Opportunity Cost, The Nuggets’ Trade For Caldwell-Pope, And The Lakers’ Handling Of Horton-Tucker – Forbes
When the Denver Nuggets traded Monte Morris and Will Barton to the Washington Wizards for Kentavious … [+]
When the Denver Nuggets and their newly-elevated general manager Calvin Booth made their most impactful trade of the 2022 offseason, sending longtime stalwart guards Will Barton III and Monte Morris to the Washington Wizards for a “three-and-D” wing in Kentavious Caldwell-Pope and a third-string point guard in Ish Smith, the deal was mostly well-received around the league, with Denver receiving trade grades mostly in the B range from many national writers, and a favortable response from most fans.
Some others raised concerns that Denver may not have received enough in return for what they gave up by effectively trading two starting-caliber players for one starter and a deep bench guy, or pointed to the deal being a cost-cutting move designed to get the Nuggets under the luxury tax threshold (which it was not, as they’ll be firmly in tax territory this season and likely for years to come).
The general consensus seemed to be, “Yes, Denver giving up both Morris and Barton for KCP and Smith was probably an overpay, but one they needed to make for a badly-needed upgrade – especially defensively – at the starting shooting guard position.”
Looked at through the lens of another more recent trade, however, there’s a strong case to be made that the acquisition of Caldwell-Pope was likely just about the optimal use of their resources that the Nuggets could and should have, taking into account the larger context.
Just about any trade can make a bigger-than-usual splash in the NBA mediasphere during the current deep doldrums of the league’s offseason, and such was the case when it was reported by ESPN’s Adrian Wojnarowski last Thursday that the Los Angeles Lakers had come to terms on a deal sending Talen Horton-Tucker and Stanley Johnson to the Utah Jazz in exchange for Patrick Beverley.
As always, much of the trade talk centered around the merits of the deal itself. Will the addition of Beverley bolster a LeBron James-led Los Angeles team which has struggled since their championship in the 2020 NBA bubble? Can PatBev and Russell Westbrook, who have been beefing for years, peacefully coexist if the latter does not end up getting traded? Can Utah get more out of the 21-year-old Horton-Tucker that the Lakers were able to last season? And importantly, was it a good value trade for either side?
But the aspect of the situation which got the most buzz on NBA Twitter had less to do with this particular trade itself, and more with the seemingly plummeting arc of THT’s
Fast forward five months later, and the Miami Heat won the offseason bidding war for Lowry, leaving the Lakers to settle on a deal with the Washington Wizards for Russell Westbrook. And the rest has been a fairly disastrous history for Los Angeles ever since.
Although it seems highly unlikely that solely acquiring Lowry would have been the over-the-hump move to vault a Lakers team that did not even make the play-in tournament last season into legitimate championship contention, their season at a minimum almost certainly would have fared better, and – the salient detail for our purposes here – they would have redeemed a greater haul for Horton-Tucker (packaged with other players a Lowry deal would have necessitated, including, somewhat coincidentally, Caldwell-Pope) than they in fact ultimately got in Beverley.
The Lakers’ handling of Horton-Tucker has quickly become one of the more clear and striking examples of bungled asset management in recent NBA history, with the criticism hyped and intensified by that bright Los Angeles spotlight. And the most critical aspect of the missteps made by Lakers general manager Rob Pelinka and his front office can largely be boiled down to one concept: opportunity cost.
Investopedia defines opportunity cost alternately as “the potential benefits that [one] misses out on when choosing one alternative over another,” and “the forgone benefit that would have been derived from an option not chosen.” Both of these are apt descriptions of the Lakers’ prioritizing retaining Horton-Tucker over acquiring Lowry, a point driven home acutely by just how far from untouchable THT proved to be for Los Angeles just a year and a half later.
Again, getting Lowry would clearly not have been a magical cure-all for Los Angeles. And in fairness, there were legitimate mitigating concerns about his age (on the cusp of turning 35 just after the 2021 trade deadline) and impending salary (he was on an expiring $30 million contract and in for a big payday after that, which the Heat delivered on in the form of a three-year, $85 million deal). And as many teams can with young, developing players (see: the Nuggets and Emmanuel Mudiay), the Lakers became deeply invested in the concept of THT as their most promising future prospect, a trap that’s easy for execs to fall into when these guys are concretely right in front of their eyes in the gym, while the true value of opportunity cost tends to be much more abstruse.
But in retrospect, including THT in a deal for Lowry would pretty clearly have been the better value play by far. And while hindsight may be 20/20, there was plenty of real-time criticism from many corners in and outside of Los Angeles back then of the Lakers’ failure to pull that trigger – or for that matter, to retain Horton-Tucker rather than Alex Caruso in the ensuing offseason.
The “forgone benefit that would have been derived from an option not chosen,” whether that option had been Lowry or Caruso, was thrown into sharp relief when the Lakers settled the following year for Beverley, who may be a solid NBA role player but is not really close to the same caliber as those other two, in exchange for THT. And even as high as they were on Horton-Tucker’s potential last year, had the Lakers had better recognition of the opportunity cost values of the various options they were weighing, it would seem a near-certainty that in retrospect they would have made different, better choices.
If the Nuggets hadn’t dealt Morris and Barton for Caldwell-Pope and Smith, then what would have been the superior alternatives?
According to Investopedia, “to properly evaluate opportunity costs, the costs and benefits of every option available must be considered and weighed against the others,” and “the formula for calculating an opportunity cost is simply the difference between the expected returns of each option.”
To be sure, the most visible and readily apprehensible criteria for evaluating trades is player-for-player or asset-for-asset value. If Player A is traded for a clearly superior Player B, with all other factors such as salary, contract length, age and injury history being roughly equal, it is probably often fair to say just at face value that the team acquiring Player B “won” the trade by getting the better value out of the deal.
In reality, trades are far more complex than that more often than not, with a multitude of factors, options and potential outcomes muddying the waters of evaluating even straight market value, let alone potential opportunity costs.
And more than their salaries, it’s those tributary factors around Morris and Barton that shaped Denver’s opportunity cost picture. For one thing, the timing for trading both players in terms of the value they’d fetch from other teams was probably as high as it was going to get for the Nuggets. A look at their stats over the last three seasons illuminates part of the reason why.
Will Barton and Monte Morris Stats In Their Last Three Seasons
Will Barton has had his ups and downs over the past several years, in large part due to injury issues, but also on account of inconsistent play (which at least in some cases may have been at least injury-adjacent as well). In the early part of last season, in the wake of Michael Porter Jr. joining Jamal Murray in in the ranks of the injured and having to sit out the season, Barton did a commendable job of helping carry Denver through their first few months. His performance later tapered off, as it has tended to do, but overall it was a bounce-back season following one in which he seriously struggled. Given his age of 31 years and his injury history, his trade value was only likely to decline after this offseason.
Beyond the numbers, there had also just been a recognition for quite some time that, as instrumental as he had been in helping create and foster the growth of the Nuggets from the very beginning of the Nikola Jokic era, that Denver’s path together with him had pretty much run its full course, and then some. Both in getting swept by the Golden State Warriors in the first round of this year’s playoffs, and by the Phoenix Suns in round two in 2021, the need for the Nuggets to make a significant defensive upgrade in their backcourt had become painfully clear. And Jamal Murray was, of course, not going anywhere.
And although Monte Morris is coming off the most productive and efficient season of his career, his trade value was likely to take a hit as well, albeit for very different reasons. In Murray’s absence, he was able to jump into the full-time starting point guard slot, a role expansion that saw his minutes jump from 25.4 to 29.9 and his field goal attempts from 8.2 to 10.3 per game. The impending return of Jamal Murray would have sent Morris back to the bench, with those numbers inevitably declining again. While he hopefully will continue his improving trajectory was Washington’s ostensive starting PG, that opportunity was simply not going to be available to him in Denver. And by extension, his trade value would have likely declined in tandem with his production by the deadline or next offseason.
Also potentially encroaching on Morris’ playing time – not to mention making it less costly in basketball terms for the Nuggets to part ways with their longtime backup point guard – was the rise of Bones Hyland through the course of his rookie year, and his success as backup after taking over the role full time from Facu Campazzo midway through the season. Not only would Morris have had to revert to a bench role, even there his minutes and opportunities would have been scrunched by Denver’s need to keep giving Bones more reps to further his development.
So, operating on the acceptance that both players would basically need to be moved sooner or later, in evaluating the opportunity cost in a bubble of trading Morris and Barton this offseason, or waiting until the February trade deadline or next summer’s free agency period, the clear best option was to get a deal done now, not only to do so before their trade value started slipping, but also to get the roster reset by training camp so they could start the season with the more fully-formed team they’ll be by the next playoffs.
Another aspect of this opportunity cost evaluation, however, comes down to the question of whether they could have gotten a better trade package in return for Morris and Barton. And on this count, it seems highly unlikely that any better offers were out there. While it was leaked that both were on the block, and “significant trade interest” in Monte Morris was reported by the Denver Post’s Mike Singer and confirmed by others, there did not appear to be any concrete reports of Team X offering up a better Player Y than KCP in any trade proposals to Denver. Barton’s market value was essentially neutral, and while Morris’ was positive, it wasn’t of the bowl-you-over, offer-you-can’t-refuse variety.
It’s impossible for those outside the NBA’s front offices to know in any complete or fully-informed way what the opportunity costs of not-made Morris and Barton trades were. After all, while we know 100% of the trades that actually get made, we know only a tiny fraction of the deals executives discussed on the phone that never came to pass. But on the surface of it all, the proof is pretty much in the pudding: Had such a hypothetical better offer been out there available for the Nuggets to take, they surely would have taken it.
As it was, Caldwell-Pope was already a presumed coveted trade target for Denver. If you go back and read a sampling of ten different Nuggets writers’ free agency previews, you will likely find that 100% of them had KCP on their lists. As a clear defensive upgrade with a championship pedigree, one who knows how to fit in alongside star players, can space the floor with his three-point shooting, but doesn’t need the ball to be effective, Caldwell-Pope checks just about every box the Nuggets needed for their starting shooting guard position, and at least on paper is a perfect fit.
And not only that, but because three-and-D wings are the most coveted player type by just about every team in the league these days, the opportunity to acquire one at a price that in certain ways (including emotional) may be painful, but is one that financially and asset-wise the team could afford, is not one to be lightly dismissed. To anyone out there saying the Nuggets “should have gotten better” for giving up Barton and Morris, the first question in reply should be: “Oh, yeah? Who?”
We will never know, of course, what Denver might have gotten in exchange for Morris and Barton had they waited until the deadline or longer. But we do know they got the kind of player they needed. And it seems far more likely than not that had they waited any longer, they would not have been able to get as good a return, with the lesson of the Lakers and Horton-Tucker illuminating the risk of failing to account for the potential negative value of opportunity cost when it is not fully accounted for.
Although just about every NBA franchise has made some genuinely bad deals over the years, the entire framing of one team “winning” and the other “losing” a trade seems misconstrued from the start, when in fact, for both teams it is really more about optimizing their opportunities given the context of their respective situations and the players and assets they have at hand.
The Nuggets may not have “beat” the Wizards in their trade for Caldwell-Pope if it were a contest. But there are many solid reasons to believe that time will eventually reveal that in-house, they effectively won the deal on their own merits in terms of getting the best out of what they had to work with, especially when opportunity cost is factored into the calculus.