Larry Coon does not explicitly define what must be offered to a 2nd-round pick in order to retain their draft rights, but the 2005 CBA defines the "required tender" as a 1-year minimum contract offered by Sept 6th, valid through October 15th. There is nothing in the CBA indicating it must be guaranteed for injury or lack of skill, so it seems like it's non-guaranteed. Additionally, if a player accepting a required tender cannot pass his physical, the team is allowed to rescind the offer while still retaining the player's rights. It's rather interesting to compare Chandler's situation to Carl Landry's; both had rather long and protracted contract battles with the Rockets having been drafted as early second round picks. Parsons ultimately "won" his battle and secured quite a bit of guaranteed money for himself, Landry "lost" and basically signed the required tender, only to hit restricted free agency first and ultimately made about $9.5M in his first 4 years in the league, and another $17M in unrestricted free agency. Parsons will make $3.7M in his first 4 years in the league, and i don't think it's unrealistic to expect his next contract to contain $28+M in guarantees.
A few things to note here about Parsons contract. 1. If Parsons wanted to make more money, he should've played better at Florida. He didn't play well enough to make it to the 1st round, that's on him. 2. Parsons had no leverage in negotiations. Negotiations occured before he had a chance to see how good he is compared to everyone else. Hence he was forced to a bad contract or risk getting no money unless he was absolutely certain that (A)he was better than most others and (B)he'd have a chance to prove himself on a veteran team. Huge risks unless he had ridiculous confidence. 3. From a Rockets standpoint, value of Parsons is not 900k/yr. It's 900k+cost of 2nd round pick+cost of FAILED 2nd round picks previously. Factor in Jermaine Taylor, Dorsey, and Budinger, and Parsons contract becomes bigger. This is simply due to the fact that not all 2nd round picks work out. The Rockets have to factor in both the panned-out picks along with the failed picks when it comes to salary discussion. 4. If Parsons want mo money, I think they can negotiate an extension next year. Of course, in that scenario, I'm sure Morey will offer a below-market contract in return for one year quicker financial security.
Regarding point 3, they just call it sunk cost in business. What you've already spent is gone, should not be taken into consideration on future spending.
Yes it does. How much the Rockets are willing to risk monetarily should absolutely depend on how likely they feel said pick will reach that potential. If they're 100% sure, they're likely go give more money than a player they're 30% sure. Morey as a business guy absolutely takes into account risk management. And 2nd round picks, even for the Rockets, are very unsure assets.
Correct. Which means, as far as Rocket recent track record on high 2nd rounders, it's 50% for reaching backup/fringe starter status. Compare this with someone like Asik, who is 100% capable of being superb role player, with a good chance of reaching all-star level. And the Rockets gave Asik $8.3mil/yr instead.
Yeah I wonder if Asik would be this elite defensively without the tutelage of Thibs and Noah/Gibson/Dengs' passion for D rubbing off on him.
I really hope we can keep Parsons. He's just the absolute ideal role player, and I will be more than happy to have him as our starting SF going forward (unless Lebron comes along).
I think Les slipped him a bill or two. He twitched whe Lowe said "Don't you kinda want to help him out a little, financially?"
The sunk costs are not affecting future decisions. When determining to go the route of using long term contracts with 2nd round picks, Morey knows that it only works if the ones that work out are paid the same as the ones that don't work out on their initial contract. The negotiations use the past cost as a way to gauge expected value of a high failure commodity. The Rockets use 3 or 4 2nd round pick contracts to extract the value of one rotation player. They use this information to judge the expected value of a single second round contract. The sunken costs did not keep Jermaine Taylor.
While I agree with most of it, the failed second year contracts are sunk costs, it's not really that they failed, that's actually irrevelant (and I'm certain Daryl and Les would know), it's that they serve as practical examples of the odds of failure, in simple terms, it's a 1 in 8 chance he becomes a 7m per player, so you pay them all 1/8 of 7m.
i think he said that he thought patpat would fall short of being an allstar talent, and that trob had that potential. thats quite different than saying a player has maxed out. he also said that we took a step backward for this season to loose him.
Great post, especially point three. Sure businesses can include that as sunk cost but it's also factored in risk analysis.
Well, that was what I was trying to say. Basically that you don't know whether Parsons becomes Parsons or Dorsey at the time of the signing. Hence the odds of failure has to be incorporated into the salary. But yeah, it did come across as I was trying to put Taylor/Dorsey's salaries onto Parsons. This I agree is not correct.
