Betting On Yourself: As the clock ticks down to tomorrow’s October 31 midnight deadline for 2011 first round draft picks to agree to early extensions, a number of players are going to have to decide whether to accept guaranteed, life-long security in the form of a rookie scale contract extension or roll the dice on having a strong season and seeing what restricted free agency brings them.
There are a number of deals that look like they are going to get done.
Ricky Rubio and the Minnesota Timberwolves seem close on a multi-year deal some say could clock in around $52-$54 million.
Tristian Thompson and the Cleveland Cavaliers continue to talk about a new deal, there is talk that the Cavs are hovering around a $10 million per year deal. That one could get done.
The Chicago Bulls and Jimmy Butler have made progress, but the sense is that Butler may roll the dice on himself. The Bulls could up their offer and get it done at the deadline, but it seems Butler will take the risk.
The Orlando Magic and Tobias Harris exchanged numbers on a new deal, but there hasn’t been any real progress since. Orlando says all the right things about Harris’ future with the team, but it looks like he’s headed to free agency rather than take Orlando’s offer.
Reggie Jackson and the Oklahoma City Thunder have done something similar.
Why would guys pass on guaranteed money like this?
The biggest reason is that teams making offers are generally making them based on what similar players have already signed for. In some cases the numbers being offered are about right based on deals that got done. But rarely are teams trying to set a new ceiling and that’s something of the problem.
Kemba Walker and the Charlotte Hornets reached a deal on a four-year, $48 million deal this week. Why wouldn’t Jackson want something similar? The problem is Jackson wasn’t the player last season that Walker was, and that is where the disconnect is.
Teams tend to pay for what you are, while players, specifically their agents, are trying to get their clients paid for what they will be.
This brings the second part: Virtually every player that has accepted a non-max contract has outplayed the extension they accepted at the end of their rookie deals.
Golden State’s Stephen Curry is slated to earn $10.62 million this season and $11.37 million next season. He is woefully underpaid by NBA standards for the player he is today.
Toronto’s DeMar DeRozan signed a four-year, $38 million extension in 2012. He’ll earn $10.1 million this year and next. He was an All-Star a season ago and arguably one of the better players at his position in the league. At the time he signed that deal was considered a bad deal, today DeRozan is underpaid based on his peers.
While the appeal of the long-term security is hard to pass up, and for many of the guys still considering deals there is risk that passing on an extension could put them on the trade block, but the reality is that to truly get your market value as a player, you have to hit free agency.
A number of clever agents have obtained loss insurance for their guys. One player, who is pondering an extension deal, has an insurance policy that protects him against losing what’s been offered if he waits for free agency
If this particular player misses more than a handful of games this season, and does not get a new contract equal to what he’s currently being offered, his private insurance will make up the difference. So the risk of getting hurt and losing out is offset by insurance.
So for this particular player, why sign a deal that’s not exactly what you are looking for? Why not play out the season and gamble on yourself and change your value.
As the clock ticks closer to the deadline teams will have their own fears to embrace. Do you really want to be the team with the top restricted free agent on the market when as many as 15 teams could have $15 million or more to offer in free agency?
The Utah Jazz had to match a max offer sheet for Gordon Hayward. The Houston Rockets lost out on Chandler Parson because the Mavericks constructed a shorter, player-friendly deal that was unfavorable to Houston.
If you are a pending restricted free agent, do you want to allow another team to set the terms for you?
Deadlines create activity. Most teams will make one more pass at their guys hoping to strike an eleventh hour deal, so some of the guys will get done.
The guys that don’t reach a deal are not necessarily unwanted or not coveted, they are likely willing to gamble on themselves to do better in July, and that’s because normally early extensions offer security but rarely offer maximum earnings potential.
Expansion Still Unlikely: NBA Commissioner Adam Silver sat down with Bleacher Report’s Howard Beck in a wide ranging interview.
One of the topics broached was the idea of expanding the NBA. There has been a long running rumor that after the NBA closed its new broadcasting rights deal that the league would at least look at expansion, especially with situations like Seattle, Louisville, Kansas City, Las Vegas and San Diego showing so much promise and interest in the league.
The league has said numerous times that domestic expansion was not on the radar in the foreseeable future, and Commissioner Silver reiterated that stance to Beck, suggesting that relocation was still more likely than adding new teams.
“I think it is possible some teams can be in different markets, but expansion is not on our agenda right now,” said Silver.
“Thirty teams feels right, part of it is not just a financial issue, but a competitive issue.”
The NBA has learned a number of lessons over the years as it pertains to expansion and even relocation.
There was a time that expansion was viewed positively because it created more markets and more revenue streams, but the league learned quickly that more markets also equated to more mouths to feed, and with teams finally swinging to profitability, there does not seem to be much appetite for expanding.
While it does seem that the NBA could demand expansions fees north of $1 billion if it wanted to, the belief is over a ten or 15 year span a new teams would take out more than it put in, hence why expansion is undesirable.
There is also sense that after the NBA reaches a new labor deal with its players in 2017, that expansion might get looked at, but even then it’s viewed as a long shot.
The one thing that is very real for the NBA is relocation.
The Milwaukee Bucks franchise was given a year to get a new arena going or they’d have the option to move if new ownership wanted to. They are saying all the right things now, but that market is on the clock so to speak.
The Atlanta Hawks are currently on the market for sale, and have had long running attendance issues. The Hawks’ venue is also in need of an upgrade, so if new ownership can’t get things moving in the right direction, the Hawks could be a team that becomes a candidate to relocate inside the next ten years.
Commissioner Silver is hardly the final word in matters like this. The NBA Board of Governors could open the door for expansion at some point, but the stance from the league has been for some time that 30 domestic teams was where they wanted to be, meaning those other markets will have to wait until things go bad in an existing city.
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