(Photo: John Geliebter – USA TODAY Sports)
This summer, members of the NBA’s 2013 draft class will become eligible to sign an extension with their current clubs. Some may be tempted to lock in the security of a multi-year deal, much like Charlotte’s Michael Kidd-Gilchrist, Toronto’s Terrence Ross and Milwaukee’s John Henson did this past year.
Unless they’re set to receive a max contract, however, they should instead opt to become restricted free agents the following offseason.
The reasoning is simple: The impending influx of revenue from the league’s nine-year, $24 billion television contract is going to wildly distort free-agent values in the near future. When the cap shoots up from $70 million to roughly $89 million this July, teams will find themselves getting into unprecedented bidding wars. The demand for top-tier free agents will far outpace the supply, leaving those jilted by Kevin Durant, Mike Conley and Al Horford with gobs of money to burn on the next-best thing.
No offense to Harrison Barnes, who is a fine player in his own right, but does anyone think he’s worthy of a $20-plus million annual salary at this moment in time? He’s currently averaging 12.1 points, 4.5 rebounds and 1.9 assists per night for a historically dominant Golden State Warriors team, but he’s no better than the fourth-best player in their starting five. He has yet to ever record even a league-average player efficiency rating—he’s at a career-high 14.0 this season—and doesn’t appear to be elite at any one thing in particular.
None of those things are likely to deter prospective suitors, however. Barnes turned down a four-year, $64 million extension offer from the Warriors this past fall, per Yahoo Sports’ Adrian Wojnarowski, partly in recognition of how the impending cap boom will work in his favor. Because so many teams will be swimming in cap space and jostling for high-profile additions on the free-agent market, second-tier players such as Barnes will still wind up commanding top dollar.
The Warriors forward is just one of many examples of how distorted free-agent values are about to become. Recently, ESPN.com’s Zach Lowe conducted an “informal poll of a dozen front-office executives” regarding how much they expected Atlanta forward Kent Bazemore to command on the free-agent market. Responses varied from “the mid-level exception, to $12 million, to ‘who the hell even knows?'” according to Lowe.
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Considering Bazemore signed a two-year, $4 million deal with Atlanta in the summer of 2014, the thought of him commanding even a high-eight-figure annual salary speaks to just how wild this summer is going to be. Once those gonzo deals start flowing in, agents representing 2013 draftees will suddenly have unlimited ammunition in their extension negotiations. “If Bazemore made X and produced Y, then my client should receive Z at the bare minimum.”
The calculus is different for those in line to receive max-contract extensions. Since those deals are bound to a percentage of the salary cap rather than a fixed dollar amount, there’s no harm in agreeing now instead of waiting it out until restricted free agency. (Both Anthony Davis and Damian Lillard went this route last July.) The contract amount could still vary slightly depending on eligibility for the “Rose Rule”—Lillard and Davis each stand to make upwards of an additional $20 million over their five-year deals if either earns an All-NBA nod this year—but at a bare minimum, those deals will begin at roughly 25 percent of the 2017-18 cap.
Speaking of which: The cap boom isn’t just limited to this coming summer. The NBA estimates the cap will once again soar the following offseason, going from $89 million to an eye-popping $108 million. Much like this free-agent class will reset the concept of player values—a $5 million player last year could be worth $10-plus million this time around—the 2017-18 cap jump will only further that revaluation.
The 2017 free-agent class should be more star-studded than this summer’s group—Stephen Curry, Russell Westbrook, Blake Griffin and Serge Ibaka will be the headliners—and that’s not to mention the prospect of Kevin Durant taking a one-and-one deal this summer to maximize his earnings in 2017. Even so, demand will still outweigh supply on the market, as each team will once again receive an infusion of roughly $20 million in cap space to spend however it sees fit. Once the big fish get gobbled up, the 2013 draftees will stand to benefit from a bidding war in restricted free agency.
Teams, meanwhile, have little reason to sign their 2013 draftees to extensions unless said players agree to below-market deals. (MKG, for instance.) If a team agrees to an extension with a fourth-year player by the Oct. 31 deadline, the terms of that new deal immediately go on its books once the new league year begins July 1. If it waits until restricted free agency to re-sign said player, the cap hold is significantly smaller.
San Antonio exploited this loophole to perfection in recent years, eschewing an extension for Kawhi Leonard—who was fresh off winning the 2014 Finals MVP award—to free up additional cap space in the summer of 2015. The Spurs took advantage of that extra space to sign LaMarcus Aldridge to a four-year max deal before using their Bird rights on Leonard to exceed the cap and hand him a five-year max. Had Leonard been unhappy with that tactic, he could have opted to take San Antonio’s one-year qualifying offer, ensuring he’d become an unrestricted free agent this coming summer, but… c’mon. Who’s leaving a five-year max from the Spurs on the table?
The Washington Wizards and Detroit Pistons are likewise attempting this tactic with Bradley Beal and Andre Drummond, respectively. Beal’s continued issues with stress reactions in his right leg could give both the Wizards and other prospective free-agent suitors pause, as Chris Mannix of The Vertical reported, but again, demand will outweigh supply on the free-agent market. Even if he doesn’t receive a full max offer, it would be shocking to see him sign less than a four-year, $70-plus million deal. Detroit, meanwhile, has experienced firsthand the threat of a restricted free agent accepting a qualifying offer, as Greg Monroe pulled that very move in 2014 before fleeing to Milwaukee one year later as an unrestricted free agent. Drummond, however, appears to be on board with the tabled extension, as he’s well aware the team considers him a franchise cornerstone and a max-caliber player.
So, while rising fourth-year players are incentivized to sign extensions only if they’re max deals, the exact opposite is true for teams. Those who convince a 2013 draftee to take a non-max deal will almost assuredly be getting a bargain, just by virtue of how preposterous the 2017 free-agent market could become. (Even with his shoulder injury, Kidd-Gilchrist couldn’t receive more than $13 million annually this summer? Really? Fire your agent, MKG.)
Both sides do have one further complicating factor to keep in mind: the prospect of a new collective bargaining agreement coming into effect following the 2016-17 season. The league and the players’ union have already begun collective-bargaining negotiations in an attempt to prevent an acrimonious lockout like the one that led to the cancellation of 16 games in 2011.
That’s an undeniable positive. However, who knows what changes both sides will agree upon in the new CBA, or how radically certain free-agent rules will be altered? Perhaps teams will receive even more advantages in terms of retaining their own players (by virtue of offering higher annual raises). Maybe non-incumbent teams will be allowed to offer five-year deals instead of the four-year ones they’re restricted to now. What if the two sides agree upon a formula to “smooth” the cap rise, thus preventing it from reaching $108 million in the 2017-18 league year?
Even if the new CBA does smooth out the cap boom, the 2017-18 cap will almost assuredly be higher than the one this coming July. Additionally, the players’ union won’t willingly accept changes to contract rules that significantly limit their earning power, so 2013 draftees have little to fear in that regard. Though the prospect of a new CBA does cast additional uncertainty over the decision of whether to ink an extension now—thus locking in a guaranteed four- or five-year rate—those who opt to test restricted free agency aren’t likely to regret it.
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