What is the point of diminishing returns when it comes to roster depth?
This is a question the Denver Nuggets will most likely have to confront over the next few seasons, whether it’s sooner or later. Their much trumpeted youth and depth (see every 2011-12 season preview ever written) have indeed proven to be two of the team’s most valuable dimensions. Last season, when injuries to key players such as Danilo Gallinari, Timofey Mozgov and Rudy Fernandez might have depleted the team’s rotation, Denver was able to bring guys like Kosta Koufos, Corey Brewer, and most notably rookie Kenneth Faried up from the lower ranks to fill in the gaps and help keep Denver a winning team, a luxury many NBA teams would not have had.
Additionally, with many of its players on rookie or otherwise reasonable contracts, Denver’s payroll structure featured another positive aspect: financial flexibility.
But the Nuggets model of last season is not one that’s well built for sustainability. The flip-side implication of having a young, deep squad of talented players is that it will not be too long before they’re going to get paid. And as the clock has ticked forward from last summer to present day, we have seen many of those dominoes start to fall.
The Nuggets have had a busy year, procuring the contract extensions of Arron Afflalo, Gallinari, Koufos, Wilson Chandler, most recently JaVale McGee (who came by way of extending Nene). And another signing is apparently on the near horizon. Chris Dempsey of the Denver Post recently reported Ty Lawson as saying his extension – as perhaps the Nuggets’ highest paid player – is “definitely going to get done” soon. So, depending on whether Lawson is extended,, and if so for how much, by the start of the regular season Denver should have somewhere in the neighborhood of $62 million to $71 million in guaranteed salary* for the 2012-13 season.
That’s well above the $58.044 million salary cap and, in the event of extending Lawson, at least flirting with if not slightly exceeding the $70.307 million luxury tax threshold.
[Correction: Big thanks to LotharBot for clarifying Lawson's contract extension situation in the comments: "If Ty Lawson signs an extension, the higher salary will take effect next season, not this one. The 2012-13 season team salary, for the current roster, is going to be in the low-mid 60s."]
In contrast, at the beginning of last summer Denver had $38,674,414 in guaranteed salary on the books for 2011-12. Now, it isn’t really fair to compare this very low figure with the greatly increased 2012-13 projections above, as the Afflalo extension was a near-foregone conclusion, and whether Nene had agreed to extend or not, it was pretty clear that money would need to be spent on a big man. Yet even taking that into consideration, there’s no way to escape the impending reality that the financial flexibility the Nuggets possessed last summer has mostly disappeared, assuming the current roster remains mostly intact.
Which at last brings us back to the question regarding diminishing returns on roster depth.
Running with the Ty Lawson max contract scenario for the sake of illustrating the point (though I don’t necessarily believe he’ll get that much), the Nuggets will have committed as much as nearly $59 million in 2013-14 and $62.5 million in 2014-15 in salary to seven players (albeit some of this is not fully guaranteed due to Al Harrington’s contract). Meanwhile, those seven do not include young draft picks Faried, Jordan Hamilton, Evan Fournier and Quincy Miller, or Mozgov who, if retained, will be up for an extension next summer.
While nearly every one of these contracts may be fairly reasonable in its own right, as a collective they form a fairly hefty salary bundle comprised of a group of players which, young and developing as it is, has not yet produced any definitively transcendent star players. It remains to be seen if one or more of these players can truly break through to the next level, or to what extent the front office will be committed to adhering to a philosophy of building a team which has, in George Karl’s words, “a top-10 player at every position”.
But considering that there is a limitation to the number of minutes which can be distributed among this deep roster of players, many of whom seem to be on approximately the same tier, as well as the fact that the Kroenke family has in recent years shown a keen propensity for staying firmly out of luxury tax territory, it seems that the Nuggets organization could soon reach a point where something might have to give.
They may need to consolidate some of their numerous assets for a single more potent one – or in other words, make a 2-for-1 or 3-for-1 trade to at once land a higher impact player and create more financial breathing room.
I suspect that if Denver does pull the trigger on such a move it won’t be right away. Masai Ujiri in so many words has already basically indicated they intend to keep the current roster intact: “Our existing roster we felt deserved to move forward and compete together. Those guys earned that right.” So I don’t expect them to do much more than perhaps cut Julyan Stone (whose unguaranteed contract and recent injury make him the odd man out by default) to clear a roster space for signing second round draft pick Quincy Miller.
At the very least, keeping the current crop of players around for a while longer will give the front office and coaching staff the opportunity to further evaluate their talent in order to clarify which players they value most highly as keepers. And for the time being, that’s probably a perfectly reasonable approach in terms of holding onto a small wealth of somewhat similar assets in order to allow the cream to rise to the top.
But the time for making some tough personnel decisions may be rapidly approaching. And the good news for Denver, despite its ever-increasing payroll, is that the large number of assets they hold in pocket translate into a different kind of flexibility: trade options.
So my humble prediction (and I’m admittedly not going out on too risky of a limb here) is that the Nuggets will basically stand pat through training camp and the beginning of the regular season, but will then seek to make some kind of deal by the trade deadline which will consolidate their talent pool and restore a little more financial flexibility over the next few years.
*(I based these salary estimates on a combination of figures from Storytellers Contracts and my own calculations based on news reports of the more recently signed players’ salaries. You can see how I got there here, here, and here. I’m no cap expert, and I made some assumptions (such as Miller replacing Stone) and used a bit of guesswork, so please consider these speculative at best. Feedback on this is more than welcome.)