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NBA PM: The Problems with Restricted Free Agency

Despite the logic behind restricted free agency, there are a lot issues that hurt both players and teams.

Jesse Blancarte

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The issue of player movement is under the microscope after Kevin Durant decided to leave the Oklahoma City Thunder to join the Golden State Warriors this month. The NBA has a number of rules and restrictions in place that are designed to help teams retain their players while still allowing individuals the flexibility to periodically switch teams if they so choose.

The most problematic portion of this system of rules and regulations is restricted free agency. Players become restricted free agents in limited circumstances, most often after the fourth year of rookie-scale contracts for first-round draft picks. If a team extends a qualifying offer, it can then match any offer sheet that player signs. This system is of course designed to help teams retain their key players, but there are some negative consequences for both the teams and the players.

First, any restricted free agent who isn’t a star or budding star will likely face an artificially dry market. This is the case since teams that otherwise would be interested in a particular restricted free agent often know that the player’s original team will very likely match any semi-reasonable offer sheet. Aside from completely overpaying a restricted free agent, there aren’t many effective ways to structure an offer sheet to deter the original team from matching.

Another reason why teams shy away from chasing restricted free agents is because it will likely limit their ability to pursue desirable unrestricted free agents. Teams are allowed to contact and negotiate deals with free agents starting on July 1. However, players are not allowed to actually sign a contract until the end of the moratorium, which lasted from July 1 until July 7 this year.*

*The moratorium was supposed to last until July 11 this year, but was changed after last offseason’s incident with DeAndre Jordan and the Dallas Mavericks.

Furthermore, once an offer sheet has been signed, the original team has three days to match it. This means that if a team set aside $20 million for a restricted free agent this offseason, that money would be tied up until July 9 once the original team matches or opts not to. In the meantime, other players will be flying off the free agency board as other teams rush to make deals before the free agency pool dries up. This is a huge risk for teams, especially when you consider how often restricted free agent offer sheets are matched. And even if a team chooses not to match, the primary reason is likely that the offer sheet is unreasonably high and exceeds the player’s estimated worth at that point in time. There are some circumstances where teams are comfortable severely overpaying a restricted free agent, but in general it’s still a problematic means of adding talent.

This creates problems for the restricted free agents as well. The obvious result of this system is that unrestricted free agents will almost always be pursued first. This means that by the time teams collectively set their sights on the bulk of the restricted free agents, the majority of the teams’ spending power may be used up. This may not be a major issue for star-caliber players, who will ultimately receive a sizable contract, but it is for the average role player.

This often leaves players in a tough position. The player must determine if he should accept whatever offer his original team has put on the table, continue waiting for another team to step with a big offer sheet, accept the original team’s qualifying offer to become an unrestricted free agent the following offseason or perhaps even hold out for a bigger deal, as Tristan Thompson almost did when he was a restricted free agent last summer in negotiations with the Cleveland Cavaliers.

We saw a rare example of a player taking the qualifying offer in 2014 when Greg Monroe did so with the Detroit Pistons. Monroe opted to earn $5.5 million that season, passing on a reported deal worth somewhere between $50-$60 million. In doing so, Monroe became an unrestricted free agent after the season and signed a three-year, $50 million deal with the Milwaukee Bucks. Monroe’s contract with Milwaukee isn’t a max-level deal, but he is earning roughly $3 million more per season than he would under Detroit’s offer and he had the freedom to choose where he would play – a luxury that has a lot of value to most players.

While things worked out contractually for Monroe, there is a reason why the vast majority of players pass on their respective qualifying offers. First off, the player is likely losing significant salary for that single season, as we saw in the case of Monroe. Also, injuries can happen at any time as we know too well. So if a player accepts their qualifying offer and then suffers a catastrophic injury, they have no long-term security and will likely enter unrestricted free agency at a disadvantage (depending on the severity and long-term prognosis of the injury).

While Michael Kidd-Gilchrist likely would have signed a much better deal as a restricted free agent, he did land financial security in signing a rookie extension last summer. Shortly after doing so, he dislocated his shoulder and partially tore his labrum during one of the Charlotte Hornets’ preseason games last October. He then suffered a second shoulder injury toward the end of last season, shortly after recovering from the first injury. In signing an extension, he locked in a lot of money and protected himself against the risk of injury. However, Kidd-Gilchrist is highly thought of around the league and it’s hard to imagine him not landing somewhere close to the four-year, $90 million max-level offer sheet he was eligible for, even after suffering the shoulder injuries.

Jimmy Butler and Tobias Harris both passed on sizable extensions from their respective teams and entered restricted free agency. Harris passed on signing an extension in 2014 and landed a four-year deal worth $64 million from the Orlando Magic the following offseason. Butler reportedly informed the Chicago Bulls that he would agree to a four-year, $48 million extension, which the team reportedly would not offer. Butler subsequently had a career-year and landed a five-year, $95 million deal from the Bulls as a restricted free agent. As you can see, any player displaying a developing game, under the current system, should most likely pass on signing a rookie extension and instead test restricted free agency.

While Harris and Butler came out ahead with their decisions, it doesn’t always work out that way for players. Another notable issue that comes up with restricted free agency is the animosity that can brew between a player and his team. It’s usually difficult determining what a player is actually worth in terms of dollars and years, and determining this becomes even more difficult when the market is artificially cooled by a system that deters teams from pursuing a certain class of players.

While players like Tristan Thompson and Eric Bledsoe, among many others, may think they are worthy of max-deals, their team’s executives may disagree. In the case of Thompson and Bledsoe, both players went through a lengthy negotiation process that got nasty at times. While players and executives are professionals and often get past any hard feelings that come up during the negotiation process, there’s little doubt that oftentimes this process dampens whatever positive feelings both sides may have had for the other.

Having said all of this, we did see some examples this offseason of role players getting significant contracts as restricted free agents. Orlando’s Evan Fournier (five years, $85,000,000), Portland’s Allen Crabbe (four years,$75,000,000), Miami’s Tyler Johnson (four years, $50,000,000) all signed bigger deals than anyone reasonably expected for differing reasons. Fournier proved himself to be a deadly shooter last season and fills a bigger role now that Victor Oladipo plays for the Oklahoma City Thunder. Crabbe and Johnson both got huge deals partially because the Brooklyn Nets lack assets and draft picks to acquire young talent and were thus willing to overpay to add some promising players to their roster. Nevertheless, restricted free agency is problematic in several ways and is something that likely will be adjusted in the next Collective Bargaining Agreement.

So how can the NBA and the Players’ Association address the problems with restricted free agency during their labor negotiations? There aren’t any obvious answers to this question, but here are a few thoughts on the issue:

1. Create early extensions for rookie-scale contracts

One of the easiest ways to avoid losing a player in free agency is to extend their existing contract before they hit free agency. This could be particularly useful for rookie-scale contracts since they are not tied to the salary cap, which means they do not increase as the cap increases. This is why productive players on rookie deals are such valuable commodities – they are heavily cost-controlled.

Nate Duncan of The Cauldron spoke with league executives earlier this year and one change that received strong support was a rule that would allow teams the option to extend players after the second season of their rookie contracts:

“One idea an executive floated would more align compensation with production for players on rookie contracts: provide a window after the second year of a rookie contract for an extension which would immediately supersede the last two years of the rookie contract while extending the contract beyond that time frame.

If such an extension were not agreed to, the last two years of the rookie contract would operate normally, but the player would become an unrestricted free agent after the fourth year, rather than a restricted free agent as under the current system. Under this proposal, the thinking goes, a team that really viewed a player as part of its future and wanted to keep him from unrestricted free agency would be forced to free him from the indentured servitude of the rookie-scale deal. But, much as in baseball, teams could still get discounts on these extensions, because the player would be motivated to agree rather than go through two more cheap years on the original deal.”

This makes sense for several reasons. As Duncan stated, the team has a means to delay its player from becoming an unrestricted free agent, while significantly increasing the player’s annual salary. While this approach may not be appealing for teams or players in every situation, it offers some incentive to both sides to extend the length of their contractual relationship.

2. Shorten the period teams are given to match an offer sheet

If one of the major deterrents to pursuing restricted free agents is the three-day period for the original team to match, then why not shorten that period? Limiting the period to exercise the right of first refusal to one day may be harsh, but perhaps 36 hours or even two days would be a fair compromise. This solution only address one of several problems associated with restricted free agency, so this would have to be just one component of several other amendments.

3. Expand incentives teams can include in offer sheets

Under the current system, teams cannot offer contracts as long as a restricted free agent’s original team, nor can it offer comparable annual raises. These rules are in place to theoretically give a restricted free agent’s original team an advantage in keeping its players, but that consequently prevents other teams from structuring offers that the player’s original team may think twice about matching, which has the effect of chilling the market for many restricted free agents. While teams typically use trade kickers, poison pills and player options, there could be more incentives so a team may feel more confident in their ability to structure a deal that a restricted free agent’s original team may pass on. Even if teams still match these offer sheets at a high rate, at least other teams will feel somewhat more confident in their ability to effectively pursue restricted free agents.

4. Getting rid of restricted free agency altogether

This is a drastic approach that team owners would likely never agree to without significant concessions elsewhere. The ability to retain a player for several seasons is a major tool for teams, so getting rid of it altogether could cause even more player movement than we currently see in free agency. However, removing a safeguard like this would incentivize teams to run their respective franchise’s as effectively as possible in order to make itself a desirable destination for free agents, while teams that are run incompetently would necessarily flounder. Again, this is a drastic measure that owners would most likely never agree to, but there is some merit to removing a flawed system that is designed to protect owners.

*****

These are just a few proposed solutions to a series of issues with restricted free agency. If you think you have the solution, be sure to leave your thoughts or suggestions in the comment section below.

Jesse Blancarte is a Deputy Editor for Basketball Insiders. He is also an Attorney and a member of the Professional Basketball Writers Association.

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NBA Daily: Is It Time To Cash Out On Kemba Walker?

Should the Hornets get serious about trading Kemba Walker or risk losing him in 2019 for next to nothing?

Steve Kyler

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Is It Time To Sell?

Every professional sports team at some point has to decide when its time to cash out, especially if they have a star player heading towards free agency. The Charlotte Hornets are a team teetering on this decision with star guard Kemba Walker.

Now, let’s be honest for a moment. The Hornets are getting nothing of meaningful value in a trade for Walker if they decided to put him on the trade market—that’s something that will drive part of the decision.

The other part of the decision is evaluating the marketplace. This is where Charlotte may have an advantage that’s easy to overlook, which is the ability to massively overpay.

Looking ahead to the cap situations for the NBA in the summer of 2019, there doesn’t appear to be a lot worth getting excited over. While it’s possible someone unexpected goes into cap clearing mode to get space, the teams that project to have space in 2019 also project to have space in 2018, meaning some of that 2019 money could get spent in July and change the landscape even more.

But for the sake of discussion, let’s assume most of the 2019 cap space teams swing and miss on anything meaningful this summer and have flexibility the following summer. Not only will Walker be a name to watch, but guys like Boston’s Kyrie Irving, Minnesota’s Jimmy Butler, Golden State’s Klay Thompson, Dallas’ Harrison Barnes, Detroit’s Tobias Harris, San Antonio’s Kawhi Leonard and Cleveland’s Kevin Love can all hit unrestricted free agency.

That’s a pretty respectable free agent class.

While most of those names will likely stay where they are, especially if their teams shower them with full max contracts as most would expect, there are a few names that might make the market interesting.

The wrinkle in all of it is the teams projected to have space. Based on what’s guaranteed today, the top of the 2019 cap space board starts with the LA Clippers.

The Clippers currently have just Blake Griffin and Danilo Gallinari under contract going into 2019. They will have qualifying offers on Milos Teodosic and Sam Dekker, but that’s about it. If the Clippers play their cards right, they could be looking at what could be close to $48 million in usable cap space, making them the biggest threat to poach a player because of the LA marketplace. It should be noted, though, that DeAndre Jordan’s situation will have an impact here.

The Chicago Bulls come in second on the 2019 cap space list with just $35.77 million in cap commitments. The problem for the Bulls is they are going to have to start paying their young guys, most notably Zach LaVine. That’s won’t stop the Bulls from getting to cap space, it’s simply a variable the Bulls have to address this summer that could get expensive.

The Philadelphia 76ers could come in third on the 2019 cap space list, although it seems the 76ers may go all in this summer on re-signing guard J.J. Redick and a swing at a big fish or two. If the 76ers miss, they still have an extension for Ben Simmons to consider, but that shouldn’t impact the ability to get to meaningful space.

For the Hornets, those three situations have to be a little scary, as all of themff something Charlotte can’t offer – big markets and rosters (save maybe the Clippers) with potentially higher upside.

The next group of cap space markets might get to real salary cap room, but its more likely they spend this summer like say the Houston Rockets or are equal to less desirable situations like Sacramento (similar), Dallas (has Dennis Smith Jr), Atlanta (similar) or Phoenix (likely drafts a point guard).

That brings us back to the Hornets decision making process.

If the Hornets put Walker on the market, historically, teams get pennies on the dollar for high-level players headed to free agency. If traded, its more likely than not that Walker hits free agency and goes shopping. That’s the scary part of trading for an expiring contract unless you get the player early enough for him to grow attached to the situation, most players explore options. That tends to drive down the potential return.

The Hornets can also start extension discussions with Walker and his camp this summer and it seems more likely than not the Hornets will pay Walker the full max allowed under the collective bargaining agreement, which could be a deal north of $150 million and he could ink that in July.

It’s possible that someone offers the Hornets the moon for Walker. That has happened in the past. The Celtics gave the Cavaliers a pretty solid return for Irving, a player the Cavaliers had to trade. So it’s not out of the question real offers come in, especially with the NBA trade deadline approaching, but what’s far more likely is the Hornets wait out this season and try to extend Walker this summer.

League sources at the G-League Showcase last week, doubted that any traction could be had on Walker while admitting he’s a name to watch, despite however unlikely a trade seemed today.

The challenge for the Hornets isn’t as simple as cashing out of Walker, not just because the return will be low, but also because where would the franchise go from here?

It’s easy to say re-build through the draft, but glance around the NBA today – how many of those rebuild through the draft situations are yielding competitive teams? How many of them have been rebuilding for five years or more?

Rebuilding through the draft is a painfully slow and frustrating process that usually costs you a coach or two and typically a new front office. Rebuilding through the draft is time consuming and usually very expensive.

It’s easier to rebuild around a star already in place and the fact that Walker himself laughs off the notion of him being anywhere but Charlotte is at least a good sign and the Hornets have some time before they have to really make a decision.

At some point, Charlotte has to decide when to cash out. For the Hornets, the time to make that decision on Walker might be the February 8 trade deadline. It might also be July 1, when they’ll know whether Walker would sign a max contract extension.

If he won’t commit then, the Hornets have their answer and can use the summer to try an extract a package similar to what the Cavaliers got for Irving.

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Cavs Woes Reason For Concern, But Not Dismissal

Spencer Davies takes a look at the Cavs’ issues and why we shouldn’t count them out just yet.

Spencer Davies

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The Cleveland Cavaliers are the classic case of Dr. Jekyll and Mr. Hyde.

When they’re on, they look like the defending three-time Eastern Conference Champions. When they’re off, they look like an old team that’s worn down and, at times, disinterested—and it gets ugly.

Take this past three weeks for example. After going on a tear of 18 wins in 19 games, the Cavs have dropped eight of 11 and are falling fast. Two of those three victories in that stretch were decided by four points or less against bottom-of-the-barrel teams in the East.

So what happened? For one, the schedule got significantly tougher. Beyond just the level of competition, Cleveland has been on the road for a long while. Nine of the games in this recent down period have been away games. The only time they’ve been home was for a quick second in mid-December and a short stay for New Years.

You’ve got to think about how that affects a psyche, not only from an on-court standpoint but also in regard to spending time with loved ones and family. LeBron James brought attention to his own homesickness on Christmas Day while he was in the Bay Area instead of in Northeast Ohio to celebrate the holidays. If it gets to him, you know it’s got to get to the other players as well. These guys are human beings with lives, and the rigors of travel can wear differently on people. Luckily for them, seven of their next nine games will be at Quicken Loans Arena.

With that being said, everybody in the NBA goes through it, so it’s no excuse for how flat the Cavs have been. Anybody on the team will tell you that, too. However, when you’re figuring out rotations and re-implementing players who had injuries, it’s not easy. This is exactly why nobody should envy Tyronn Lue.

He’s being asked to make room in his rotations and adjust on the fly as Cleveland gets guys back. When they went on that month-long run, the reason they had success was that the second unit really clicked. Dwyane Wade found his niche as the maestro of the bench bunch along with any mixture of Kyle Korver, Jeff Green, Cedi Osman, Channing Frye, and Jae Crowder. Lue had found the perfect group to spell LeBron James and company.

But then, Tristan Thompson came back and, with all due respect, it messed with their flow. The spacing is no longer there for Wade or Green to penetrate because the paint is clogged. It makes it easier on opposing defenses to just stick to Korver because there aren’t any other threatening shooters on the floor (besides Osman, maybe). Worst of all, the change basically kicked Frye—who has a plus-14 net rating, according to Cleaning The Glass—out of the rotation completely.

Deciding who plays and when is a tough job. Derrick Rose is set to come back soon. Iman Shumpert is coming along as well. Lue likes a 10-man rotation, but there are at least 12 players who deserve to be on that court. We already know Rose is expected to commandeer the second unit in Wade’s absence on back-to-backs. As for if Shumpert remains in Cleveland, who knows? It’ll be interesting to keep an eye on how this situation is managed moving forward.

Isaiah Thomas, on the other hand, is somebody the Cavs have been waiting on to return since the season started. Despite LeBron being LeBron and Kevin Love having as great of an offensive year as he’s ever had on the team, the starting unit lacks an extra punch. Thomas can be that shot in the arm, and he proved that in his debut at home against Portland and on the road in Orlando. There are two snags that both he and the team are going to hit before the 29-year-old returns to his All-Star form: 1) He’s got to get his legs under him to regain the consistency in his game and 2) His teammates are going to have to adjust to playing with him.

These are not easy things to do. Remember, aside from Jae Crowder, there is nobody on Cleveland’s roster that has played with Thomas before. Add in that he’s trying to re-discover his own game and that makes for a pretty bumpy road, at least out of the gate.

Start here—put Thompson in the starting lineup. As poor of a fit he’s been on the bench, he has shown promising signs of a developing chemistry with Thomas. It’s only been four games, but he loves having a partner in the pick-and-roll game. That’s clearly where you’ll get the most production out of him and how he can thrive. He’ll provide hustle, second chance opportunities, and a semi-decent big that can at least bother some of the competition’s drives to the basket. Sliding Love over to the four might change his game a little bit, but you can still get him going in the post before giving him chances as a shooter to work him outside-in.

The resulting effect helps the second unit as well. They’ll get one of either J.R. Smith or Crowder, depending on who would be relegated there. Both of those guys can use a spark to get them going. Because of Crowder’s familiarity with Thomas, let’s say Smith gets kicked out. Maybe that gets him out of the funk he’s in? It also allows for Frye, who hasn’t seen more than 20 minutes in a game since December 4, to get re-acclimated to a group he truly helped on both ends of the floor earlier in the year.

Outside of the need to make a move at the deadline, the Cavs can figure this out. It’s understood that they’re the fourth-worst defensive team in the NBA, but they’ve gone through these kinds of ruts at this time of year, specifically since LeBron came back. There might not be statistical evidence backing up the claim of any improvement, but the track record speaks for itself.

The panic button is being hit, but pump the brakes a bit. This isn’t anything new. The pieces are a little different and things look as bad as they ever have, but in the end, the result will likely be the same.

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NBA Daily: Zach LaVine Has Solid Debut With Bulls

Zach LaVine put together a solid performance for the Bulls in his first game back from injury.

James Blancarte

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The Chicago Bulls are turning a corner this season. Zach LaVine is healthy after completing a year of rehabilitation from an ACL injury. LaVine’s return comes at a critical moment. The team is 13-7 over the last twenty games. Many of the wins in this stretch are over current competitors for a potential spot in the playoffs. This includes wins against the Charlotte Hornets (in overtime), the Philadelphia 76ers and three wins (one in overtime) against the New York Knicks. The stretch of winning ties into the return of forwards Bobby Portis and Nikola Mirotic. Having these key players back and winning this many games recently has changed the dynamics of what had been shaping up to be a losing season.

LaVine played in his first game of the season on Saturday and hit three of four three-point baskets while scoring 14 points in 19 minutes played. LaVine described how he felt physically and about the team’s recent run.

“I thought I did pretty good. I was tired as hell at first. But, we got the win,” LaVine said. “We’re going to keep this thing going.”

The team went into this season having parted ways with their franchise player, Jimmy Butler, in a trade that was derided by many for being lopsided. The trade netted the Bulls LaVine, point guard Kris Dunn and the sixth pick in the 2017 draft in exchange for Butler and the number 16 pick. The trade also allowed Butler to be reunited with coach Tom Thibodeau in Minnesota. For the Bulls, Dunn has greatly improved from the poor play of his rookie season in Minnesota. In addition, the Bulls selected Lauri Markkanen, whom has already displayed some serious talent and potential. Now with LaVine in the lineup, the Bulls can see the total value of the trade on the court.

So, where do the Bulls now stand? According to FiveThirtyEight, as of January 14, the Bulls are projected as having a three percent chance of making the playoffs with a projected record of 32-50. This is a jump from less than one percent (essentially zero percent) back on December 11, 2017. Still, three percent is not the most reassuring projection.

In addition, the recent shift to winning basketball also puts Chicago’s 2018 draft pick in a more precarious position. On December 6, 2017, the Bulls were 3-20 and were on pace to have one of the worst records in the league, if not the worst. Now every win moves the pick further away from a likely top three or even a potential number one pick and moves it closer to a top-10 selection or even middle of the first-round pick.

At the moment, the team is 16-27, good enough for 12th place in the Eastern Conference behind the Hornets, Knicks, 76ers and Milwaukee Bucks for the eighth and final spot in the playoffs. Being 6.5 games back and having seven more losses than the Bucks means the Bulls will need to continue winning at a high rate to make up the difference in the time left in the season.

LaVine didn’t hold back when it came to expressing his optimism regarding the team’s potential.

“I think we can make a push for this thing,” LaVine said. “That’s our job to do. That’s our job to do that,”

LaVine isn’t paying much attention to skeptics who still don’t believe the Bulls have much change to win anything meaningful this season.

“You know, we can’t control outside thoughts or anything,” LaVine said. “We’re ball players, we go out there and try to win every competition. You know, I think we’re good. I think we’re going to be good.”

In LaVine’s absence, Mirotic and Portis (despite their offseason scuffle) have emerged as two of the team’s best players. In addition, center Robin Lopez has done an admirable job keeping up his effort all season long while fulfilling his role as a veteran leader for the team. Lopez described the atmosphere on the team as positive recently in an interview with Joel Brigham of Basketball Insiders.

Despite the reason for optimism, it must be noted that the franchise might make another big trade that would diminish the team’s ability to be competitive this season. Despite his recent on-court success, reports are that Mirotic would like to be traded and that the Bulls asking price is a first-round pick.

Until such a move occurs, the Bulls appear poised to maintain their recent rate of success. Every win could cost the Bulls what could be a top overall pick in 2018. Regardless, the Bulls are surely feeling better about the results of the Butler trade, especially after LaVine’s impressive Chicago debut.

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