This probably wasn't the deal Sam Presti hoped for when he thought about the possibility of losing James Harden. A true title contender dealing a 23-year-old star like Harden, one of the very best young players in the game, out of financial concerns — to ensure profit, basically — is a losing proposition in the short-term. But it's an artful middle-ground move for the Thunder general manager, the sort I (kind of) predicted in August, that might work to create long-term financial flexibility without fatally compromising Oklahoma City's 2012-13 championship hopes.
If you have to deal Harden in exchange for financial breathing room, the dream scenario is to land a sure-thing player in the beginning stages of his rookie deal. A big man trumps a guard. Presti likely started with Anthony Davis before mulling over names like Klay Thompson, Utah's young bigs (Derrick Favors and Enes Kanter), Bradley Beal, Jonas Valanciunas (with Jose Calderon's expiring deal), and maybe one or two others before landing on Houston.1 Thompson would have been an especially nice fit. It's not hard to argue the Thunder could survive the loss of Harden if in return they received an elite shooter capable of some ballhandling duties and at least average defense on the wing. Subtract Harden, and the Thunder don't have much outside shooting on the floor at once; spacing can become an issue for them.2
Harden is a very good shooter, but his best skill is ballhandling and playmaking on the pick-and-roll, and he was never going to be able to use that skill to the optimal degree on the same team as Kevin Durant and Russell Westbrook. There's a reason Harden came off the bench, propping up strong second units while scoring more and shooting more accurately than he did while playing alongside either Durant or Westbrook, per NBA.com's stats database.
The Thunder's offense reached historic levels of productivity when the three stars played together, and Scott Brooks was getting better at turning all three into active threats within the same sets. But there would always be some redundancy, and the Thunder's defense slipped significantly when all three played.3 An NBA offense can only get so efficient; the Thunder may have been able to maintain their stature by dealing Harden for shooting and a bit more defense.
They haven't done that here, and they also haven't received a can't-miss player on a rookie contract. Jeremy Lamb isn't that kind of player, and the Thunder cannot reasonably expect to get one with their new Raptors pick (likely to be in the no. 10-13 range in the next draft) or a Dallas pick they may not receive until 2018. Kevin Martin is — to be generous — a minus defender.
Martin does provide very good outside shooting and a mobile catch-and-shoot dimension that was not part of Harden's game; one can see Brooks running sets in which Martin and Durant curl off screens on opposite sides. Martin is also a usable secondary ball handler, but he's not in Harden's stratosphere in this regard and almost certainly incapable of wringing high-level productivity out of second units. Eric Maynor will help, but Brooks will rely more on his two incumbent stars, perhaps staggering their minutes more strategically. They should still be able to play small effectively and more often this season, with two of the Maynor/Martin/Perry Jones III trio joining Durant, Ibaka, and Westbrook in lineups with just one big man. And if Durant and Westbrook really are a top-three and top-10 player, respectively, the Thunder should be able to at least stay on the fringes of contention.
But the fall from "true contender" to "fringe contender" is a steep one — one of the largest a team can take. The Harden deal unquestionably hurts the Thunder's odds of dethroning Miami. That is a giant, painful price to pay, and the size of it shows how concerned Oklahoma City's management was about the team's finances going forward.
Keeping Harden on a deal just a bit below the max — the Thunder's ceiling — and sticking with Kendrick Perkins would have meant total payroll and tax bills between $100 million and $110 million in both 2013-14 and the following season under the stepped-up tax rates. That is a steep price to pay for a small-market club that makes only $15 million from its local television deal and may receive little help, if any at all, from the league's new revenue-sharing system.4 Small-market teams have paid hefty tax bills before during championship windows, but the Thunder's tax bill going forward would likely have been the largest in history for a team outside the New York/Prokhorov/Lakers/Mavericks/Blazers heli-skiing crew.
But those tax bills wouldn't have kicked in this season, leaving fans screaming for these alternatives:
• Just sign Harden and amnesty Perkins after this season! That was a viable alternative, but the Thunder payroll in 2013-14 and the next season would still have come in about $5 million over the tax line (at least), and they would have had to pay Perkins's full salary. The total bill would have been in the $90-95 million range, still a huge cost. And just as important: The Thunder, even in this scenario, would have had zero flexibility in signing players. The new collective bargaining agreement bans teams who spend more than $4 million above the tax line from using the full mid-level exception, engaging in sign-and-trade deals, and other roster-building mechanisms. The Thunder would have been subject to those limitations in perpetuity had they kept all four of their young stars. The full mid-level is back in play for them now, with payrolls set around $68 million in both 2013-14 and 2014-15, even factoring in all their coming first-round picks. It's fair to ask, though, how much supporting talent a team really needs with these four guys logging huge minutes together.
• Take a shot this season with the current core and deal Harden later. Harden would have been a restricted free agent next summer, leaving Oklahoma City in total control of the situation. They could have simply matched the inevitable four-year max offer sheet from Houston, Dallas, or Phoenix, and either signed-and-traded Harden right then or dealt him later. Heck, they could have left him unsigned now and made this same deal at the trade deadline.
But there are problems with these scenarios. Suitors wanted Harden before the Halloween contract extension deadline so they could lock him up immediately rather than wasting valuable days in July waiting for restricted free agency to play out. Keeping Harden into next season would mean hefty tax payments for that season, since even dealing Harden for an expiring contract would leave that expiring deal on Oklahoma City's 2013-14 cap sheet. That would amount to putting off the same cost-cutting choice by a year, while in the meantime suffering potential losses and continued turmoil about the team's future. Harden's value probably wouldn't have fallen much over time, but Presti looked at all the variables and decided to act now.
Don't cry for the Thunder or rail against the unintended consequences of the new collective bargaining deal and its harsh tax rates. There are very few examples in the league's modern history of teams in any market carrying four players at max or near-max deals. That was true under the old luxury tax, and it will be true going forward. The new tax makes it less palatable for Oklahoma City, and the new rule limiting teams to one five-year extension — already given to Westbrook — prevented Oklahoma City from offering the carrot of a five-year deal with lower annual salaries.
But again: Teams with four players at this relative salary level have been extraordinarily rare exceptions in any market size. Two or three huge-market teams would have bitten the bullet on Harden in the same situation as Oklahoma City for a couple of seasons; the Lakers are in year one of an ultra-expensive two-year spree. Mikhail Prokhorov doesn't care at all about losing money on the Nets. But even the Lakers have cleared the salary decks beyond 2013-14, and several owners, including Mark Cuban in Dallas, have scaled back spending to avoid the roster-building restrictions mentioned above. The NBA just can't legislate away owners who don't care about losing money (Prokhorov) or basic market realities that allow the Lakers to earn $150 million annually in local TV money — 10 times more than Oklahoma City makes in local TV cash, and enough to fund two team payrolls over the luxury tax line.
The new revenue-sharing system and tax-based restrictions were attempts to legislate in this direction, but they can't eliminate market-based gaps. And the Thunder were going to have issues keeping Harden at the max even under the old system.
But spare me the dreck about how James Harden should have sacrificed for the greater good. He's under no obligation to do so. The Thunder's owners haven't sacrificed profits here; why should Harden? The Thunder brain trust believes in the importance of sacrifice for the greater good, harking back to Tim Duncan taking less than the max in 2007 to help San Antonio afford its complementary stars. They wanted Harden to make that sort of sacrifice. He didn't, and the Thunder voluntarily chose to cut their championship odds in order to save the equivalent of about $1.5 million in salary and a few million more in tax payments every season.
Both sides forced each other into a choice, and the Thunder have chosen Westbrook and Ibaka over Harden. Those are both fascinating choices, and we'll delve further into them later in the week. There is a wide range of opinion around the league about whether the Thunder have chosen correctly on either count. Any of the three paths is defensible, but the Thunder have taken a risk in dealing a proven All-Star-level player and betting on Ibaka developing into that kind of player. But it's an understandable one, given the skill overlap between Durant, Westbrook, and Harden, and the fact that none of those three is a proven plus perimeter defender at this point.
This isn't the best choice for the Thunder's championship aspirations. That would have involved giving the Harden-Durant-Westbrook core one more season to chase the ring, or even accepting one hefty tax bill in 2013-14. The Thunder have been profitable for the last couple of years; why not exchange one year of losses for two years of true title contention?
As for the Rockets, they've paid a steep price, as you can trace all the assets they've sent in this deal back to Kyle Lowry (the price for the Raptors pick) and Samuel Dalembert (the price for the pick that became Lamb). Harden isn't a top-three overall player like Howard, Houston's first choice, but he has the potential to be a top-15 or even top-10 player when unleashed as the focal point of his team. He flopped in the Finals, and it is astounding how many fans and writers are judging Harden's contributions based solely on his play in that series — and against one of the league's most athletic defenses.
Harden is an ultra-efficient scorer who shot 70 percent at the rim and nearly 40 percent on 3s. He is almost unguardable on the pick-and-roll and draws free throws at the rate of a star. He's an elite passer who can also work off-the-ball as a spot-up guy. He has to prove his worth as a max player, and uncertainty about his ability to do so is one likely reason the Thunder dealt him away. Harden's per-minute numbers and overall efficiency suggest he should be able to earn his contract, but he has piled up a lot of those numbers against opposing bench units. When alongside Durant and Westbrook, Harden often had the luxury of working head-to-head against the second- or third-best perimeter defender on the other team. And he's an uneven defender himself, prone to ball-watching, vulnerable to back cuts, and not quite big enough to defend the league's best post-up wing players consistently.
But he only just turned 23, and all the data we have suggests he's a reliable first option. And as mentioned above, his shooting percentages from all over the floor generally improved when Durant and Westbrook hit the bench. There will be growing pains with the Jeremy Lin partnership, since Lin is a subpar shooter for his position. But Lin will improve his shot as he gets more open looks, and he'll learn to cut off the ball from the 3-point arc when Harden drives and sucks Lin's defender toward the foul line.
Best of all: Houston should have max-level cap space in each of the next two summers if they want it, even assuming they keep their draft pick in both 2013 and 2014. (The Hawks own that pick, but they only get it if Houston makes the playoffs.) Houston will have to do some tinkering to carve out room for a veteran's max deal, but that tinkering could be as simple as declining an option on Marcus Morris and losing another bit of flotsam along the way. If Omer Asik emerges as a heavy-minutes defensive game-changer, the Rockets will have a very solid core going forward as the Lakers age and other teams break apart. Josh Smith will headline this summer's class, and if the Rockets carry over their cap flexibility into the summer of 2014, they could make a run at any number of stars who will either be unrestricted free agents (Pau Gasol, Dirk Nowitzki) or carry option clauses that would allow them to hit the market (Miami and New York's stars).
The bigger story here is that with Harden presumably locked up, the 2013 star free agent market is getting pretty dry — assuming Philly and the two Los Angeles teams lock up Andrew Bynum, Chris Paul, and Dwight Howard. Teams are no longer hoarding cap space for a particular summer. Space is becoming a permanent asset, one teams can more easily use in lopsided trades and as a means of generally avoiding the roster-building restrictions that come with overspending.
But that's a story for another day. Today, the Thunder's path to a title over the next few years is significantly harder than it was on Saturday afternoon. Let's see how good these guys really are.