Navigating The Financial Landscape Of The NBA Draft: Winners And Losers

The NBA Draft is a pivotal event that not only shapes the teams for the upcoming season but also significantly impacts the financial futures of the players selected. Typically, the NBA Draft happens less than a month after the playoffs finish. After that, we have a long summer that includes free agency, the NBA Summer League for rookies and other young players, and training camps as teams head into the pre-season. This year, due to the COVID-19 pandemic, the NBA Draft did happen soon after the conclusion of the NBA Finals. However, all of those other summer activities are being compacted into five weeks, with the season set to start on December 22. As the rookies get acclimated to their new teams, let's take a look at the biggest winners and losers, strictly from a financial perspective.

Identifying the Financial Winners of the NBA Draft

The NBA Draft is a chance for young athletes to secure lucrative contracts, and this year was no exception. Among the most notable financial winners, we found players who not only had high draft positions but also favorable contract structures. Let's delve into the key players who emerged as financial victors.

Anthony Edwards: The Top Pick's Financial Upside

Being the number one pick in the draft comes with immense expectations, but it also opens the door to a substantial paycheck. Anthony Edwards, selected by the Minnesota Timberwolves, was not a guaranteed top choice, yet he proved to be the best fit according to the team's evaluation. In terms of rookie salaries, they are set on a sliding scale, which means Edwards stands to earn approximately $43.3 million over his first four seasons, assuming he signs for 120% of the sliding scale.

To put this in perspective, LeBron James signed a four-year deal in 2003 for just $18 million. While both players are now considered highly successful, the contrast in their rookie contracts highlights the evolving financial landscape of the NBA. Edwards may have the smallest percentage increase for his fourth-year option, but the sheer value of his contract makes it a significant win.

Patrick Williams: Potential and Payoff

Drafted at No. 4 by the Chicago Bulls, Patrick Williams comes with a unique blend of potential and financial reward. Averaging just 9.2 points and 4.0 rebounds in college may not seem impressive, but at such a high draft position, the Bulls are banking on his future growth. His projected earnings of $32.1 million over the first four seasons position him as a significant financial winner as well.

Williams is also the youngest player in this year's draft, which means he has ample time to develop into a star. With improvements in his shooting, especially from three-point range, he could emerge as a valuable 3-and-D player, further enhancing his marketability and earning potential.

Cole Anthony: The Florida Advantage

Cole Anthony's journey took a slight detour due to injuries and a down season at North Carolina, but being selected by the Orlando Magic at the 15th pick still comes with financial perks. His rookie deal is projected to be around $15.9 million over four years, but the real kicker is Florida's lack of state income tax, allowing him to keep more of his earnings compared to players in states with higher taxes.

For instance, fellow draftee Aaron Nesmith, who was taken just above him by the Boston Celtics, will lose around $520,000 in state taxes. This financial advantage gives Anthony a favorable edge as he embarks on his professional career.

Josh Green: Tax-Free Benefits in Texas

Selected at No. 18 by the Dallas Mavericks, Josh Green also benefits from Texas' absence of state income tax, which will help him retain more of his projected $13.6 million rookie deal. This financial structure allows him to focus on developing his game without the burden of high taxes.

Additionally, with the league considering a weighted schedule for the upcoming season, this could further reduce his tax burden, allowing him to maximize his earnings while contributing to his team.

Analyzing the Financial Losers of the NBA Draft

Not every player benefits financially from their draft position. Some find themselves in less favorable circumstances due to a variety of factors, including team location and tax implications. Let's explore the players who emerged as financial losers in this year’s draft.

James Wiseman: The Tax Burden of California

Selected as the No. 2 pick by the Golden State Warriors, James Wiseman's situation is complicated by California's high state income tax of 13.3%. This means that he will lose more than half of his projected $39.6 million contract to taxes, diminishing the financial gain typically associated with such a high draft position. When factoring in additional taxes from being in a high-income state, Wiseman's financial outlook takes a hit.

Moreover, sharing a division with other California teams like the Kings, Clippers, and Lakers means that Wiseman will face additional tax burdens due to more games played within the state. This combination of factors makes him a notable financial loser in this year's draft.

Malachi Flynn: A Tough Break for the Canadian Draft Pick

Malachi Flynn's story is one of potential hampered by age and location. Drafted at No. 29, he is viewed as a top-20 talent, but his age led to concerns from teams. Consequently, his projected earnings of $10 million over four years are significantly lower than if he had been selected higher.

Furthermore, playing in Toronto, Flynn faces the highest state income tax in the NBA, which can reach up to 53.53% when combining federal and provincial taxes. This means he may only take home around $4.6 million from his rookie contract, making it a tough financial situation despite his skill level.

Golden State Warriors: The Impact of Injuries on Financial Strategy

The Golden State Warriors faced a challenging draft after Klay Thompson suffered a season-ending injury on draft day. Instead of trading their pick or selecting a shooter, they chose Wiseman, leading to an expensive situation. The Warriors will be paying an additional $82 million simply to roster Kelly Oubre Jr., whom they acquired to fill the gap left by Thompson's injury.

This situation illustrates how circumstances can dramatically affect a team's financial strategy and the implications for their drafted players. The Warriors' inability to pivot quickly has financial repercussions that could affect their roster and salary cap flexibility moving forward.

Final Thoughts on the NBA Draft's Financial Implications

The NBA Draft is about more than just basketball talent; it is also a pivotal moment that significantly impacts the financial futures of the players involved. While some emerge as clear winners, benefiting from high draft positions and favorable contract situations, others face challenging financial realities due to factors like state taxes and team circumstances.

As fans, understanding these dynamics not only enhances our appreciation for the game but also gives us insight into the business side of basketball. Whether you're rooting for the winners or feeling for the losers, the financial outcomes of the NBA Draft are a crucial aspect of the evolving narrative of the league.