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Understanding Harden’s Restructured Contract

Eric Pincus explains restructuring contracts, which has implications for players like Russell Westbrook & Derrick Favors.

Eric Pincus

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On July 9, the Houston Rockets took advantage of one of the many quirks of the Collective Bargaining Agreement, renegotiating and extending the contract of All-Star guard James Harden.

As detailed in May, Harden was one of almost 30 players who have qualified (or will qualify this summer) to have his contract restructured — available only to players with four or five years contracts, at least three years following their original signing date.

Additionally, renegotiation cannot lower salary; and teams must have enough cap-salary space to take advantage of the rule.

Others who may still restructure include Derrick Favors (Utah Jazz), Russell Westbrook (Oklahoma City Thunder) and Paul George (Indiana Pacers).  Naturally, both sides need to consent to a deal.

Restructuring isn’t common, but the Denver Nuggets used their cap room last summer to re-work the contracts of Danilo Gallinari and Wilson Chandler.  But Harden is unique in that he had two seasons left on his deal – paying $16.8 million for 2016-17 and $17.8 million for 2017-18.

Under his new contract, Harden will receive the following:

2016-17 — $26,540,100
2017-18 — $28,299,399
2018-19 — $30,421,854 (estimated)
2019-20 — $32,703,493 (estimated; player option)
Total — $117,964,846 (estimated)

The odd raise structure, year-to-year jumping by $1,759,299, $2,122,455 and $2,281,639 looks like a mistake, but it’s the proper application of a myriad of rules.  Harden’s actual salary over the last two years of his deal won’t be set until the 2017-18 salary cap is officially announced.

Why wouldn’t Harden receive raises of $1,990,508 each year — 7.5 percent of his 2016-17 salary?

2016-17 — $26,540,100
2017-18 — $28,530,608
2018-19 — $30,521,115
2019-20 — $32,511,623 (player option)
Total — $118,103,445

The key is that Harden’s original contract covers the 2016-17 and 2017-18 seasons.  His extension doesn’t actually start until 2018-19.

By the rules of extensions, Harden is eligible for a raise of 7.5 percent in 2018-19 over the final year of his original contract (2017-18, after it is renegotiated).  Once the extension starts, the 2018-19 season is the basis for any subsequent raises, limited again to 7.5 percent, which determines his salary for 2019-20.

Technically, Harden and the Rockets could have agreed to an extension with a sizable pay-cut in 2018-19 — down by 40 percent from his 2017-18 salary — but Harden’s actual agreement is listed as a “maximum contract.”

(UPDATE: This next two paragraphs are flawed in regards to Harden’s 2017-18 salary, in that raises are not subject to the next season’s maximum salary.  It does apply to his potential salary in 2018-19.  Further explanation to follow.)

If that’s not already complex enough, there’s yet another wrinkle to the equation.  In a memo distributed to teams earlier in the month, the NBA updated its salary cap projection for 2017-18 to $102 million, down from $107 million.  With that, the maximum salary Harden is eligible to receive next year shrunk from roughly $29.7 million to the league’s current middle-tier max, or $28,299,399.

This matters because Harden is only eligible for a 7.5 percent raise over his 2016-17 salary if the resulting amount is no higher than the maximum salary.  Harden may still earn that $28,530,608, but to get it he’ll need the salary cap to climb higher than $102 million.  In fact, his actual salary could further shrink if the cap comes in lower than the current projection.

(UPDATE: The basis for Harden’s raise is actually 7.5 percent of the additional amount of $9,756,068 he received in renegotiated salary for 2016-17, which is $731,705.  Harden’s original salary of $17,811,626 for 2017-18 is increased by both the same raise he received in 2016-17 ($9,756,068) and $731,705 to reach $28,299,399.  Hat tip to cap expert Albert Nahmad of HeatHoops.com for his breakdown of Harden’s 2017-18 figure.)

Westbrook, in the final year of his deal, would be eligible for a three-year extension, after renegotiating his salary up to the same number Harden will receive for 2016-17.

2016-17 — $26,540,100 (2016-17 middle-tier maximum)
2017-18 — $28,530,608 (7.5 percent raise, first year of extension)
2018-19 — $30,670,403 (7.5 percent raise, $2.1 million raise based on first year of extension)
2019-20 — $32,810,199 (same $2.1 million raise)
Total — $118,551,310

As a free agent next summer, Westbrook won’t be able to earn more than the maximum, once set next July.  If his future is in Oklahoma City, then restructuring gives the team a clear path forward.  If not, the Thunder are probably better off looking for a trade.

Westbrook would be able to restructure and extend on a new team, provided they have the necessary cap room after a trade.  Without that commitment from the All-Star guard, teams will be hesitant to give up as much to the Thunder for Westbrook.

The Boston Celtics are well-positioned to give the Oklahoma City a rich offer, with the cap space to renegotiate and extend Westbrook’s salary.  The Los Angeles Lakers have held off signing players like second-overall pick Brandon Ingram, Tarik Black and Marcelo Huertas, protecting their remaining cap space, in case a trade opportunity should arise.

A number of teams would line up with offers, but that list shortens considerably without Westbrook agreeing to sign to a long-term deal immediately — and that may simply be a non-starter.  Westbrook may want a Hamptons-like moment, similar to the one recently experienced by former teammate Kevin Durant.

Meanwhile, Favors has six years of NBA experience, and is eligible for the bottom tier max of $22,116,750.  Currently he is set to earn $11,050,000 for 2016-17, but the Jazz could earmark their $11 million of cap space (available upon waiving the non-guaranteed Christapher Johnson) to give Favors a restructured and extended four-year deal starting at the maximum salary.

(UPDATE: Minor tweaks made to Derrick Favors’ figures, based on the logic applied from James’ Harden’s renegotiation.)

The following is the maximum restructured contract potentially available to Favors:

2016-17 — $22,116,750 (2016-17 bottom-tier maximum)
2017-18 — $23,896,756 ($11.1 million raise, plus 7.5 percent, in final year of original contract)
2018-19 — $25,689,013 (7.5 percent raise in first year of extension)
2019-20 — $27,615,689 (7.5 percent raise, based on first year of extension)
Total — $99,318,207

Extensions can also start at the maximum salary, but with a descending salary in subsequent seasons.  The following is the minimum the Jazz can offer Favors, provided they start at the current season’s maximum:

2016-17 — $22,116,750 (2016-17 bottom-tier maximum)
2017-18 — $22,236,744 (7.5 percent decrease in final year of original contract)
2018-19 — $13,342,046 (40 percent maximum decrease in first year of extension)
2019-20 — $12,341,393 (7.5 percent decrease, based on first year of extension)
Total — $70,036,933

Should Favors finish out his contract, signing a new deal in 2018-19 at a projected max of $30.5 million (based on a projected cap of $108 million), he would earn a maximum of approximately $86.3 million from 2016-17 to 2019-20.

Why would Favors accept a renegotiation?  At a maximum salary over four years, the easy answer is a lot more money, immediately.  Even with lower raises, Favors stands to make more over the next three seasons than he would by finishing his contract, and then signing a maximum contract after the 2017-18 season.

The Jazz would benefit in locking in a young, core piece for two additional years.

A player option in the final year would allow Favors to hit free agency sooner, but then the Jazz are paying a lot for the next couple of seasons to lock in one more year with Favors.

Finding the exact sweet spot between $70.0 million and $99.3 million would be a negotiation between the team and Favors’ agent, provided both sides are open to lengthening their partnership.

Since Favors would be eligible for a similar renegotiation next summer, the Jazz might want to wait to lock him in for the maximum of four seasons, through 2020-21, but there’s no guarantee the same rules will be in place beyond the current Collective Bargaining Agreement, which is likely to be renegotiated after the 2016-17 season.

Qualifying Offer Deadline

Saturday is the deadline for teams to unilaterally withdraw outstanding qualifying offers to restricted free agent.

After July 23, the teams can rescind a qualifying offer — provided the player gives their consent.  If so, the player is also renounced — the team losing Bird rights.

The following eight players remain restricted:

  • Tyler Zeller — Boston Celtics — $3.6 million qualifying offer (QO)
  • Donatas Motiejunas — Houston Rockets — $4.4 million QO
  • Tarik Black — Los Angeles Lakers — $1.2 million QO
  • Marcelo Huertas — Los Angeles Lakers — $1.1 million QO
  • Miles Plumlee — Milwaukee Bucks — $3.1 million QO
  • Mo Harkless — Portland Trail Blazers — $3.5 million QO
  • Nando De Colo — Toronto Raptors — $1.8 million QO
  • Bradley Beal — Washington Wizards — $7.5 million QO

Half of the list (Black, Huertas, Plumlee and Beal) have already agreed to terms to re-sign.  De Colo will spend the season overseas — Toronto holding onto his restricted rights for down the road.

The players to monitor closely include Zeller, Motiejunas and Harkless.

Even if their qualifying offers are rescinded before the deadline, each can still re-sign with their respective teams — but they would immediately become unrestricted free agents.

Unsigned First-Rounders

On Friday, the New Orleans Pelicans announced the signing of Buddy Hield, the team’s sixth overall pick in June.

“We could not be more excited to add a player and person like Buddy Hield to the New Orleans Pelicans,” said General Manager Dell Demps in a statement.  “He embodies all the traits we care about in our organization. His work ethic, energy and confidence have been on full display since he stepped foot in New Orleans. We look forward to helping him grow as a player as he will help us become a better team.”

The following eight 2016 first-round picks have yet to sign contracts:

  • Brandon Ingram (2nd) — Los Angeles Lakers
  • Jaylen Brown (3rd) — Boston Celtics
  • Thon Maker (10th) — Milwaukee Bucks
  • Donatas Sabonis (11th) — Oklahoma City Thunder
  • Juancho Hernangomez (15th) — Denver Nuggets
  • Guerschon Yabusele (17th) — Boston Celtics
  • Ante Zizic (23rd) — Boston Celtics
  • Furkan Korkmaz (26th) — Philadelphia 76ers

Some, like Yabusele, Zizic and Korkmaz will play overseas.  The Lakers, Celtics, Bucks and Thunder are likely waiting to maximize their salary cap space before inking their respective lottery picks.  Hernangomez is also expected to join the NBA this season.

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Is LeBron Enough For Cavs To Get Through The East?

Cleveland’s offense has struggled through the first two games of the playoffs. Can the four-time MVP consistently bail them out? Spencer Davies writes.

Spencer Davies

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After a less-than-encouraging series opener versus the Indiana Pacers, LeBron James responded emphatically and led the Cleveland Cavaliers to a bounce back 100-97 victory to even things up at one game apiece.

Scoring the first 13 points of the game itself, The King was a one-man wrecking crew out of the gate and carried that momentum throughout all four quarters of Game 2. His 46 points were James’ second-highest scoring mark between the regular season and the playoffs. In addition, he shot above 70 percent from the field for the sixth time this year.

The four-time MVP pulled down 12 rebounds total, and but all but one of those boards were defensive—the most he’s had since Saint Patrick’s Day in Chicago a month ago.

What James did was another classic instance where LeBron reminds us that through all the injuries, drama, and on-court issues, whatever team he’s on always has a chance to go all the way. But having said all of that—can the Cavaliers realistically depend on that kind of spectacular effort for the rest of the postseason? It’s a fair question.

Kevin Love is a solid secondary go-to guy, but he’s struggled to find his rhythm in the first two games. He’s done a solid job defensively between both, but he’s getting banged up and is dealing with knocked knees and a reported torn thumb ligament in the same hand he broke earlier in the season.

Love has admitted that he’d like more post touches instead of strictly hanging out on the perimeter, but it’s on him to demand the ball more and he knows it. But finding that flow can be challenging when James has it going and is in all-out attack mode.

Kyle Korver came to the rescue for Cleveland as the only shooter that consistently converted on open looks. Outside of those three, and maybe J.R. Smith, really, there hasn’t been a tangible threat that’s a part of the offense during this series.

We all pondered whether or not the “new guys” would be able to step up when their respective numbers were called. So far, that hasn’t been the case for the most part.

Jordan Clarkson looks rushed with tunnel vision. Rodney Hood has had good body language out there, but seems reluctant to shoot off dribble hand-offs and is second-guessing what he wants to do. The hustle and effort from Larry Nance Jr. is obvious, but he’s also a good bet to get into foul trouble. Plus, he’s had some struggles on an island against Pacer guards.

As for George Hill, the good news is the impact on the floor just based on his mere presence on both ends (game-high +16 on Wednesday), but he hasn’t really done any scoring and fouled out of Game 2.

Maybe these things change on the road, who knows. But those four, the rest of the rotation, absolutely have to step up in order for the Cavaliers to win this series and fend off this hungry Indiana group, which brings us to another point.

Let’s not forget, the offensive issues aren’t simply because of themselves. After all, the Cavs were a team that had little trouble scoring the basketball in the regular season, so give a ton of credit to the Pacers’ scheme and McMillan’s teachings to play hard-nosed.

Unlike many teams in the league, the strategy for them is to pressure the ball and avoid switches as much as possible on screens. The more they go over the pick and stick on their assignments, the better chance they have of forcing a bad shot or a turnover. That’s what happened in Game 1 and in the majority of the second half of Game 2.

Cleveland has also somewhat surprisingly brought the fight on defense as well. In the first two contests of the series, they’ve allowed under 100 points. Lue’s said multiple times that they’re willing to give up the interior buckets in order to secure the outside, and it’s worked. It doesn’t seem smart when there’s a yellow-colored layup line going on at times, but it certainly paid off by only allowing 34 percent of Indiana’s threes to go down.

Still, looking ahead to what the Cavaliers can do in the playoffs as a whole, it doesn’t bode well. They’re not only locked in a tug-of-war with Indiana, but if they get past them, they could have a Toronto Raptors group chomping at the bit for revenge.

If they’re having this much trouble in the first round, what should make us believe they can barrel through the Eastern Conference as they’ve done in the past?

It’s not quite as obvious or as bad as Cleveland’s 2007 version of James and the rest, but it feels eerily similar for as much as he’s put the team on his back so far. The organization better hope improvement comes fast from his supporting cast, or else it could be a longer summer than they’d hoped for.

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2017-18 NBA Report Card: Third-Year Players

Among the third-year players a few budding superstars have emerged, along with some role players who are helping their teams in the 2017-18 NBA Playoffs.

Mike Yaffe

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The 2015 NBA Draft has provided the league with a limited quantity of talent so far. After Terry Rozier (at 16th), it’s unlikely that anyone remaining has All-Star potential. Despite the lack of depth, the highest draft slot traded was at number 15, when the Atlanta Hawks moved down to enable the Washington Wizards to select Kelly Oubre Jr.

But placing a definitive “boom” or “bust” label on these athletes might be premature as the rookie contract is standardized at four seasons with an option for a fifth. If their employers are given a fourth year to decide whether a draftee is worth keeping, it seems reasonable to earmark the NBA Juniors’ progress for now and see how they’ve fared after next season’s campaign before making their letter grades official.

The Top Dogs

Karl-Anthony Towns, Minnesota Timberwolves: Given the dearth of premier choices and their glaring need up front, it’s hard to envision the T-Wolves drafting anyone but KAT if they had to do it again. Although his scoring average is down from last season (21.3 vs. 25.1 PPG), that trend could be explained by the addition of Jimmy Butler and the team’s deliberate pace (24th out of 30 teams).

To his credit, Towns had career highs in three-point percentage (42.1 percent) and free throws (85.8 percent), while finishing second overall in offensive rating (126.7). His continued improvement in these areas could explain why the Timberwolves ended their 14-year playoff drought.

Nikola Jokić, Denver Nuggets: Although he was a 2014 draft pick, Jokić’s NBA debut was delayed due to his last year of commitment to the Adriatic League. His productivity as a rookie was limited by both foul trouble and a logjam at the center position, but he still managed 10.0 PPG.

With Joffrey Lauvergne and Jusuf Nurkic off the depth chart, Jokić became the clear-cut starter this season and rewarded Denver’s confidence by averaging 18.5 points and 10.7 rebounds per game. And by chipping in 6.1 APG, he provides rare value as a center with triple-double potential.

Kristaps Porzingis, New York Knicks: Although he has never played a full season since joining the league, Porzingis has provided enough evidence that he can be a force when healthy. Before his junior campaign was derailed, the Latvian was enjoying career highs of 22.7 PPG and 39.5 percent shooting from behind the arc.

Unfortunately, the Knicks haven’t provided much support at point guard to help with Porzingis’ development. Trey Burke looked impressive down the stretch in Zinger’s absence, but that was in a score-first capacity. Meanwhile, both Frank Ntilikina and Emmanuel Mudiay have underwhelmed. On the plus side, Porzingis’ outside ability paired nicely in the frontcourt with Enes Kanter, who prefers to bully his way underneath.

Devin Booker, Phoenix Suns: Like Porzingis, Booker’s third year in the NBA was cut short by injuries, but that didn’t stop him from achieving career highs in points (24.9 per game), assists (4.7) and three-pointers (38.3 percent) on an otherwise moribund Suns team. Indeed, cracking the 40-point barrier three times in 54 contests was an achievement in and of itself.

While his short-term prospects would’ve been far better on a team like the Philadelphia Sixers (who might have taken him instead of Jahlil Okafor in a re-draft), Booker can still become a franchise cornerstone for the Suns if they are able to build around a young core that also includes T.J. Warren and Josh Jackson.

Solid Potential

Myles Turner, Indiana Pacers: Despite an inconsistent freshman season at Texas, Turner has become a stabilizing influence at center for the Pacers, whose blueprint consists of surrounding a go-to scorer with role players. While he hasn’t shown drastic improvement in any particular area, he has produced double-digit PPG averages all three years as a pro.

Although Turner’s shot-blocking ability fuels his reputation as a defensive maven, the reality is his 104.8 defensive rating (which is just OK) was skewed by his 110.9 d-rating in losses (it was 100.8 in wins). In order to merit consideration for the NBA’s all-defensive team, he will need to bridge the gap in this discrepancy and impact his team’s ability to win more games in the process.

D’Angelo Russell, Brooklyn Nets: Following their respective trades, Russell has fared better in the Big Apple than his 2015 lottery counterpart Emmanuel Mudiay, as the Los Angeles Lakers were forced to cut bait to draft Lonzo Ball. While Ball has shown promise as a rookie, the Lakers’ perception of Russell may have been premature, as the former Buckeye has stabilized a Nets backcourt that had been characterized more by athleticism than consistency.

Despite missing a significant stretch of mid-season games, Russell provided similar numbers for Brooklyn to that of his sophomore season; but without a pick until number 29 in the upcoming NBA Draft, the Nets will have to bank on improved production from DLo and his raw teammates to contend for the eight-seed in the East.

Terry Rozier, Boston Celtics: Injuries have paved the way for Rozier to showcase his talent, most recently with a 23-point, 8-assist effort in game two against the Milwaukee Bucks. But Rozier was already making headlines as a fill-in for Kyrie Irving whenever he was injured. Now that the starting point guard reins have been handed to the former mid-round pick, he has become one of the more pleasant surprises of the 2017-18 NBA season.

The biggest impediment to Rozier’s success might be the regression to limited playing time once Irving returns. While the Celtics could “sell high” and trade Rozier on the basis of his recent performances, they may opt to retain him as insurance while he is still cap-friendly.

Best of the Rest

Larry Nance Jr., Cleveland Cavaliers: Following the trade deadline, Nance has provided a spark for a Cavs frontcourt that has been bereft of viable options aside from Kevin Love.

Josh Richardson, Miami HEAT: A jack-of-all-trades at the small forward position, Richardson has evolved into a three-and-D player that has meshed well with the HEAT’s shut-down focus.

Willie Cauley-Stein, Sacramento Kings: Thrust into the starting center role after the trade of DeMarcus Cousins, WCS has provided serviceable (albeit unspectacular) play as the next man up.

Delon Wright, Toronto Raptors: A key contributor for the East’s top seed, Wright was instrumental in the Raptors’ game one victory over the Washington Wizards with 18 points off the bench.

Bobby Portis, Chicago Bulls: The former Razorback has flashed double-double potential, but playing time at his true position (power forward) has been limited by the emergence of rookie Lauri Markkanen.

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NBA Daily: Looking At The 2018 Draft Class By Tiers

The NBA Draft is a hard thing to predict, especially when it comes to draft order and individual team needs, Basketball Insiders publisher Steve Kyler takes a look at how this draft looks in tiers.

Steve Kyler

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Looking At The 2018 Draft In Tiers

While Mock Drafts are an easy way to look at how the NBA Draft might play out, what they do no do is give a sense of what a specific player might be as a player at the next level. With that in mind, we’re going to take a look at how some of the notable NBA draft prospects project.

It’s important to point out that situation and circumstance often impact how a player develops, even more so than almost any other variable.

So while the goal here is to give a sense of how some NBA teams and insiders see a draft prospect’s likely potential, it is by no means meant to suggest that a player can’t break out of his projection and become more or sometimes less than his he was thought to be.

Every draft class has examples of players projected to be one thing that turns out to be something else entirely, so these projections are not meant to be some kind of final empirical judgment or to imply a specific draft position, as each team may value prospects differently.

So, with that in mind, let’s look at the 2018 NBA Draft in Tiers.

The Potential Future All-Stars

DeAndre Ayton – Arizona – C – 7’0″ – 245 lbs – 20 yrs
Luka Doncic – Real Madrid – SG – 6’7″ – 218 lbs – 19 yrs
Michael Porter Jr – Missouri – SF/PF – 6’10” – 216 lbs – 20 yrs

Maybe Stars, But Likely High-Level Starters

Jaren Jackson Jr. – Michigan State – PF – 6’10” – 225 lbs – 19 yrs
Marvin Bagley III – Duke – PF – 6’11” – 220 lbs – 19 yrs
Wendell Carter – Duke – PF – 6’10” – 257 lbs – 19 yrs
Mohamed Bamba – Texas – C – 7’0″ – 216 lbs – 20 yrs
Collin Sexton – Alabama – PG – 6’2″ – 184 lbs – 19 yrs
Mikal Bridges – Villanova – SG/SF – 6’7″ – 210 lbs – 22 yrs
Robert Williams – Texas A&M – C – 6’9″ – 235 lbs – 21 yrs
Miles Bridges – Michigan State – SF/PF – 6’7″ – 230 lbs – 20 yrs
Dzanan Musa – Cedevita – SF – 6′ 9″ – 195 lbs – 19 yrs
Shai Gilgeous-Alexander – Kentucky – SG – 6′ 6″ – 181 lbs – 20 yrs
Trae Young – Oklahoma – PG – 6’2″ – 180 lbs – 20 yrs

Maybe Starters, But Surely Rotation Players

Kevin Knox – Kentucky – SF – 6’9″ – 206 lbs – 19 yrs
Troy Brown – Oregon – SG – 6’6″ – 210 lbs – 19 yrs
Khyri Thomas – Creighton – SG – 6′ 3″ – 210 lbs – 22 yrs
Zhaire Smith – Texas Tech – SG – 6′ 5″ – 195 lbs – 19 yrs
Rodions Kurucs – FC Barcelona B – SF – 6′ 9″ – 220 lbs – 20 yrs
Aaron Holiday – UCLA – PG – 6′ 1″ – 185 lbs – 22 yrs
Jacob Evans – Cincinnati – SF – 6′ 6″ – 210 lbs – 21 yrs
De’Anthony Melton – USC – PG – 6’4″ – 190 lbs – 20 yrs

The Swing For The Fence Prospects – AKA Boom-Or-Bust

Lonnie Walker – Miami – SG – 6’4″ – 206 lbs – 20 yrs
Mitchell Robinson – Chalmette HS – C – 7′ 0″ – 223 lbs – 20 yrs
Anfernee Simons – IMG Academy – SG – 6′ 5″ – 177 lbs – 19 yrs
Jontay Porter – Missouri – C – 6′ 11″ – 240 lbs – 19 yrs
Lindell Wigginton – Iowa State – PG – 6′ 2″ – 185 lbs – 20 yrs
Bruce Brown – Miami – SG – 6’5″ – 191 lbs – 22 yrs
Isaac Bonga – Skyliners (Germany) – SF/SG – 6’9″ – 203 lbs – 19 yrs
Hamidou Diallo – Kentucky – SG – 6’5″ – 197 lbs – 20 yrs

Players not listed are simply draft prospects that could be drafted, but don’t project clearly into any of these tiers.

If you are looking for a specific player, check out the Basketball Insiders Top 100 Prospects list, this listing is updated weekly.

More Twitter: Make sure you are following all of our guys on Twitter to ensure you are getting the very latest from our team: @stevekylerNBA, @LangGreene, @EricPincus, @joelbrigham, @TommyBeer, @MokeHamilton , @jblancartenba, @Ben_Dowsett, @SpinDavies, @BuddyGrizzard, @JamesB_NBA, @DennisChambers_, @mike_yaffe, @MattJohnNBA, and @Ben__Nadeau.

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