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The Trade Deadline and the Sunk Cost Fallacy

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A mistake is not made worse by moving on from it.

Kimani Okearah

The Sacramento Kings spent Thursday’s trade deadline shedding past mistakes. George Hill was signed to the largest per-year contract in Kings history just 7 short months ago, and was traded for cap relief and a 2020 second round pick. Georgios Papagiannis was the 13th overall pick in 2016 and had a $2.4 million option exercised by the Kings a mere 3 months ago. He was waived on Thursday. Malachi Richardson was the 22nd pick in the 2016 draft. He was traded for Bruno Caboclo on Thursday. Caboclo has played 113 total minutes in his 4-year NBA career.

The George Hill signing was widely considered a positive move this past summer. There were concerns about why the Kings would spend so much on a free agent point guard when they had just drafted De’Aaron Fox and Frank Mason. The idea at the time was that Hill was a reliable veteran who could guide the Kings offense until Fox was ready. That plan began to fail almost immediately. Hill struggled to fit in with the Kings, and had a difficult time adapting to being a primary scorer on offense. He eventually bounced back to his career averages, but was never a player who looked like he was worth $20 million a year. The Kings, according to various reports that filtered out over the past few months, were happy with Hill off the court, and Hill was engaged in the Sacramento community. Hill isn’t the type to cause problems in a locker room, but it was never an easy relationship. When we look at his impact for the team and the return he fetched via trade, it’s fair to call the signing a mistake.

From the moment Georgios Papagiannis was drafted it was viewed as a blunder. Mock drafts aren’t always a reliable indicator of a player’s draft value, but most boards had Papa G as a late first rounder at the earliest. Trading the 8th pick to the Phoenix Suns for the 13th pick, the 28th pick, and the rights to Bogdan Bogdanovic could have gone down at Vlade Divac’s greatest move as a GM. Bogdan is a very solid player and part of the team’s future, so the trade can still be considered a win, but it could have been so much better. Getting Skal Labissiere at 28 still seems like decent value, even if Skal’s future with the team has seemed uncertain in the weeks leading up to the deadline. But wasting the 13th pick on Papagiannis was a massive setback.

Similarly, getting a first round pick for Marco Belinelli was a tremendous coup for the Kings. The Kings selected Malachi Richardson with the 22nd pick they acquired from the Charlotte Hornets, and there was a moment when it looked like the Kings had a gem. Malachi was willing to step up and take big shots. A streaky scorer with good athleticism, Richardson had Kings fans excited before an ill-timed injury derailed Malachi. He put in the work, added muscle over the summer, and then promptly failed to receive consistent playing time this season. To see him unloaded so unceremoniously is a disappointment to say the least.

Within this context, yesterday can look like a disaster for the Kings and their fans. But there’s a concept called the Sunk Cost Fallacy that is very relevant here. Ideally, we would make decisions based on the future value of assets. In reality we tend to overvalue assets based on emotional attachments associated with the cost of that asset. We’re not mad the Kings cut Papagiannis. We’re mad they used the 13th pick to get him. We’re not mad that the Kings don’t see Malachi as part of the future. We’re mad the Kings missed with the 22nd pick and that his injuries limited his growth that we had expected to see.

And let’s look at Hill. Let’s accept that the signing was a mistake. Is it better to keep that mistake on the roster? Or is it better to trade him to free up minutes for younger players and create more cap space to take another shot at acquiring a player who might fit? It’s better to acknowledge a mistake and move on rather than continuing to give Hill minutes or pay him to sit on the bench. There’s an argument that maybe the Kings should have held onto him until the summer, but there’s no guarantee there would be any more of a market for Hill in June. He wasn’t in demand last summer, he’s certainly not raising his value by playing sporadically as a backup to De’Aaron Fox, and there’s a big salary crunch coming this summer. There’s no reason to believe Hill would be more marketable this coming summer beyond the idea that we’ve invested in him and we want a better return.

I’m not absolving the Kings of their many past mistakes, but a past mistake shouldn’t be how we evaluate yesterday’s moves. Acknowledging a mistake and moving on doesn’t make the original mistake worse.