Kevin Durant’s Pay Cut Could Ultimately Make Him Richer

Kevin Durant will receive less money in the present, but in the long run, his investment in the Warriors may ultimately leave him richer as well.

One good year does not a lifetime fortune make.  Kevin Durant may seemingly know this, as his cut in pay to stay with the Golden State Warriors might actually be a savvy investment in his future and his team.  His team-first mentality could spark a dynasty — and he could end up with much more lucrative marketing contracts as a result.

The Background

By now, we all know about Durant’s massive pay cut.  What he did goes against how sports and free agency tend to work. And as a result the news garnered plenty of attention.  There was some anger.  Some jealousy.  Above all, most NBA fans, often begrudgingly, admit that it was a team-first act that could only be considered selfless.  

The selflessness is still there, of course, but another element exists to this deal as well.  This pay cut might ultimately work in KD’s financial favor.  It’s already boosted his public image, and it wouldn’t be shocking if, in the long run, it helps his financial future as well.

Personal finance is a marathon, not a race – sorry Raghib Ismail.  Had Durant taken the max or somewhere near it, he would have potentially hamstrung the Warriors and shortened the dynasty’s length — and thus lessened his overall worth.  

Not that Durant is Michael Jordan, but Jordan isn’t making the money he is today were it not for his dynasty, his legacy, and his six championships.  Had he been able to take $40 million a year instead of $30 million, but had lost Scottie Pippen in the process, would the Bulls still win six?  And if not, would the Jordan brand be what it is today?  

This is hypothetical, of course, but arguably, there’s more long-term value in building your brand than there is in chasing max contracts.

The Situation

KD also signed up to play in the Bay Area of all places, home of tech startups, venture capitalists, and foreign investment.  He doesn’t have to care about those things if he doesn’t want to – but a smart man puts his money to work, and most believe KD to be a brighter individual than for him to only see the pay cut as a pay cut.  

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There’s no saying “team” wasn’t still the primary motivating factor in him taking the pay cut, but most also think Durant capable of seeing past the short term loss and towards the long term gain.  

Andre Iguodala serves as a prime example of this sort of thinking.  He’s well known for being a shrewd investor in the tech world, and the business opportunities in the area were likely a key factor in his decision to sign with the Warriors in the first place.  

Durant would be wise to follow Iguodala’s example by keeping a good thing going for as long as possible in a location as prosperous as the Bay Area.

It’s not about the yearly salary and is more about how you invest your money if you’re looking to make it grow long-term.  He’s in the right place with the right team at the right time. In a situation like that, you want to see how long you can keep that going. And if that requires some financial sacrifice for a year or two so be it.  The long term gains would seem worth it.  

The Investment

This all then leads into the final point, which is that marketability matters.  According to Forbes, Durant took in $36 million from endorsement deals last year — more than a max contract is even currently worth. (Forbes NBA Endorsements 2017).   

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James Harden, meanwhile, took in $20 million.  Russell Westbrook took in $15 million.  Some of this endorsement deal discrepancy might be explained away by calling it a difference in perceived skill (and thus perceived worth), especially over the course of a number of years. But the argument can be made that Durant’s greater marketability plays a much larger role in explaining these numbers.  

If Durant can lead the Warriors to another championship (or two, or three), how much more does that boost his basic brand value?  How much more does that boost the value of his likeness?  How much more does that bring him into contact with gleeful tech CEO’s interested in helping the guy who helped the Bay Area to a dynasty?  

Durant might seem to understand that it’s about the long run, not the short sprint. And it wouldn’t be shocking if this butterfly effect of sorts sees him far richer in 30 years than he would have been had he taken his full worth in yearly contract.  

This is all theoretical, of course, all based on unknown future outcomes, but Durant is owed more credit than to think that he doesn’t see the real world value of his team-first mentality.  There’s selflessness there, sure, but there’s also a shrewd investment in his own future at play as well.  

If all goes according to plan he’s a Peyton Manning, a Michael Jordan, a Roger Staubach – which would be much better than being an Allen Iverson with max contracts and nothing left in the bank. 

By taking the pay cut now, there’s more than just millions in salary given away here – there’s an investment in his own brand’s future.