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The smarts behind Ricky Ledo's contract

8/9/2013

Ricky Ledo's contract negotiations were going badly. Which sounds a little ridiculous. The Mavs selected Ledo with the 43rd pick in the draft, meaning he was a second-rounder with very little leverage and almost certainly no place else to go if he wished to play in the NBA anytime soon. His track record to that point was spotty. He played for several high schools and logged zero minutes in college after being ruled academically ineligible. He looked so disinterested in some pre-draft workouts that officials from two teams told me they'd concluded that Ledo was “undraftable.”

And yet Ledo and his agent, Seth Cohen, were locked in fairly contentious negotiations with Dallas officials during much of the NBA’s Summer League in Las Vegas. Those negotiations, and several others, shined a light on the NBA subculture of second-round picks — an asset type teams have found increasingly valuable under the restrictive new CBA, and one that brings a bit more negotiating wiggle room than a first-round pick with a set salary slot, according to several team executives and player agents. Want to know how smart your favorite team is with the cap, or how much it values a particular second-round pick? Pay attention to the nuances of that player’s contract and salary.

The handsome personage of Chandler Parsons hovered around the Ledo talks and many other second-round negotiations. The Rockets drafted Parsons with the 38th pick in 2012 and signed him to a four-year that guaranteed Houston could keep him with a salary under $1 million in each of those four seasons. It wasn’t the first four-year deal for a second-round pick, but as Parsons emerged into a well-rounded NBA starter, it quickly became the most famous-slash-infamous of such deals. Cap experts and union officials estimate that about a half-dozen second-round picks have received four-year deals in the last half-decade, and Houston helped pioneer the process before Parsons in deals for Chase Budinger, Joey Dorsey, and Jermaine Taylor. (The Spurs also did this with DeJuan Blair, as did the Kings with Hassan Whiteside.)

Those contracts give teams control over cheap second-rounds for an unusually long time. (Teams can control first-round picks for four seasons, but those players carry larger salaries that increase at set annual rates.) Most of the players upon whom Houston used the Parsons Plan did not really work out, but Parsons has, rather spectacularly, and the league has taken notice in pursuit of copycat deals, officials say. “With players we think have a big upside, we will only do three- or four-year deals,” Mark Cuban, the Mavs owner, tells Grantland. “If their agents don’t like it, we let them go overseas.”

Go to Grantland.com to read the rest of the story.