Andrew Nembhard Contract Strategy

There’s a known bias in human thinking called “anchoring bias”. Effectively, people aren’t generally great with numbers, so when they’re trying to figure out what the right amount for a given answer is, they’ll often start from a number, called the “anchor”, and try to adjust it from there. Anchoring bias exists in that people typically don’t adjust far enough from their anchored value, and end up overpaying (or underselling) for something they might not really want all that much. This is made even more exaggerated because retailers have figured out a bunch of tricks that allow them to create the anchor for their buyers. Think about the case where a jacket costs $250. If the price tag said $250, you wouldn’t have bought it. But when you see that the jacket is $500, but on sale for $250, you think “what a great deal” and maybe you buy the jacket. That $500 was your anchor, and so you made your personal value of the anchor 

But anchoring is not in itself bad – the notion of using an anchor that you then adjust forms the core of an entire branch of statistics and probability called Bayesian analysis. An anchor can allow you to find the ideal contract much more quickly because it gives you a starting point. The trick is just that in the process, you have to absolutely make sure that you’re adjusting properly along the way and not letting the anchor get in the way of finding an actually good option.

In Andrew Nembhard’s case, the Pacers have presented an anchor for his next contract. They have offered, as we understand it, an extension for 1 year, $30 million for the 2028-29 season following the expiration of his current deal in the 2028 offseason.

This deal is not one that Nembhard should accept, but it will inform how to proceed with negotiations. In this write-up, we’re going to walk through the reasoning behind the Pacer’s offer, and how Andrew Nembhard should respond with that in mind.

Why are the Pacers offering this contract now?

With any contract, there’s never a single reason why it’s offered in the way it is. The NBA ecosystem is large and constantly evolving. At the same time, this contract has three clear reasons that it is exactly what it is.

First, the Pacers are anticipating a bounce back season. Last season, with Tyrese Haliburton injured, the Pacers did not push their guys in the same way they might have in a healthy season. No player started more than 62 games, Jay Huff was the only player to play in all 82, and all 27 players that logged games for them (which is already a feat in itself) played at least 10 minutes per game in the games they did play. Midseason acquisition Ivica Zubac only played 5 games. This season, everyone should be healthy, and roster decisions like waiving Micah Potter to sign veteran Larry Nance Jr. are being made specifically in anticipation of making a serious playoff run.

In a perfect world, a bounce back year wouldn’t impact Nembhard’s contract value. But this is not a perfect world, so there’s a pretty good chance that it does. NBA teams have become progressively more and more wary of volume statistics put up on teams that win very few games. Mind you, had they actually just properly scouted Nembhard it would’ve been clear that he was in fact everything the volume stats said and more, but NBA teams rarely do their jobs that fully.

As a result, a bounce back year could very quickly take Andrew Nembhard from the $30 million a year range to closer to $35 million a year. It’s hard to project exact peers this far out (currently no players are set to make between $35 and $38 million in 2028-29), but moving up that $5 million would move Nembhard past players like James Harden, Walker Kessler, Immanuel Quickley, and Jarrett Allen, all of whom Nembhard has a sizeable claim to being better than.

Mind you, that bounce back year target is not without risk. Even if Nembhard improves, if the Pacers struggle because Haliburton’s injury takes time to work itself back into basketball shape or because it takes time to acclimate Ivica Zubac into the Pacers’ unique, frenetic system, that could hurt Nembhard’s average annual value if not properly addressed by his agency. We Nerds can do a lot to mitigate that risk by maintaining constant contact with the team to remind them how valuable Nembhard is, but nothing we do can prevent the team from deciding to move on from core pieces and rebuild. Thankfully, the Pacers (particularly at Herb Simon’s directive) have been the most reticent team in the league to attempt longer rebuilds, which makes that less of a risk, but even so it is something that we have to be aware of.

But also, the Pacers did not select that $30 million out of thin air. Extensions are capped by, at maximum, 140% of the player’s prior salary. In Andrew Nembhard’s case, that is $29,397,648, which is almost assuredly the exact amount being offered at this time.

The second reason this deal is being offered right now is the term. The Pacers are very specifically selecting to offer an extension for one year. The reason they probably had in mind is that it synchronizes Nembhard’s deal with Haliburton’s in a way that means they won’t have to focus on retaining everyone in the core of this team. They’ve probably offered similar one year extensions to Pascal Siakam and Ivica Zubac to create a similar alignment in timeline.

But there’s also a sneaky undercurrent to why the Pacers might be offering a one year now, and that’s that it creates time pressure on Nembhard. In the current NBA market, where the substantial majority of large deals are negotiated as extensions, every player has to be aware of when they become extension eligible. In Nembhard’s case, if he accepts an extension, he becomes extension eligible two years from the day that he signs that extension – this would make him eligible for yet another extension just before he starts playing the 2028-29 on the new extension. However, because Nembhard has multiple years remaining on his deal, if he chooses right now, in 2026, to delay the decision on an extension into the regular season, then he is no longer able to sign a new extension until the end of the 2026-27 regular season. If he does that, then his new extension eligibility window starts in summer 2029, and at that point negotiations are much more limited because the impending free agency a few weeks later looks just as good. As a result, by offering just a one year deal, the Pacers create time pressure on Andrew Nembhard to accept now rather than delaying.

The third reason this deal is offered right now is risk mitigation. Free agency, to put it politely, sucks for everyone involved. This fact was previously applied somewhat unequally – players could enjoy free agency with multiple suitors, where teams had to sweat out the possibility of making their best offer and watching their talent walk. However, extension rules have reshaped the market there – players can now receive 140% of their last season’s salary (up from 107.5% in the 2011 CBA and 120% in the 2017 CBA) in an extension, and as a result substantially more players are extending. It turns out that when players extend, that eats into the available cap space for free agents, and so it’s common to go into an offseason with only five or six teams with any cap space at all, much less enough to be meaningful threats to talents at Nembhard’s scale. As a result, players risk running into a dead market in free agency and getting the short end of the stick.

However, that doesn’t mean teams like free agency either. All it takes is one team willing to play ball in free agency and all of a sudden the Pacers’ carefully built potential championship core is broken up. This is exacerbated even further for the Pacers, who have generally had a philosophical stance of trying to better the league as a whole and play fair, even when negotiating leverage is strong. As a result, they tend to be favorable partners in sign-and-trades, should things get to that point, and that means that getting to free agency is more likely to cost them their best players than it is .

What the Pacers then want to do, and are offering this extension to do, is reduce the risk of going to free agency. This is a good thing – Andrew Nembhard doesn’t particularly want that risk either – but it does mean that they do have to actually put in a large enough investment to properly reduce the risk on both sides.

What should Andrew Nembhard do?

With the three reasons that the contract is being offered at the current point in time in mind, we can also look at how Andrew Nembhard can act in response to the Pacers’ reasons in order to get the best contract he can.

The short version is that Andrew Nembhard should decline the 1 year, $30 million offer, but should possibly be open to longer extensions starting at that number. He should also keep in mind that a longer contract has less incentive to be signed immediately (on either side), and therefore that may take a longer period of time to actually sign it.

The amount in year one for this contract is pretty much set in stone. As discussed before, the most that a player is allowed to receive in an extension’s first year is 140% of their prior salary. In Andrew Nembhard’s case, this is $29,397,648. The Pacers factually cannot move up from there, so any agent trying to claim they can guarantee more than that is one of lying, uninformed about the situation, or recommending that Nembhard face the risk of free agency. Or possibly some combination of the three. The only acceptable case is the third one, and for that, Nembhard should make absolutely certain that his representation is properly accounting for the risk.

What is not set in stone is the length of the extension contract. One year, rather obviously, is the shortest possible extension – the NBA will not let you extend for a half season (and no one would ever actually want to do that). While the Pacers may have a preference for lining up Nembhard’s expiration with Haliburton’s, that preference probably doesn’t really matter too much to Andrew Nembhard, who should want, at minimum, a player option for a second season. Nembhard should be getting multiple years here, so as to secure generational wealth across his NBA career, and he shouldn’t let the Pacers’ desire to organize their contracts a little more cleanly stop him from getting what he merits.

Further, the Pacers’ desire to make this a one year deal leaves Nembhard with a fair bit of risk, so if both sides want to sign this deal in order to mitigate the risks of free agency and everything that could happen between now and then, it makes no sense that the Pacers are getting, via a short deal, the lion’s share of the risk mitigation. Extra years reduce the risk that Nembhard and the Pacers both face, and shortening the deal like this only reduces the risks to the Pacers.

However, once the subject of multiple years is broached, the Pacers may back off of extension talks. We expect that that will be the case, because then the distance between extension eligibility (two years after the extension is signed) and the end of the contract (currently summer 2029, but could be summer 2030 or 2031) becomes larger, thus reducing the pressure they’re currently trying to create in order to get a deal done now. This is perfectly okay, and to be expected – we believe they’re likely to come back with a better (longer) offer once the possibility of time pressure appears again.

But the thing is, Nembhard should be perfectly happy to delay the negotiations. Typically, when statisticians model value, they assume that it’s symmetric. The probability that Nembhard’s value increases by some amount because of success next season is exactly equal to the probability that it decreases by that same amount because he struggles next season. Except symmetric changes in value do not equate to symmetric changes in contracts. If Nembhard’s value goes up a little because he plays well next season, then his leverage to threaten free agency goes up, and he can get additional money when he does. If Nembhard’s value goes down a little, then the Pacers are still likely to offer that maximum extension in year one, because it’s still less than Nembhard’s actual value – it’s just the max they can offer. As a result, since playing well helps him, but playing poorly doesn’t really hurt him too much, Nembhard likely gains more from the extra information of the new season, on average, than he loses. As a result, if the Pacers see that he wants a longer deal and choose to delay, he comes out ahead.

Now, that doesn’t mean that delaying the contract is without risk – it’s always possible that the Pacers are truly only interested in that one year extension and that’s all they’re ever going to offer. It’s also possible that things go so badly – injuries do exist and do unfortunately have to be calculated in to any proper risk analysis – that the risks become symmetric again. It would be perfectly legitimate for Nembhard to elect to take the deal and guarantee that he receives the largest amount he can for that year, because $30 million is a lot of money. But we suspect that given the willingness to offer the maximum amount that the Pacers have shown, the risk here is relatively low, and it’s worthwhile for Nembhard and his representation to negotiate a little more firmly and aim for extra years and even more security.

With that in mind, we would recommend the following pathway for the current moment: 

Nembhard will have to make a decision on the potential counteroffer – he doesn’t have incentive to take less than that, but with a contract length of two years, there is at least enough positive reason to take a maximum extension to make it worth thinking about in a way that the current offer cannot claim. With that, we would need to have a better feel for Andrew Nembhard as a person to provide a more precise recommendation, because we don’t know him well enough right now to know what his tolerance for risk is or how much he’s willing to bet on himself.

If Nembhard doesn’t want to take the counteroffer, or if the Pacers never make it in the first place, he’ll have to be prepared to wait until next offseason, when the Pacers will have the option to make another extension offer. If that’s the case, they no longer have the same justification with extension timing creating time pressure, so they should be more open to offering something longer in the 2027 offseason, which should achieve the contract goals he is looking for. In the meantime, he’ll have to play a season of basketball, and during that season, nothing can be done on an extension, so he should put all contract talk out of his mind and go play.  Ultimately, Nembhard’s job is to play basketball, and he should be able to trust us to go out and execute his wishes off the court so that he can focus on what happens on the court.

And that’s really what’s at the crux of all of this – we can strategize all we want, but at the end of the day, we’re here to get Andrew Nembhard what he wants and to make his life easier.  We have a lot of specific knowledge, but the most important knowledge is knowledge we don’t have yet – who Andrew Nembhard is as a person, what his goals are, and how much he’s willing to bet on himself, both for good and for bad.  That only comes from a long time relationship with him as agent and player, and it takes time to build that up.  We’re excited to begin building that relationship, so that we can turn what he wants into something a concrete strategy plan for how we’re going to interact with the Pacers at every level and give him the best shot at his best extension.