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October 23, 2009
Transaction Analysis
The LaMarcus Aldridge Extension

by Kevin Pelton


The extension signed by Portland Trail Blazers forward LaMarcus Aldridge, first reported Wednesday by Yahoo!'s Adrian Wojnarowski and announced yesterday, was noteworthy because it was the first signed by a player entering the final year of their rookie contract since Aldridge's teammate Brandon Roy agreed to an extension in early August. Besides the Portland duo, Toronto's Andrea Bargnani is the only other player from the 2006 NBA Draft who has signed an extension. With the deadline for extensions to rookie contracts coming up Oct. 31, a week from tomorrow, the prevailing expectation (as articulated by Chad Ford on TrueHoop) is that no others are certain to be completed in time.

Because it was hit hard by players who entered the 2005 Draft in order to avoid the forthcoming NBA age limit, the 2006 Draft has long been advertised as one of the weakest in modern NBA history. Three years in, it has lived down to the hype. Of the 28 first-round picks who immediately entered the league (Oleksiy Pecherov spent another year in Europe before joining the Wizards, while Joel Freeland has yet to make his NBA debut), merely 15 have been above replacement level over the course of their first three seasons. While Roy is a budding superstar and Aldridge has shown the potential to be an All-Star, just three other players--Boston's Rajon Rondo, Chicago's Tyrus Thomas and Utah's Ronnie Brewer--have surpassed 10 WARP thus far in their career.

In general, rookie-contract extensions are some of the most difficult decisions for NBA general managers because they have to project out up to six years into the future based on a player's production and his potential. In the NBA, that can be an eternity. Take the last Blazer to sign a near-max extension, forward Zach Randolph five years ago. Randolph still has two years left on his deal because at the time extensions could last up to six years. Nonetheless, he's already packed a career's worth of drama into the last five years. Even before the extension kicked in, Randolph underwent microfracture knee surgery. He was traded by Portland two years into his new contract, and is now on his fourth team.

Despite those complications, in general extensions have been fairly predictable. My research has indicated that teams tend to pay for unweighted total production over the player's first three years. On average, each four additional WARP translates into about a million dollars in salary during the first year of the extension above a constant term of $6 million. Adjusting these numbers to a projected 2010-11 salary cap of $52 million (the average of the range of $50.4 million to $53.6 million that has been reported) offers the following projections for the class of 2006.

Pk  Player              WARP  Salary  Notes
1   Andrea Bargnani    -  .8    5.5   Signed for first-year salary of $8.5M
2   LaMarcus Aldridge   19.0   10.3   Signed for first-year salary of $10.7M
3   Adam Morrison      - 8.6    3.7
4   Tyrus Thomas        11.9    8.6
5   Shelden Williams     2.8    6.4   Fourth-year option not picked up
6   Brandon Roy         29.6   12.8   Signed for max (estimated first-year salary of $13M)
7   Randy Foye           2.5    6.3
8   Rudy Gay             8.0    7.6
9   Patrick O'Bryant      .0    5.7   Third-year option not picked up
10  Mouhamed Sene         .4    5.8   Fourth-year option not picked up
11  J.J. Redick        - 1.3    5.4
12  Hilton Armstrong   - 1.0    5.5
13  Thabo Sefolosha       .7    5.9
14  Ronnie Brewer       12.3    8.7
15  Cedric Simmons     - 1.1    5.5   Fourth-year option not picked up
16  Rodney Carney      - 1.6    5.4   Fourth-year option not picked up
17  Shawne Williams    -  .7    5.6
18  Oleksiy Pecherov     N/A    N/A   Eligible for extension next summer
19  Quincy Douby        -2.0    5.3   Fourth-year option not picked up
20  Renaldo Balkman      7.2    7.5
21  Rajon Rondo         23.5   11.4
22  Marcus Williams    -  .3    5.7   Fourth-year option not picked up
23  Josh Boone           6.5    7.3
24  Kyle Lowry           7.0    7.4
25  Shannon Brown      - 1.4    5.4   Fourth-year option not picked up
26  Jordan Farmar        1.8    6.2
27  Sergio Rodriguez     2.7    6.4
28  Maurice Ager       - 2.3    5.2   Fourth-year option not picked up
29  Mardy Collins      - 3.0    5.0
30  Joel Freeland        N/A    N/A   Has yet to play in NBA

These salary projections obviously break down at some point. Mouhamed Sene, who is now playing in France, does not deserve nearly $6 million a year for playing 260 minutes at slightly better than replacement level. The numbers should only be applied to players who might reasonably be extended.

For the Blazers duo, the projections served to accurately peg the deals they ultimately signed. Roy is essentially projected to earn a maximum extension, as he did. The projection for Aldridge is also very close to the $10.7 million he will make next year, assuming the contract is as reported for $65 million (along with incentives that could potentially push it to $70 million) and includes standard 10.5-percent raises each season. However, based strictly on his WARP totals to date, the Raptors dramatically overpaid for Bargnani. They are hoping his second-half surge is more indicative of what he will provide them over the next five years than his overall performance from his first three seasons, which has been below replacement level.

Among the other players who could sign an extension in the next week, the projections are extremely favorable. There's only one player in the group I think might make his team regret not coming to terms on an extension, that being Rondo. If he progresses again this season, Rondo could hit the market at age 24 as a restricted free agent with three years of starting experience on a championship contender. If the big names decide to stay put next summer, Rondo could become a consolation prize for one of the teams with cap space should they be willing to risk the seven-day period Boston would have to match any offer. Rondo would certainly be a intriguing fit in Mike D'Antoni's system. If nothing else, an offer sheet would drive up Rondo's price dramatically for the Celtics.

Returning to Aldridge, we can also evaluate his extension by looking specifically at the deals similar players have gotten. As seen above, Aldridge has been worth precisely 19 WARP over his first three seasons. Here are the other players this decade who were between 17 and 21 WARP during their first three seasons, along with the contracts they ultimately signed--either extensions or as restricted free agents the following summer. The last column adjusts the value of the first year of the contract to 2010 terms so it can easily be compared to Aldridge's extension. (A technical note: The entire contract value is used, not the actual first-year salary, to account for Kirk Hinrich, whose extension declines each season instead of increasing.)

Player             Yrs   $    1stYr
Carmelo Anthony     5   80     13.0
Mike Bibby          7   80.5   10.8
Andre Iguodala      6   80     10.7
Lamar Odom          6   63      9.9
Andrew Bogut        5   60      9.6
Emeka Okafor        6   72      9.0
Jason Terry         6   57      8.2
Kirk Hinrich        5   47.5    7.8
David Lee           1    7.5    7.1

Blazers fans might quibble a bit with this list; Anthony, who is the obvious outlier, is the only player in the group to make an All-Star team. However, Aldridge has not quite yet reached that level himself, and most of this group has inhabited the tier just below All-Star level. Aldridge's salary is toward the higher end of this group, but not unreasonable, especially considering his age. In fact, the group breaks down perfectly by how early the player entered the draft. Anthony spent one year in college; Bibby, Iguodala, Odom, Bogut and Aldridge all left after two; Okafor played three at UConn; and Terry, Hinrich and Lee were all four-year players.

While extensions are inherently a tricky business, none of the players of Aldridge's ilk signed contracts their teams have really come to regret. The negotiations on Aldridge's extension were difficult, complicated by the fact that the two sides had to try to hit a moving target in terms of next year's salary cap, which will depend on how much the NBA and the economy in general rebound over the next six months. Using history as a guide, it appears that the Blazers and Aldridge did a fine job of reaching a deal that is equitable to both sides.

Pro Basketball Prospectus 2009-10 is now available on Amazon.com. See our PBP 09-10 page for more details and to purchase your copy in printed form or as a downloadable PDF.

Kevin Pelton is an author of Basketball Prospectus. You can contact Kevin by clicking here or click here to see Kevin's other articles.

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