Roy Hibbert and the Quixotic Quest to Quantify Value

The immediate choice facing the Pacers is simple: to match or not to match. The decision, however, is incredibly complex.

On the bright side, Portland’s max offer sheet to Indiana’s restricted free agent Roy Hibbert has pretty much guaranteed that we as observers will get to see the Pacer summer plans resolved by Friday the 13th. On the down side, it means that the freshly minted leadership team of Donnie Walsh and Kevin Pritchard only has until Friday the 13th to make some pretty far-reaching decisions for this franchise. That means that former team president Larry Bird’s well-used strategy of waiting for the right opportunity won’t be available to them.

So … what do you do?

The Pacers Will Match Because …

They have to.

After Miami eliminated the Pacers, the natural thought process was to ask what Indiana needed to do to improve enough to get past Miami and win a championship. The blue and gold made a huge leap forward in 2011-13 and now seem poised for another one. The squad is populated by young, improving players, and Indiana entered this offseason armed with a first-round draft pick and plenty of cap space.

Expectations have been set accordingly.

One thing, though.

As worthy and exhilarating as those thoughts and goals may be, they should not be — cannot be — the franchise’s top priority. The Pacers must steal an old Ford Motor Company slogan and ensure that “Quality is Job #1.” The imperative for Donnie Walsh and Kevin Pritchard this summer is simple: stay good.

There are those who aren’t going to be satisfied with what I’m about to say, but trying to “build a champion” is a fool’s errand for the vast majority of NBA franchises. There are magnet locations — like Los Angeles, New York, and Boston — that may be able to try to do it every so often, but most would have to rely on too many things beyond their control. There are too few players who are difference makers, and there is a not insubstantial amount of  luck and timing involved in hanging a banner.

Building a good team, however, is within the reach of all 30 NBA cities.

And in a small market like Indy, building a good team is absolutely crucial. The Pacers need to figure out how to become a perennial 50-game winner. Build a sound foundation to become a good franchise first. Then see if you can reach out for the ring after that. But right now, and probably forever, the Pacers’ priority is to put a quality product on the floor that the community can get behind.

And since that’s what they did this season, their offseason mission must become solidifying that foundation for success. Locking up Roy Hibbert and George Hill are steps 1 and 1A. These are good players, each of whom is well liked among the fan base. Losing one or both not only costs the team on the floor, but it costs them from a public-relations perspective. As a franchise that is finally breaking out from under a dark cloud, the Pacers cannot afford to go backwards.

The Pacers are catching something a break with the timing of Hibbert’s deal.

While the owners fell short of their goals during last season’s lockout, there were some meaningful improvements made. Specifically, the offer sheet Portland is giving is one year shorter and valued at about 30% less than it would have been under the previous CBA. (It will also qualify for the “stretch provision,” which is not entirely comforting, but could potentially mitigate the contract, if it goes horribly wrong.)

Moreover, matching a max deal for Hibbert would not entirely destroy the Pacers long-term flexibility. Hibbert would join George Hill and Miles Plumlee (and possibly Orlando Johnson) as the only players signed beyond the 2013-14 season. While that will certainly change, having that type of contract situation certainly makes it easier for the Pacers to sign Hibbert than otherwise it might be. When most teams decide to commit long-term to a player who isn’t a no-brainer for max money, they are adding that obligation on top of several others. For Indiana, only Hibbert and Hill will be set in stone as franchise mainstays.

Indiana has already secured George Hill. Now, they need to retain Roy Hibbert.

The Pacers Will Not Match Because…

It’s a bad contract.

Or, I guess a more accurate way to put it is, the Pacers consider it a bad contract.

The most likely reasoning in this scenario is that Walsh, Pritchard, and owner Herb Simon will look at Roy Hibbert and decide that he’s simply not a guy they see as the best player on a good team. If they believe that a contender requires at least two players as good as or better than Roy — perhaps even three — then paying him max money is prohibitive.

The Pacers had a highly successful season last year, but they did it by leveraging five to seven high-level players. Hibbert was an All Star, but somewhat by default given the talent scarcity at his position. Additionally, his production declined moderately over the second half of the regular season. He played well during the playoffs, but struggled to make an impact over the last three games of the Miami series and was generally unable to score on the tiny front lines of the Magic and Heat. While some of his struggles could certainly be laid at the feet of his teammates who could not get him the ball, it’s worth noting that fact also shows his reliance on the other players on the floor.

Pacers’ management may also have concerns about what effect the heightened expectations that come along with a max deal will have on Hibbert. Roy is very popular and very likable, but he isn’t the hasn’t always seemed the most stout individual. He is a hard worker, but he doesn’t always deal well with pressure, and he handles criticism poorly. Like it or not, the bigger salary will change how many people view him.

For the Pacers not to match, they will effectively have to weigh all of the factors, and decide that it simply isn’t worth the risk.

What Is Hibbert’s Value?

From what I can see, the vast majority of observers consider a four-year max deal (which pays out 25% of the team’s salary cap, or roughly an average of about $14.6 million per year) to be a least somewhat overpaying for Hibbert. Exactly how much of an overpayment is very difficult to determine.

And that fact creates a lot of difficulty in and of itself.

There is no sound mechanism of establishing a player’s value. None. In fact, it is difficult to get a clear consensus on what drives value. Value — when you’re speaking monetarily — goes beyond performance on the floor. It also speaks to marketability. Yao Ming was likely incredibly valuable to the Houston Rockets despite never even playing in a Western Conference Finals. Vince Carter was probably a cash cow for the Toronto Raptors.

So how do you measure and balance on-court (wins) and off-court (dollars) value?

Further, much of a player’s success is dependent on his environment and teammates. It’s no coincidence that Hibbert’s acclaim rose after the addition of David West and George Hill, and the improvement of Paul George and Darren Collison. So much of the NBA is about fit and opportunity, and the starting units for the Pacers were great environments for all of the players.

Some will say that the market determines value — that a player is worth whatever he can get someone to pay him. But, besides being overly cynical, that point of view is inaccurate. The market doesn’t determine the players’ value, so much as it determines his cost. Moreover, it’s not a particularly efficient mechanism. The market is at least heavily influenced — if not dictated — by the presence of existing bad contracts.

All of these things mean that you can’t dial in a contract perfectly. You speak in terms of “reasonable” and “unreasonable” based on a ballpark range. You create a vague number with wiggle room around it. The higher the number, the bigger the range on either side. You basically throw darts.

This becomes especially problematic when the market has other motives, as in the case of restricted free agents.

Over the last year or so, Larry Bird has mentioned a couple of times that Pacer owner Herb Simon was reticent to go after restricted free agents. This news was met with some consternation by many fans (and possibly Larry Bird), particularly in light of Indiana product Eric Gordon’s status as an restricted free agent this summer. I, on the other hand, consider it to be a pretty enlightened approach.

The big problem with chasing a restricted free agent is that it’s highly improbable — if not practically impossible — to sign said player to a reasonable contract. This is based on the assumption that if a team has tendered a qualifying offer, then they want to keep that player, so they’ll match any reasonable contract. Therefore, trying to sign an RFA away from his team is really an exercise trying to construct a contract offer that’s ugly enough for the player’s team to walk away from, but not so ugly that you choke on it.

It’s not exactly the type of environment that makes for good deals.

While the system was always set up to favor the team holding the RFA, the new CBA has made the advantages stronger by limiting raises and reducing signing bonuses. Offering teams can’t “trick up” contracts like they used to, so they basically are left with brute force.

This has played out not only with Portland’s expected offer sheet to Roy, but also in the offer that Phoenix is expected to make to Eric Gordon. In both of these cases, the expected contract of the player was high enough for the offering team to simply cut to the chase, presenting the players’ teams’ worst case scenarios – max Non-Bird offer sheets.

What Will the Pacers Decide?

This is deep into reading tea leaves without even being able to see the teacup. There are indications that could lead you in either direction, and prognostications from observers like Mike Wells, Bob Kravitz, and Chad Ford has been mixed.

Indiana has actively courted other free agents, most notably Chris Kaman, which could be considered an indication that they’re inclined not to match. However, that’s far from definitive. Bird’s departure may raise some questions about Herb Simon’s willingness to spend, but that, too, is heavy on speculation and light on actual proof.

Factors that mitigate towards Indiana matching include (1) my reasoning above, (2) the Pacers willing and concerted effort to make Roy Hibbert one of the most visible faces of the franchise, (3) and the newness of Walsh and Pritchard. Ultimately, matching the offer sheet is far and away the safest thing for a new leadership team to do — particularly since Simon has reportedly left it up to them.

While matching a max contract is risky, it has the advantage of being a somewhat known risk. Barring injury, Hibbert should be at least a relatively productive player. He may be disappointing in the context of the dollars, but it’s pretty unlikely he’ll be a disaster. If he goes, then you have to replace him — at least in production, if not in position.

Plus, it becomes a “forgivable mistake.” It is unlikely to be the type of error that gets either of them fired.

Without any sound basis for valuation, it becomes gut and guess. The idea of saying, “I’ll pay $X million, but not a penny more,” seems silly and arbitrary when then the stake you’ve just posted is hammered into thin air. And because of this, the calculus on the vast majority of these decisions comes down to one binary solution set: Either you have the guy, or you don’t.

And in that context, it’s easy to rationalize your way into overpaying. The other night, I tweeted that both matching and not matching were “very bad” for the Pacers, but I didn’t know what was worse.

This was a response from @HicksPD, who runs the basketball discussion forum Pacers Digest.

First, it’s probably fair to challenge me on the “very” part of the “very bad.” I go ’round-and-round with myself on how exactly to frame my view of a Hibbert max contract. I don’t think he is worth it, but I also have known (or at least strongly suspected) that this is what “the market would bear” for several months now. I understand why it is what it is, but understanding does not breed acceptance.

I did, however, want to address the question, and I wanted to do it without the constraint of 140 characters. “What (were) they gonna do with $3 million per?” is a valid question. That sum is not going to land a player — at least not an impact player.

So, what do you lose?

Well, that’s the trap in this entire situation. That $3 million doesn’t exist in a vacuum. You give $3 million more than you really want to Roy, you’re OK. But, then if you offer George Hill $2 million more than you really wanted to pay him, while you’re paying Danny Granger a couple million too much …well, now that $3 million is part of a $7 million problem.

Further, these “little” differences add to the general inflation in the marketplace as a whole. The contracts become rationalization for other contracts, and the market becomes “noisy,” for lack of a better word. There is a continual drift — and, to the delight of the players and the chagrin of small-market owners (and fans), the bias is upwards.

Therefore, the ultimate — and only — answer to Hicks’ question is that you just don’t know.

The CBA and cap rules create obstacles at certain levels, and these obstacles complicate the math. The implications are often obscured, and it makes it hard to see when the extra couple million you threw at Hill or Hibbert, or the extra year with a player option you gave to Dahntay Jones, means the difference between bidding on a player or not.

But while this line of reasoning is pretty sound from the perspective of operational discipline, it has some real practical limitations. First is the inability to actually quantitatively understand how much any player is over or underpaid with any reliability. It makes it impossible to say, “I have $X.X million dollars in waste in my payroll, and I’m going to cut that down by Y percent.”

Far more importantly, there is no incentive in the market for fiscal discipline. Or, perhaps more accurately, the incentives are often abstract and of uncertain value. However, in a concrete situation like the one the Pacers currently face with Roy Hibbert, the potential penalty for exercising “fiscal discipline” is clear and harsh.

People are fond of blaming stupid owners for offering bad deals, but the ones that stick out like sore thumbs aren’t the real issue. It’s the rocks you can’t see that are going to sink your ship. It is the sorta-bad-but-not-egregious deals that eat you up. Teams are continually forced to make the decision they have to make, and not the decision they want to make.

For there to be widespread fiscal sanity in the NBA, there needs to be a general consensus on how players are valued, one that everyone adheres to with a decent amount of discipline. However, absent any sound quantifiable valuation process, that simply can’t happen.

For now, I find it very difficult to predict exactly what the Pacers will do, simply because I don’t think they know, yet.

It’s clear they would prefer not to give Roy a contract like this — else he never would have gotten to free agency — but they can’t be sure what the alternative is. For many reasons, it behooves the Pacers to use every minute they have available before making that decision to fully flesh out every possible alternative. That isn’t failing to want to retain Hibbert — it’s simply due diligence.

In this sense, the offer sheet is blessing: it sets a clear deadline by which Indiana must either find an alternative or accept a tough-to-swallow contract.

Of course, getting too many of those kinds of blessings aren’t good for your health.

Tags: Salary Central

  • Sammy

    A lot of good points but man that was a loooooong read. I think you’ve got to let him walk. That’s too much money and I don’t think he can handle the pressure of being the highest paid. Sure it’s a step backward for SOME fans, but at 29th in attendance last year I think it’s safe to assume most people going to games are true fans (Besides the guy wearing the Wade jersey to every game) and are not that fickle. You can afford to let some of the fair weathers jump ship. Real Pacers fans will still watch, even if they are disappointed at first. Also just a thought…. Maybe there’s a reason “True Centers” are becoming extinct.

  • mikey

    Remember the bad Roy right after the all star game? And the bad Roy earlier in the year? And the stretches of bad Roy throughout his career? Pacers can’t match. They just can’t.

  • Jack

    @Mikey Do you remember Roy in the playoffs? He was essential. We were a different team with him on the court. And, he’s not done improving. It’s possible that he’s only getting started.

    They can and should match. Now’s not the time to be cheap, and now’s not the time to look far ahead into the future. We want to win the title next season or the season after, BECAUSE THAT’S WHEN WE HAVE THE BEST CHANCE. And I don’t understand why Hibbert necessarily has to be the best player on the team in order to get the max contract.. I wouldn’t care if he’s the 4th best player on the team (which, thinking about it, he very well may be). The fact is, he’s the best way for us to spend our money, and we NEED to keep our core together. WE HAVE TO. We have the money to do it. So let’s do it.

  • Jeff

    I think you summed it up by asking whether or not he’s the best player on the team – he’s not. Maybe 3rd, probably 4th. I think they won’t re-sign. At least not until they start selling out more games. Or with this new contract would Roy be buying more sections?

  • Jesse

    Roy was the best player for stretches early in the season. Better than D West, better than Granger. Granger and D West were the best after the all star break. But unless West has continued rejuvenation, Hibbert is the only one getting better.

  • gml

    As a season ticket holder (last 7 years), I say retain him. (Easy for me to say because it is not my money.) To win in the NBA you need to have the best players; he is one of the best players and getting better at his position. I think it is that simple. Bringing in Chris Kaman or Elton Brand….seriously these are huge steps backwards — not only in player talent but in the commitment of management to put the very best team on the floor. Hibbert will provide gains to the Pacers on the court and off far in excess of his contract –there are intangibles. They should do their due diligence but in the end, they will need to embrace him.

  • Jesse

    If we do let him go, I would vote Javale Mcgee over Kaman.

  • Dr. McStinky

    Maybe this is just me being hopeful and idealistic…but is there any chance the Pacers take advantage of the 5th year they can offer? They could try to low-ball Roy into, say, a 5-year, $65 million offer (still $13M per year and $7M total over Portland’s offer) and sell him on the idea of saving $1.5M per year to help sign another guy to make the team better.

    If Roy leaves, Pacers brass could save some face with fans by publicizing that they offered Roy more money to stay, but he still took the bigger per-year figure and walked.

    I’m guessing something like this has been bandied about already in the front office… and already shot down by David Falk.

    Thoughts?

  • Jack

    Dr. Stinky – I’d like to see that happen, too. But if he doesn’t go for it, I’d match Portland’s offer. And I agree with Jesse.. JaVale McGee would be a better asset than Kaman. If we don’t sign Hibbert, then I say we go after McGee and Mayo/Lee.

  • http://AintNoPacerHater.com AintNoPacerHater

    I think the front office has known all along they’re keeping Roy. They’re just keeping their lips sealed. Here’s what why I think Roy will be back with the Pacers and exactly how much I thinkRoy is worth……

    http://www.aintnopacerhater.com/2012/05/how-much-is-roy-hibbert-worth.html

    thanks

  • Chris D.

    The reason it’s hard to quantify value in the NBA is because the salary structure–unlike those in the NFL and MLB–overpays bad players and underplays good ones. It’s no wonder Jordan tried to switch to baseball. Lebron only makes $17 mil. He ought to make $30 mil. given how truly rare he is and how many wins he can produce almost single handedly. Just think about having Roy make 80% as much as when he’s not half as much of a game changer. This is why no one can agree on what to pay Roy and why good players are forced to seek outside income from exposure in big markets, which you don’t see in the NFL, where cities like Indy and Green Bay can win superbowls, or baseball, where any team can develop or hire at least one star player and pay them whatever they want.

  • Ian

    I can’t believe we are still debating the ‘is he worth it question’. That is not the question. The question is, what do we do with that 14M if we don’t have him, and will it add up to more than his value.

    We all know big name free agents will not come to Indy voluntarily and are unlikely to re-sign if they are traded here. We also know we aren’t going to be getting any top-5 draft picks any time soon.

    So lets say we had 14M instead of Roy. We’d spend 8M/yr on Kaman (a declining, injury prone, inefficient offensive player), and what does 6M get you? Leandro Barbossa or his equivelent. We are in a world where George Hill is an 8M/yr guy.

    I see lots of talk about ‘value’ and ‘cap space’ but not one realistic argument as to how we’d be able to spend this money to get more value.

  • Jack

    @Ian- I don’t think we could get any more value with the money than if we spent it on Hibbert. The closest thing would be to try to land JaVale McGee and Courtney Lee/OJ Mayo. But Hibbert is the best option.

  • gregor t.

    JaVale McGee is not an option. He is looking for Hibbert type money from Denver, has no shot outside 5 feet, cant hit his FT’s, and has a serious attitude problem. Does he have loads of talent? Yes. Does he fit the Pacers? Uh, No! Besides, he is an RFA. I don’t think he is anywhere near the Pacers BIG BOARD. Pacers fans would not like this kid. And he is about to be overpaid, anyway. The Pacers need to sign Hibbert, keep the team together, win games, and strike when the time is right. Tim D. has it pegged. Keep winning 50, fill the stands, and make the playoff runs. The Pacers will never be the Celtics, but we could be the Spurs. ABA-STYLE!

  • dwain

    funny, the Heat just got better adding Ray Allen, and here we are debating wether to keep Roy…..

  • Jack

    yeah i agree with Gregor. and dwain… i know. it’s ridiculous. pay him the money PLEEEASE

  • gregor t.

    Fine. I will say it. If the Pacers sign Hibbert and West, Granger, George, and Hill stay healthy, the Pacers will be a 55+ win team next year. They will win the Central and be the 2 seed in the East. Rose wont be back til Christmas, the Celtics wont care til the Playoffs, and who else but the Heat can stop us in the regular season? I expect a Pacers v Heat Eastern Conference Finals next year. Do i expect the Pacers to beat the Heat in the playoffs next year? Well, no. Do i think they can get there? Would that be a successful season? Yep!

  • Pervis

    Roy Hibbert and his 15M per year MUST GO! Consider this: the NBA cap is around 60M. Let’s break it down into Starters money and Bench money. Starting salaries should hold around 40M (8M per player) and bench around 20M (2M per player). THIS year, assuming George Hill is starting the Pacers have 33.5M BEFORE signing Hibbert (Hill 8M, P George 2.5M, Granger 13M, West 10M),. Add Hibbert’s 15M and the total is 48.5M, leaving just over 10M for the bench, which last year consisted of 11 players! If the Pacers are to remain a deep team, a competative team, they need to let Hibbert and his Max Offer go (I’m sorry to say) and sign or trade for an affordable center. It’s not personal, it’s business. And keeping Hibbert at 15M a year DOESN’T MAKE SENSE!

  • gregor t.

    Pervis, the Pacers need players that can produce in the playoffs. Hibbert averaged a double/double. Name me one team with a Center that averages a double/double in the playoffs that makes less than what the Pacers will pay Hibbert. Bird’s dream of a 10 deep bench will leave with him. Seven deep will be just fine, if they can produce against the Heat and Bulls. An affordable Center that scores 12pts and rakes 11rbs against the Heat is what? A Multi-millionaire!

  • Jack

    i think we’d have a chance against the heat in the ECF. you just never know what will be going on at the time, how much momentum we’ll have, whether or not the heat will be playing like they did in this season’s playoffs, etc. i really, really want the pacers to win a title, and i think it’s possible

  • Ian

    gregor I agree with you, the funny thing about our 10-deep bench is that it really wasn’t. As many analysts like Hollinger pointed out, the disconnect between the perception and the reality of where the Pacers quality lies could not be larger. The Pacers had one of the 2-3 best starting lineups in all of Basketball on a per-minute basis. Because of the shortened schedule, our bench got lots of playing time, but never had more than one above average player on it (Hill or Collison). Every other Pacers bench player was significantly below average last season, and it was pretty obvious in the playoffs/

    The Pacers need to resign Hibbert, sign a swingman like Lee or Mayo, hope Plumlee can make some kind of contribution and that Tyler bounces back to become a decent bench big man again. The natural improvement of Paul George and possibly Hibbert should help as well. We could definitely challenge for the #2 seed in the East with that roster.

  • Dwight Meredith

    I agree with Ian.

    Do not underestimate the power of internal development. The good franchises get internal improvement from their players. George Hill in San Antonio is only one example. Tiago Splitter is another 25 year old big man. Does anyone doubt that he was better this year than last? Does anyone doubt that he will be better next year? I suspect that Shot Doctor Chip Engelland http://www.48minutesofhell.com/the-ball-tells-the-truth-an-interview-with-chip-engelland is working with him on free throws even as we speak.

    Improvement from Hibbert and George is required for the Pacers to get one level higher. It is the job of both the players and the team to make sure it happens. If it doesn’t happen, you have either the wrong players or the wrong staff (or, of course, both). Since it is the job of the front office to choose the players, in either case of a general failure to develop players, you need different people staffing the organization.

    I think the Pacer organization is pretty sound. Therefore I expect internal improvement from the youngish players.

  • gregor t.

    I doubt the Pacers can swing a deal for Luis Scola in this offseason. He just makes too much for us to match with value unless the Rockets take a deal just to move him. However, if Scola doesn’t get moved this summer maybe the Pacers could pick him up at the trade deadline like the Barbosa deal last year. THans and Lou were just overmatched against the Heat in the playoffs. I think Luis could be a real good fit. If THans could get 10 and 5 in the postseason this move wouldn’t be needed, but that is a big if. I think Scola is signed for 3yrs @ 9mil per which takes the Pacers out for this full season, but a deadline deal could work. As for next year, if D.West cant be resigned, Scola provides a pretty good replacement. If West is resigned, and i hope he is, that probably means THans wont be back. The numbers could work with Hans’ 3mil, D.Jones’ 3mil, and JPendergraphs’ 1.5 coming off the books to offset Scola’s 9mil. Wishful thinking? Maybe. But how good would a PF/C trio of Hibbert, West, And Scola be going forward? The Pacers still need a backup for Granger at SF, but consider this lineup:
    PG – Hill/Collison
    SG – George/ Lee-Mayo
    SF – Granger/ ?
    PF – West/Scola
    C – Hibbert/Plumlee
    It will probably take some work to bring back Collison for ’13 as well, but this team is real close. The starting 5 is top-notch, and a couple good moves for playoff bench contributors could just put the Pacers over the top. Can’t Wait!

  • Jack

    But we gotta resign hibbert first. and Kravitz said today in the Star that Walsh seems very non-committal towards keeping hibbert.

  • gregor t.

    If Walsh doesnt sign Roy Hibbert he can follow him out of town.

  • David

    You HAVE to pay Roy. Otherwise, you have NO options (better ones…) at center. I have to say that Walsh is welcome to go back to the Knicks if he doesn’t re-sign Hibbert. Let’s put it this way, the Pacers can start playing their games at the Anderson HS Wigwam or the Coliseum…because without him, they won’t need any more than 9,000 seats.

  • Realist

    2008-09 – 70/82 games played
    2009-10 – 81/82 games played
    2010-11 – 81/82 games played
    2011-12 – 65/66 games played (rested 1)

    Pretty damn durable for a 7’2 bloke. Not to mention the rapport with the fans. He is one of the good character guys Bird was adamant about filling the roster with after the mid 00′s. To me it’s a no-brainer. Pay him and don’t even worry about it. The 13 and 9 statline is fine. $10m a year is about right for the double-double centers who can protect the rim. Just try to look at it, as Hicks says, as “what would we do with the other 3-4 mill?”

    Agree with gregor t. If Walsh doesn’t bring him back, I’ll be just stunned. Absolutely stunned.

  • Donald

    Market Value.

    That is what I would pay for Roy Hibbert. I think the market values size, youth, and production. Pay Roy; worry about paying Danny, David, Darren, and Paul down the road.