The Second Round of the NBA Draft Is Broken, But Not Beyond Repair

“The second round,” a prominent agent told VICE Sports when asked to sum up the current issues facing the NBA draft, “is fucked up.”

Not everyone would put it exactly this way, but the general sentiment is a widely shared one in NBA circles. Getting chosen in the NBA draft is still a dream for any young player, but as teams have become more sophisticated in their asset management, getting drafted outside of the top 40 has become less appealing, and less lucrative, for domestic players than ever before.

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The NBA has created a situation where it is far more valuable for a player to go undrafted than to be selected in the back half of the second round, which means that the second half of the draft is now defined by negotiation and posturing from teams and representation. You can use the prominent agent’s words, or your own, but most everyone agrees that the second round is a problem that needs to be fixed.

For now, though, the system is working itself out as weirdly as possible, and on a case-by-case basis. Plenty of players have exercised their rights and avoided a system that is tilted against them, but one player has become the poster child due to his willingness to bet on himself and the way he utilized the NBA’s system to his own advantage.

Back in 2014, K.J. McDaniels was widely expected to go somewhere in the first round after a breakout season at Clemson. Instead, he fell to pick No. 32 of the draft, where the Philadelphia 76ers under Sam Hinkie selected him. The team offered McDaniels a contract that is now referred to as the “Hinkie special”: two guaranteed seasons, with a non-guaranteed third season followed by a team option on a fourth season. Knowing that he would be tied to the organization for four years at minimum-level salaries if he became a successful player, McDaniels decided to go another route.

In order to retain the draft rights of a second-round prospect, teams must offer second-round picks a tender of the minimum salary, with all that money non-guaranteed. Most players decline the offer, knowing that it’s not really all that valuable due to the likely lack of cash involved. Accept that offer, and you’re stuck with the team for training camp, and out of the running for a larger guaranteed sum elsewhere.

Recently, however, players have started using the tender to their advantage. If you’re selected, and if you believe you are a NBA player, you can accept the tender, go to camp with the team that picked you, and try to make your way onto the roster. If you succeed, you get your money. If you don’t, you are free to sign with any other team, thereby giving you more future freedom to essentially pick your spot. And that’s the call McDaniels made, accepting the tender instead of the $1 million-plus the Sixers were offering guaranteed.

“I was thinking about it a little bit beforehand,” McDaniels said when asked whether he knew his options before the draft. “You just have to see what happens, talk to your agents, see what they’re offering. But really, it just depended on me the whole time. Just going out there and believing in myself.”

The McDaniels story turned into a happy one, as the wing made the team, worked his way into the rotation, and became a valuable enough future asset that Hinkie decided to trade him to the Houston Rockets midseason instead of paying him an eight-figure guaranteed sum. In the end, that’s exactly what McDaniels got, as Houston signed him to a three-year, $10 million contract in the summer. His strategy was an unmitigated success: the $10.5 million McDaniels will make in his first four years will slightly outpace the earnings of 2014 11th overall pick Doug McDermott.

While he was neither the first nor the only person to utilize his tender rights, McDaniels’ choice particularly has had an impact on how teams approach second-round picks. Teams are wary about losing draft assets before ever getting a chance to develop them, as the Sixers did; Philadelphia got only Isaiah Canaan and a second-round pick for McDaniels in the trade with Houston. As a result, teams are approaching their second-rounders with an eye on the downside.

After being selected No. 58 overall by the 76ers last year, J.P. Tokoto took the tender offer, too, albeit for likely different reasons. On a team with a full roster of guaranteed contracts, he had little to lose. If he made the team, great. If he was cut in training camp, he’d have the freedom to sign with anyone, giving him 30 chances to make a team instead of just the one in Philly over the next few seasons—and in the end, that’s exactly what happened.

It all added up to a lose-lose situation, though, for player and team alike. Being cut in late October hindered Tokoto’s options for a year: it kept him from chasing the partially guaranteed contract he might have gotten from another NBA team, and also left him stressfully late in the process if he wanted to go to Europe. Philly, meanwhile, had absolutely nothing to show for its pick. With scenarios like this in mind, teams have started to come up with other solutions.

As players begin to take the tender more frequently, teams have started to assess their amenability to being stashed overseas or in the D-League for a year or more. In the past, the draft-and-stash was limited to European players who were long shots to ever make it over to America. Now teams are taking that process and trying to apply it to domestic players who have a better chance to play in the NBA.

“I mean, think about it this way,” one NBA executive said. “With second-round picks, would you rather have them at 25 or at 22? If either we, in the D-League, or another team overseas can develop them without us losing their draft rights and cost-controlled years, that’s the best-case scenario for us.”

The second round has now become more of a negotiation than a distribution of talent on merit; instead of the “best” players being selected, it’s the best players who are willing to be selected under the team’s terms. An agent who deals with these types of players yearly explained exactly how the process goes down during draft week.

“Usually in the few days leading up to the draft, just about every team calls around to agents and asks, ‘Which of your players would consider being stashed if we pick them, generally in the second round?’” the agent said. “I lay out all of the options with my players, what each of the options means, and get an answer to relay back to teams. Then, teams come up with two lists. One is kind of their draft board based on how they rank prospects. The other is based on who is willing to be stashed.”

It’s easy to see why teams like the draft-and-stash method, as noted above, but there are very real concerns for players. There are costs and benefits of being stashed, and—unsurprisingly—it isn’t always a great deal for the stashee.

To understand why, you have to understand the money involved and the number of second-round picks who get guaranteed contracts versus the number who don’t. Over the last two drafts, all 15 American players selected from No. 31 to No. 41 have gone on to sign guaranteed deals with their teams that offseason, with the average guaranteed money in those deals exceeding $1 million. After that, though, the numbers fall off in a hurry. Only eight of the 26 domestic players selected after No. 41 the past two years signed deals with a guaranteed season immediately following their selection; those deals were worth slightly more than $500,000 on average.

The situation gets even more dire within the final ten picks, as only one of 13 such domestic players over the past two years—Branden Dawson, whom the Los Angeles Clippers traded into the draft to select last year—was signed for a guaranteed season. Among agents, the final ten picks of the draft have come to be known as the “dead zone” for prospects. And due to the fact that it’s extremely unlikely someone will become an impact player after falling past No. 50, agents and players have begun telling teams not to select them at all.

“This year, I had multiple players that said ‘no’ to those scenarios,” the agent who explained the process above said. “Flat out. That was a conscious choice after we discussed the pros and cons. They didn’t like being locked in with one team and having no chance to play in the NBA this year. They turned it down. Now, typically during the draft, a few teams will call and ask if your player will reconsider, and we said no again to those who asked.”

“There were some offers, and teams called on draft night,” the former Wichita State point guard Fred VanVleet said about deciding against this option while at Summer League with the Raptors. “I had a good sense before the draft of where I was going to be or what was going to happen. Pretty much, though, the second half of the draft, most of those guys are draft-and-stash guys, and they tell you, ‘We’re going to put you in the D-League for three to four years’ or ‘We’re going to put you overseas.’ Getting my name called was important, but it wasn’t important enough for someone to own me with no chance of making the team and no chance of having options.”

VanVleet, who went on to sign a deal with the Raptors with $50,000 guaranteed upfront, is right on the money. It makes sense from an opportunity standpoint to go undrafted. Instead of simply being at the mercy of one team, an undrafted player has 30 teams to choose from.

“I just wanted to make a team and that was it,” former Indiana point guard Yogi Ferrell said. “I had a couple of opportunities to be a draft-and-stash pick, but I didn’t want to do that at all, though. I didn’t want to hear my name called, and then have them send me overseas or straight to the D-League. I felt like a lot of teams were interested in me playing on the Summer League team. So I talked to my agent, and we figured out the best situation for myself and for my family, and where I had the best chance to make the team.” For Ferrell, that meant the Brooklyn Nets. The point is that the choice was his to make.

Money-wise, going undrafted is also a better deal. In 2015, 26 undrafted rookies received guaranteed money to go to camp with a team, at an average of $96,730 per player. If you take out Duje Dukan and Maurice Ndour, both of whom signed a fully guaranteed deal for one year, the average is still $61,042 per undrafted rookie to get a camp invite. Thanks to the NBA’s rising cap, those numbers have only gone up this offseason, with borderline prospects like Stefan Jankovic and Bryn Forbes already getting six-figure guarantees.

As the D-League has added more one-to-one NBA affiliates, these guarantees act as a way for NBA teams to supplement the incomes of undrafted players they want to develop in the D-League, where the highest salary range this past season was a comically low $25,000(a sum nearly all camp-level NBA players can at least double by going overseas). The training-camp deals are signed with the implicit agreement that if the player is cut, he will then sign with the franchise’s D-League team as an “affiliate player.” While NBA teams do not necessarily continue to hold any rights to these players, who remain free to sign with any NBA team that approaches them, it’s a loyalty-based system. The team tells the player they want to keep developing him in their system; the player bets on the team meaning it.

Players who are drafted to be stashed, on the other hand, can’t go to training camp, as by rule the selecting team would have to sign and then cut the player if they don’t have space on the roster, and thus forfeit their draft rights. That leaves some with only a D-League salary to show for their efforts.

To put names to faces here, last season former Kentucky center Dakari Johnson was a second-round pick of the Oklahoma City Thunder. European teams tend not to favor young players like Johnson who leave school early and are still developing their games; those teams want finished products who can help them immediately. So while the 20-year-old Johnson might have had slightly better choices overseas, he likely wouldn’t have been able to make as much as someone like the former Iowa star Aaron White, age 23, who went one selection later and made over $100,000 in Germany as a stash. The possibility of a call-up was enough that the Thunder convinced Johnson to stay in the D-League, where he would make, at most, $25,000. He was sixth on the team’s depth chart, and the call-up never came.

Compare Johnson’s lot to Ryan Boatright, who went undrafted and also spent a year in the D-League. Boatright got $75,000 to go to camp with the Nets on top of his D-League salary, allowing him to nearly quadruple what Johnson made last year. Plenty of players made quite a bit more than that last season, such as Vince Hunter, who was cut by the Sacramento Kings in training camp but earned a European contract with Greek power Panathinaikos after dominating in the D-League.

Teams can draft-and-stash players overseas, too. The typical older draft-and-stash player will make at least $100,000 there, and most European teams put players up in condos, give them cars, and take care of many expenses; per one agent, the rule of thumb is that you can “double a player’s salary in Europe and that’s what it will equate to in NBA dollars.” While there are risks— Xavier Thames went to Sevilla, for example, and the team defaulted on his salary—overall the financial security tends to be much greater.

The focus in Europe isn’t on development, however—those teams don’t want to develop Americans just to see them jump back to the NBA. The concern for domestic players considering the draft, then, is that if you’re stashed overseas right away, you might never come back.

“In my opinion, I’m a NBA player,” said former Iowa forward Jarrod Uthoff, who signed a partially guaranteed two-year deal with the Raptors after going undrafted. “If I find out that I’m not, then I’m going over to Europe anyway. I didn’t want to limit myself to that so early. When I first heard about it a couple of years ago and realized what draft-and-stash was, I realized I didn’t want to do it. It just wouldn’t make sense for me. It makes sense for some people, but not for me.”

This was never how it was meant to work. An environment in which it’s better not to be drafted at all than to be among the last 20 picks is one that is ripe for reform. Something needs to change in order to bring value back to both teams and players who get selected, but what?

First, it’s worth noting that this system may not be in place a year from now, as either players or owners are sure to opt out of the collective bargaining agreement and open negotiations that will change how the NBA runs. It’s possible that within that discussion, rules are changed and these issues are fixed.

The best solution would be finding a way to adjust the salary in the D-League, at least for players selected by NBA teams. This would allow teams to keep players in their developmental system, and pay players something like fair market value. By creating two or three “D-League draftee” affiliation slots within the D-League—and letting teams pay those players something in the range of $100,000 to $200,000 per year—the league could fix this problem without enduring major financial hardship. It would be one of the first steps toward creating a true minor league system, which is an idea the NBA seems increasingly open to. Commissioner Adam Silver has also noted he is a proponent of adding a third round to the draft, and it would make sense for the rookie scale to be overhauled with the rising cap.

Whatever the case, the current system needs an overhaul if it’s going to do right by players and teams alike. To do nothing when it comes time to negotiate the next CBA would be, well, pretty fucked up.

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