Orlando Magic need rookie contracts to perform to begin growing again

The Orlando Magic have a clogged cap sheet where they need to derive value. Rookie contracts are typically the best value for any team. The Magic need more.

The offseason is a time for evaluation. Every team is reviewing its roster in tandem with its books. It is looking at how it wants to position itself to achieve its overarching goals.

That is ultimately winning a championship. But how a team gets to that championship level is set in motion every offseason.

It is the riskiest part of the year. Nothing is more dangerous than handing out a contract and trying to predict future value. A bad offseason doling out contracts can have years of repercussions that can take even longer to dig out of.

Figuring out value is one of the trickiest propositions a front office can make. Finding players whose production meets their contract is difficult. Let alone figuring out how to calculate that production in terms of dollars.

The one area where executives feel some kind of cost certainty is with rookie contracts. Those are naturally depressed contracts where teams can count on players far exceeding their salary with raw production — not even any fancy metrics.

The best teams in the league build through their draft picks. Even if they pick up just key role players in the process, players on their rookie contracts are the most valuable commodity in the league.

Teams that get star players still on their rookie deals usually are the ones that have the ability to make major free-agent plays and then re-sign their own rookies to their own massive deals.

This is at the heart of the Magic’s rebuild problem. Most teams that are in the midst of a rebuild can rely on a central draft pick of some kind to anchor their team around and grow. There are some successful grow-from-the-middle stories, but they are all anchored by draft picks too.

The Miami Heat have Bam Adebayo as a cheap star far outproducing his contract value. The Toronto Raptors used their own high draft pick who produced at All-Star levels in DeMar DeRozan to get Kawhi Leonard and win their title, but the patience to develop and grow Pascal Siakam, Fred VanVleet, Norman Powell and OG Anunoby have paid dividends.

This is how teams build. The draft is an important supplement.

So far, the Orlando Magic have gotten a lot of promise from their young players. But nowhere near the production.

If there is trepidation among Magic fans — and likely the Magic’s front office — about how to get this team to build beyond the consecutive first-round exits it is in the lack of apparent production from the team’s draft picks of the last few years.

And their looming free agency beginning at the end of the 2020 season for both Jonathan Isaac and Markelle Fultz.

The Magic have made it this far with their young players — more specifically Jonathan Isaac, Markelle Fultz and Mohamed Bamba — contributing in smaller roles. To be sure, as they begin to graduate off their rookie contracts, the Magic need to see some real production before they take home the big paychecks that weigh down cap sheets and team finances.

It certainly is still possible for these players to take sizable leaps and plant their flag on this team’s future. But undoubtedly too, the Magic’s future depends on these three — and eventually Chuma Okeke and whomever they draft in the 2020 Draft — proving their worth and value.

Measuring Value

This is Part 2 of our series trying to measure value. So it is helpful here to remind you of the methodology and way we are trying to put a dollar amount to a player’s production.

I reached back into my archives to pull out a study I did on player value in terms of production and dollars from five years ago — the last time the Magic doled out some big contracts to players already on the roster. That was a big free-agent summer where the Magic re-signed Tobias Harris and set itself in motion for the best season of that early rebuild (until it all fell apart in January).

All of these formulas are imperfect. And so within this context, it might tell us something about a players’ value. But it is not the whole picture. This chart and these calculations are being done merely for representational purposes. They give us a window into how track value with perhaps some adjustments up or down.

This is something statisticians within the NBA world have been trying to do for a long time. Nobody has gotten it perfectly right. But the formula we are using comes from Nylon Calculus and gives us this window into devising player value.

The formula starts by taking the amount of the salary cap and dividing it by 41 — the goal is to build an average team for the purposes of this formula — and then multiplying that amount by the product of Value Over Replacement Player (VORP), as calculated by Basketball-Reference, and 2.7. We then add the value of a veteran’s minimum contract.

That creates a player’s Market Value. You then simply subtract the player’s actual salary to determine whether they played above or below market value.

For the purposes of this exercise, we will divide the salary cap by 36.5 since the Magic played only 73 games this season.

Rookie performance

What is evident is how the Orlando Magic are not getting great value for their young players.

Typically rookies far outperform their contract within this market value formula. Part of the reason Nylon Calculus devised this formula to begin with was to see just how much players on their rookie contracts do so.

At the end of the day, rookie contracts are below-market deals. And if a rookie already has a major role within the team, they are going to outperform their contracts.

And this is the concern the Magic face.

Through this formula, it is notable that Jonathan Isaac is one of three players who outperformed their contracts — the others being Michael Carter-Williams and Gary Clark. And this came in a season where Isaac missed the majority of it with a knee injury.

Isaac is perhaps the one player with clear elite ability and the potential to be a fixture on the All-Defensive Team. But even within his growing talent, it is still really hard to determine what his upper bounds are.

Is he a potential superstar player? Is he a true building block? Or is he just a nice defensive ace in the hole?

Orlando Magic

Former general manager Rob Hennigan said one point that by the end of a player’s rookie contract, you typically know what a player can or will be. There are exceptions to this rule — perhaps most painstakingly in Victor Oladipo — but it mostly feels true.

And the Magic will now have to pay Isaac as he enters restricted free agency after the 2021 season. He will have played only one full season in his four years under his rookie contract. And $11.4 million would be a very low offer to what the Magic are likely to pay Isaac in the open market.

Orlando is going to run into some of the same issues as it evaluates Markelle Fultz.

Fultz had a great season considering his injury history. But even his proponents would agree it was not the kind of season you would expect from a first overall pick, let alone in his third season.

The Magic will have to make the decision on how much to pay him — actually determining his market value — when he hits restricted free agency in 2021. This is a big year for Fultz to prove his value in the league and build upon last season.

But the Magic are certainly going to expect and need to see more from Fultz. As Jeff Weltman put it, this season Markelle Fultz proved he could play and now we need to talk to him outside of the context of his injury.

Mohamed Bamba too has not quite lived up to expectations yet either. He is slowly getting more comfortable as a backup center. But his time will start to tick as his restricted free agency looms in 2022. The 2021 season will be a big one for the young center.

Decisions to make

This is all to say, the Orlando Magic have some big decisions to make. They have to cut a path forward and make bets on the improvement of young players. And right now, it is hard to say whether those bets will pan out at the level the Magic need to push out of the bottom of the playoffs.

They have to get more bang for their buck from these young players.

Typically, young players outperform their contracts by significant margins. For example, using this same formula, Jayson Tatum currently has a market value of $30.4 million. Tatum’s final year of his rookie deal will pay him just $9.9 million.

It is easy to see why the Boston Celtics have been able to build things up so quickly.

And it is easy to see how the elite stars can quickly give teams a lot more than they are paying for. Eventually, they will have to take out their wallets and pay them. And that will change the equation.

For young players, it is important to see production early enough to make the investment when that contract runs out.

And one problem simmering not so subtly beneath the surface is the Magic’s young players have been good, but not good enough.