It’s a brand new era in the NBA with the financial landscape of team and player salaries on pace to reach unprecedented heights. Not since Michael Jordan ushered in the partnership of player to athletic sponsorship has a growth been this dramatic. The renegotiated television contracts will commence in approximately 9 months time and their immediate effect began this summer with a leap in salary cap to approximately $70 million. Next season those numbers will climb to approximately $90 and surge the following season to north of $108 million. To put into perspective the massive change consider that over the next 3 years team’s salary caps will increase by approximately 58.5%.
This summer’s free agency period introduced the first phase of escalating salaries coming down the pipe as mid range players began receiving contracts previously earmarked for franchise stars. The next phase which will witness the effects of these salary fluctuations is players entering their rookie contract extensions.
Navigating the world of contract extensions and salary cap can prove to be daunting even for the most avid NBA fan (or blogger for that matter). To that end, I’ve outlined some key areas to broaden our knowledge.
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Who is eligible for early contract extension?
Contracted Players drafted in the first round of the 2012 draft are eligible for early contract extension as well as players drafted in prior years who remained overseas and began their NBA career in the 2012-13 season.
For example the Houston Rockets have two players who are eligible this season, but were drafted in different years: Terrence Jones was drafted in 2012 and Donatas Motiejunas in 2011. Motiejunas remained overseas playing in Poland for Asseco Prokam and entered the league the same year as Jones. Since both were selected in the first round and began their careers in the 2012-13 season they both are entering their fourth season this year.
Each initial rookie contract term is 4-years and as per the Collective Bargaining Agreement teams hold player options in the third and fourth seasons.
What variables exist in rookie contracts?
- Depending on where a rookie is drafted determines their ceiling, therefore of the 30 first round draft picks the highest contract would go to the top pick and the lowest to the 30th pick.
- Rookie are paid on a sliding scale with a low of 80% and high of 120% (though most teams extend the 120% offer). With each year contracts increase to meet the new percentage.
When can early extensions be signed, for what term and with whom?
Players can only sign early extensions with their existing team on a term ranging from one to five years beginning the same day free agency launches (July 1st) with a deadline of November 2nd this year only since the usual date of October 31st falls on a Saturday.
What this means for Jones and Motiejunas:
Noting the last point this highlights the timing is drawing extremely close for when the Rockets will either make offers to both or just one of Jones or Motiejunas.
The player isn’t obligated to accept the offer as was the case last season for 4 of the better players from the 2011 draft class. Kawhi Leonard, Jimmy Butler, Greg Monroe and Tristan Thompson all turned down offers their clubs extended, though it could be argued each of those players had varying reasons for why they did.
- In Kawhi Leonard‘s case it is likely the Spurs worked in concert with him to wait to sign a contract knowing they would be aggressively pursuing LaMarcus Aldridge and they would want the flexibility in their cap space.
- Jimmy Butler was banking on a productive season which would merit a max contract from the historically stingy Bulls and his gamble paid off.
- Greg Monroe was likely never going to re-sign with the Pistons given he never meshed well playing alongside Andre Drummond and coach Stan Van Gundy didn’t hide his preference for building the team around Drummond over Monroe. The irony is SVG likely expected his big man to jump at his offer as they’ve publicly cited him as the “star” of the Pistons, but in somewhat of a shocking move Drummond has elected not to sign, opting instead to test the waters next summer.
- And in the case of Tristan Thompson he banked on his ability feeling the Cavaliers offer was too low and probably more than any of the other listed players felt his team was low balling him. His gamble paid off when both Anderson Varejao went out during the regular season with the Achilles injury, Kevin Love got injured in the first round of the playoffs and Timofey Mozgov while useful wasn’t capable of providing the sheer rebounding prowess and defense Thompson brought to the playoffs. After a long stand off between the Cavaliers and Thompson his gamble paid off handsomely as the Canadian signed a reported 5 year $82 million dollar deal on Wednesday.
These four players demonstrated what the first taste of enhanced cap space would bring to bear and established the guidelines moving forward.
This summer Free Agency established the new standard for players of all ranges such as a capable center without defensive ability: Enes Kanter receiving $70M over 4 years, a solid 2-way wing: Jimmy Butler $95M over 5 years and an athletic front court player with a questionable offensive ceiling: DeAndre Jordan $88M over 4 years. Sift through the long list of free agents recently signed and you can pinpoint the range each established player of a certain ilk can expect in this new world.
The problem for the draft class of 2012 is just as a bar appeared to be set by the list above and via free agency this summer it will once again likely be shifted as the new T.V. contracts continue to escalate the cap. In addition the 4 players noted above were in a unique position because they all established their ability to produce prior to last season and built upon that. Whereas most third year players are only beginning to showcase what they’ve learned and how high their potential ceiling is. Factor in playing time, new roles based on reformulated rosters or in the case of both Jones and Motiejunas injuries and it makes the contract negotiating process all the more puzzling.
Looking back I’m all too familiar why the rookie extension rule was adopted given Tracy McGrady was the main reason the rule was changed in the first place. McGrady left Toronto after his third season with the Raptors who received nothing in return and they had no right to match the offer Orlando made. At least now the team who drafts you has your rights and the option to match offers made by an opposing team to retain their talent.
Trying to guess what Morey will do and how Jones and Motiejunas will respond is truly a crap shoot:
Analyzing the 2 players:
- Both players roster role is primarily at the power forward position
- Both can also play center
- Both have demonstrated motors and a commitment to improve yearly
- Jones is a better rebounder
- Motiejunas is a better ball distributor
- Motiejunas can stretch the floor given his 3 point capability
- Jones is a better defender
- Jones is a better blocker
- Motiejunas tends to fit Houston’s offensive scheme better
- Jones tends to fit Houston’s defensive scheme better
- Motiejunas is returning from back surgery which holds it’s own special set of concerns
- Jones is constantly suffering “strange but true” injuries
Ultimately if Morey offers either big man a max contract he won’t be able to offer it to the other player and even then can he afford to offer a max contract to either player with a view to aggressively pursuing Kevin Durant this off season. And if he doesn’t commit to at least one of the players does he risk losing both as well as Durant who is by no means a lock to even entertain a bid from Houston.
From the class of 2012:
With 11 days until the November 2nd deadline the following list details the contract extension status of the majority of the active and producing members of the 2012 class. Though there is likely to be many contracts signed prior to the deadline there are also sure to be some hold outs who hope to emulate what Butler and Thompson did this season.
- The heir apparent Anthony Davis was obviously locked in first with a max 5 years at $145 million
- The other franchise star from this draft class Damian Lillard also got his max of 5 years at $125 million
- Equally important if not a franchise star was the player who got drafted with the 35th pick of the second round by Golden State. It’s not that surprising Draymond Green was locked down by the Warriors to a 5-year $85 million contract after last season. Moreover the list of benefits Green brings to the Warriors is extensive, he was the key to their top ranked defense, is the vocal leader of the team and can fill all areas of a stat sheet on either end of the court. Conversely it’s a good thing it wasn’t Klay Thompson renegotiating his extension after his disappearance in the finals.
- The shock out of Golden State was Harrison Barnes rejecting a 4-year $64 million offer from the Warriors giving many pundits reason to scratch their heads in wonder. Festus Ezeli is also from this draft class and hopes to get a deal done by the deadline.
- The Raptors locked in Jonas Valanciunas to a 4-year $64 million extension demonstrating belief he is their center for the future. The other player still in the mix is Terrence Ross who had an abysmal season last year and is set to come off the bench this season. GM Masai Ujiri has been in talks with Ross’ agent, but don’t expect any big numbers to be forthcoming as Ross will need to prove he can return to defending and mix in a drive with his 3-point shot. Off season ankle surgery may help the cause, but my guess is he’ll be a player who doesn’t get signed by the deadline as Toronto lets him decide his own future based on production.
- Andre Drummond turned down his offer electing to feel out free agency. This decision is very curious and may come back to bite him especially if he doesn’t showcase improvement from the free throw line, shooting outside the paint or on the defensive end via his lateral movement versus quick front courts. Another season of missed playoffs and the continued movement to more agile centers might mean Drummond won’t have a choice regardless and this decision may make Van Gundy rethink his original goal of building around the big man.
- Washington has made an offer to Bradley Beal who hasn’t signed because he wants the max and the Wizards want to keep cap room available for a certain home town player entering free agency this summer. Certainly Beal has proven his worth, yet he is injury prone and he hasn’t been able to affect the Wizards winning to the same degree his back court partner John Wall does. That alone might not merit a max contract especially if Otto Porter builds upon his post season and again if Washington intend to go all in for Durant.
- Charlotte locked up Michael Kidd Gilchrist to a 4-year $52 million contract
- Kyle Singler signed a 4-year $25 million contract with the Thunder
- Oklahoma City and Dion Waiters are in discussion but it’s looking like he may wait until the summer to resolve his future
- Portland has plenty of cap space which has many thinking Meyers Leonard will come to terms prior to the deadline at a reasonable price.
- John Henson agreed to a 4-year $44 (or $45 depending on whether you believe yahoo or ESPN news sources) million extension with the Bucks adding yet another extremely lanky player to their future core. Though the Buck who truly benefited by the new cap space was the 39th pick of the second round Khris Middleton who signed a 5-year $70 million contract after his extremely productive third season in Milwaukee.
- Tyler Zeller wants to sign by the deadline and confirmed his agent is actively in talks with Boston to get the deal done. The other Celtic who could get an extension is Jared Sullinger who arrived in camp trimmed down giving fodder to the thought he’ll be one of those players who improves in a contract year. Boston already inked Jae Crowder to a 5-year $35 million deal following his yeoman efforts in the playoffs.
- The Magic have 2 players selected in the first round of the 2012 draft Evan Fournier and Andrew Nicholson. Neither has been made an offer and Nicholson is unlikely to receive one.
As for Jones and Motiejunas GM Daryl Morey has until November 2nd to sign extension offers, so the clock is ticking with just eleven days remaining to get these deals done. While the message through training camp and preseason has been Pursuit of a title this season, the outcome of these extension negotiations will be the first insight the fan base gets on what direction Morey and the Rockets plan to take beyond this season.
As we close in on opening day of the 2015-16 regular season make sure you catch up on our Player Profile Series and our Round Table Sessions prepping you for the October 28th tip-off and as always stay with Space City Scoop for all things Houston Rockets.
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