James Harden turning down the Houston Rockets’ $103 million extension was the smart financial decision and shows why the Rockets can’t keep him.
The Houston Rockets were rebuffed by James Harden in their contract extension talks. The former MVP was offered a two-year $103 million extension to be tacked on to the $132.9 million over three years remaining on his current contract.
The rejected extension would have made Harden the NBA’s first $50 million per-season earner and has left the NBA media flabbergasted. The truth is, James Harden made the right decision to turn down the extension and the Rockets simply tried to play a public relations game.
Harden has been adamant that he wants to be traded to the Brooklyn Nets but that is not the reason why he turned down the Rockets’ offer. Harden turned down the additional $103 million because of how much money he would be giving up.
The NBA “supermax” rule allows for teams to sign or extend an All-NBA, Defensive Player of the Year, and/or MVP player drafted or traded for, while still on their rookie deal, to a contract up to five years and worth 30-percent to 35-percent of the salary cap with an 8-percent escalation each year. Once a supermax contract is signed the team cannot trade the player for a full year.
Why James Harden rejected the Houston Rockets’ huge offer
There are two key factors as to why Harden should have rejected the Rockets extension offer and it’s the exact reason why having a good agent is so important. Before former Rockets and current Philadelphia 76ers general manager Daryl Morey’s infamous tweet in support of the Hong Kong protests and the ensuing coronavirus pandemic, the NBA was projecting the salary cap for 2020-2021 to be around $115 million.
As the financial implications of both events became more evident, the league’s loss of revenue dropped the salary cap down to $109.1 million for the 2020-21 season. Supermax contracts are tied to the salary cap and James Harden would have signed it right as the cap has stagnated.
Even if Harden was dead set on staying in Houston, he would want to wait for the NBA’s finances to get back to normal and for the cap to continue its steady growth before signing an extension. The other factor is that supermax contracts, even when an extension, can only make the deal last up to five years.
Harden’s current contract has two more years left before a player option. If he signed the supermax extension that the Rockets offered him his player option would disappear and he wouldn’t be a free agent again until after the 2024-25 season.
If Harden stayed in Houston for two more seasons and then opted out of his contract he could sign a new five-year supermax contract when revenues normalize that could see him make close to $60 million a year and would cover his age 33 to 37 seasons. In essence, Harden gave up a guaranteed $149 million from 2022-23 to 2024-25 to potentially make $300 million from 2022-23 to 2026-27.
The Houston Rockets extension offer is simply a public relations sham. The organization knows Harden wants out and by offering him a low-ball extension–all things considered–that looks to be a massive amount of money at first glance, their hope is that the fans won’t blame them for Harden’s departure.
James Harden has made it clear that he wants to win a championship and he thinks he can do that with the Nets. If he signed the extension the Rockets offered him he cannot be traded for a year and he will have wasted one of his prime years uplifting a diminished roster.
James Harden made the smart financial and career move by turning down the Rockets’ contract extension and the Rockets made a thinly veiled attempt to turn their fans against Harden in the event that he leaves. The Rockets know exactly how to keep Harden in Houston and it all starts with the players surrounding him.