After two weeks of free agency, most of the big fish have been reeled in. LeBron James, Carmelo Anthony, Chris Bosh and over 50 other free agents have agreed to deals. Now, it's time to weigh in and see who hauled in a catch -- and who would have been better off tossing their bounty back.
Free agency is all about finding value. Finding talent isn't necessarily as important as finding talent at a discount. In a league with a salary cap that means every team has a strict budget, getting bang for your buck is absolutely essential.
To figure out the best and worst deals of free agency thus far, we analyzed all the contracts signed, and compared their average annual salary to the amount expected based on the player's age and 2013-14 production. I based the projected salary on a regression I ran using age and 2014 free-agent contracts.
Production was measured by using a real plus-minus derivative called WAR (wins above replacement), which estimated how many wins a player contributed to his team given how many minutes he played and his impact on both ends of the floor.
With the WAR figures in hand, we then looked at the contracts that were handed out this summer and calculated that teams were paying on average about $1.4 million per WAR on the open market. As you might expect, this pay rate varied according to the age of the player. To state the obvious: Teams will typically shell out more money for 24-year-old Gordon Hayward than 35-year-old Chris Andersen, even though both players delivered similar total production last season (around 5 WAR).
From there, we calculate the difference between the actual contract (AAV) and what we'd expect given the market, age and production (expected AAV). The difference between these two amounts is what we'll call annual surplus value.
At its core, free agency is a game of improvement. Surplus value is its currency. The best teams with the best front offices routinely find ways to improve their roster without breaking the bank.
So without further ado, let's take a look at the signings that were the biggest steals -- and, on the other side, the players who made off like bandits.
Contract: Three years, $12M | AAV: $4 million
2013-14 value: 5.8 WAR | Expected AAV: $9.8M
Annual surplus value: +$5.8M
The Spurs just keep on Spursing. Mills was the NBA's best backup point guard last season. Playing behind future Hall of Famer Tony Parker, Mills led all Spurs in 3-pointers and averaged 19.5 points per 36 minutes. At just 24 years old, he was a key cog in his team's NBA Finals win.
Teams would normally fight for this sort of young talent. But the Spurs nabbed him for $4 million a year, a rate cheaper than 34-year-old Caron Butler and 32-year-old Chris Kaman received from the Detroit Pistons and Portland Trail Blazers, respectively.
Granted, Mills underwent shoulder surgery, which should knock him out for the first few months of the season. But the Spurs shrewdly took the long view here, locking in a young player to a multiyear contract. Mills is one of the best 3-point shooters in the league. He's entering his prime, and the Spurs got him for 50 percent off Avery Bradley. That's highway robbery.
Contract: Three years, $25M | AAV: $8.3M
2013-14 value: 14.0 WAR | Expected AAV: $13.3M
Annual surplus value: +$5.0M