In a fit of generosity or desperation, depending on how one looks at it, the Orlando Magic re-signed point guard Jameer Nelson to a three year, $25 million contract (via Alex Kennedy at Hoopsworld.com). The last year of that contract is only partially guaranteed.
This NBA free-agent market has seen a rash of inflated multi-year contracts. This particular contract is no exception, and it may be amongst the most overvalued of this summer's signings.
Nelson, at best, is an average NBA point guard. Over the last three seasons he's averaged 12.5 points and 5.6 assists in about 30 minutes a night. He's not a particularly active defender, averaging less than a steal a game.
The NBA point guard position is experiencing an influx of young players who have outstanding court vision and athleticism. Nelson, who is already 30-years-old, is well behind the curve.
Just why the Magic paid Nelson $8 million a year when a point guard of similar quality, Raymond Felton, signed with the Knicks for only $3 million a year is a difficult question to answer.
The best justification is that Nelson and Orlando's franchise center, Dwight Howard, have a longstanding relationship. Nelson and Howard have played together for the vast majority of Howard's career, and the preservation of team chemistry between these two friends may keep Howard happy next season.
It's also noteworthy that the last year of Nelson's contract is only partially guaranteed. Most likely, that means that it is incentive based—a stipulation which will hopefully push Nelson to perform at a higher level than over the last three years.
In any event, the Magic still made a mistake in signing Nelson at $8 million a year. If they had offered him an annual rate of $6 million instead, would any other team have been willing to match that offer?