone can point to it as unlucky, but the mistake was made when the player and team put pen to paper.