The Free Agency Riddle
There’s almost no question that July 1 in the NBA this summer is going to be manic and chaotic. As things stand today, there looks to be more than $1.09 billion in money available under the salary cap. That’s an important distinction because NBA teams need to spend at least 90 percent of the salary cap. While there is not a punitive penalty for teams that do not spend, there are some mechanisms in place that get sticky for teams that do not meet the minimum salary floor, especially with the NBA projected to fall more than $375 million short as a league in what they are required to pay the players in salary and benefits as part of the contracted revenue share.
The calculus the NBA and the players agreed on in the Collective Bargaining Agreement assumes most teams will be over the salary cap and likely under the luxury tax; however with so many teams falling way below the cap this summer, very few teams will get meaningfully over the cap, and that’s going to create a huge short-fall that will get paid to the players in a lump sum check, and that money will come from the teams that do not spend – further motivating teams to spend the windfall in cap space they are projected to have.
As things stand today, more than 26 teams will have ample cap space, meaning the ability to get to at least one maximum salary slot. There are a handful of teams that can get to two maximum salary slots, which equates to more than $45 million in usable cap space per team.
Current NBA projections put the 2016-17 salary cap in the $92 million range; however, that number does not get locked in until the final accounting for the season is done and certified by both the NBA and the Players Association.
Assuming the cap stays at $92 million, which most league insiders expect may be slightly higher, the maximum salary tiers for players projects to be something like this: $21.6 million for players with up to six years of NBA experience, $25.9 million for those with seven to nine years of NBA experience, and $30.2 million with 10 or more years in the league.
The other notable is that players with some level of Bird Rights can receive 7.5 percent annual increases if they stay with their respective home teams. That number drops to 4.5 percent if they leave for another market.
It’s also important to point out that while the NBA salary cap projects to go up more than 28 percent this summer, it also projects to go up another 20-plus percent next summer.
That’s meaningful for the handful of players finishing their ninth NBA season like Oklahoma City’s Kevin Durant, Atlanta’s Al Horford and Memphis’ Mike Conley, as all three could earn substantially more money as a 10-year player next summer.
As things stand today, there are more than 270 players that could be in the 2016-17 NBA Free agent pool depending on how many options are picked up or declined. Of those players, there are about 40 that most in the NBA would consider significant, meaning the land grab for talent on July 1 could be incredibly hard to predict given how many teams have money and how quickly teams may need to act to ensure they come out of all of this with players.
With all of that in mind, let’s look at what we know about the top of the list:
The biggest free agent fish in the pond is Thunder star Kevin Durant. While there have been a lot of reports that say Durant would do this and Durant would do that, sources close to the process say that Durant has been very aggressive with his inner circle that he was not going to talk about free agency with any of them until after the Thunder season ended. This is meaningful because reports prior to the end of the Thunder season are not based on anything Durant has said, and he’s been clear that his camp was not talking.
The prevailing belief around the Thunder is that Durant is more inclined to stay in OKC for one more season than seriously explore life on another team. That said, league sources say the Warriors and the Spurs are planning big pitches to Durant if he’ll take meetings – as most expect he will.
Durant is one of those players that is financially motivated to take a shorter-term deal, not only because of the ballooning cap, but because he’ll cross over to the 10-year experience tier next summer.
The final wrinkle in the Durant puzzle is his connection to teammate Russell Westbrook. While some see their on-court bickering and try to make that a negative, the connection Durant and Westbrook share is real and its meaningful. The belief in NBA circles is that Durant will sign a one-and-one deal with the Thunder and give the situation one more year. Durant will get the benefit of the new salary jump this year and have the ability to re-up next summer at an even higher rate. Staying for one more year also allows Durant to see what Westbrook and teammate Serge Ibaka do with their free agency in 2017. It also allows Durant the chance to see the Thunder through to the potential end without regrets.
While it’s possible a pitch from the Warriors or the Spurs sways Durant away, the belief around the league is that Durant is not going anywhere this summer. That could very well change next summer.
The narrative all season around Conley was that he was staying in Memphis. However, sources close to Conley’s camp said recently that Conley is more open to new situations than anyone in Memphis would be comfortable with. The narrative from those sources is that Conley is concerned that the Grizzlies cannot add enough to the roster to get them seriously into championship status and if that does not happen, he’s not willing to tie his career to Memphis in the long-term.
Like Durant, Conley is financially motivated to give Memphis one more year – as he too becomes a 10-year player in 2017. Doing a shorter term deal would allow Conley to let the Grizzlies add more to the roster, without the long-term commitment.
The fact that Conley likely meets with other teams is going to create some buzz, especially with teams like the Knicks and the Rockets said to covet Conley significantly.
The dark horse in the Conley race is the Spurs. More than a few league insiders have pegged the Spurs as having more than a passing interest in Conley as a free agent and, much like with Durant, they are prepared to break apart some of their core to lock in another high level player.
The smart money says Conley is back in Memphis, however it’s far from the lock that it seemed four months ago when the idea of Conley leaving was laughable within his circle.
The HEAT have a big problem when it comes to retaining Whiteside. Because the HEAT signed Whiteside to a two-year deal, they do not have full-Bird rights on Whiteside this summer and will have to fit any deal worth more than 175 percent of his previous salary under the salary cap. This gets compounded because HEAT star Dwyane Wade carries a $30 million cap hold that basically erases any salary cap space the HEAT would have, meaning the HEAT have to sign Wade’s deal first and fit Whiteside into whatever is left. As things stand today, the HEAT could get to about $40 million in cap space, but that figure has to account for Wade’s new deal and whatever is paid to Whiteside. While Whiteside was drafted in 2010, he only has two full years of NBA experiences, which sets his maximum possible starting salary at $21.6 million. The HEAT can make that work with a little help from Wade.
The problem for Miami is that while they can keep Wade and Whiteside, they’d lose the ability to keep almost anyone else and would have no means to add to the team beyond the room exception and minimum deals.
The wrinkle for Miami is that Whiteside has not earned serious money in the NBA yet and will turn 27 next Monday, so this is his chance to lock in his future and those around him say he’s not open to much flexibility.
The narrative around Whiteside has been that he’d like to stay in Miami. He’s comfortable there, has had success there and they can pay him the most money of any team in the league. Assuming that’s the offer from the HEAT, there is a better than average chance he signs a new deal. If the HEAT try to play games, sources close to the situation say Whiteside will go shopping.
There is a sense that Whiteside is one of the top names on the Lakers’ wish list of free agents, with the Celtics also interested. The problem with trying to peg either as having some edge over the other neglects that Whiteside could be the most obtainable free agent in the class and likely gets a lot of interest beyond those two suitors.
League sources said this weekend that Whiteside is getting a full max deal – the question is will it be from the HEAT or someone else?
There is no pending free agent that’s more polarizing right now than Barnes. So despite how you may feel personally about Barnes, there’s a reality to his situation: Barnes is getting a max offer. The question is will the Warriors match it?
Sources close to the Warriors say they are absolutely planning to return the entire team and if that means matching a crazy offer sheet, the Warriors a prepared to do that.
The wrinkle for the Warriors is Kevin Durant. If Durant says “yes” to a free agent deal, all bets are off and much of this Warriors team will get scrapped including Barnes. If Durant says “no thank you,” the band stays together.
As silly as that may seem, there is a unique window the Warriors have that few teams experience. Without a roster break-up for Durant, the Warriors will not be a salary cap team this summer, meaning the money they would pay to Barnes is only available to Barnes. It’s not dollars they could spend on any other player and given the ballooning cap, it would not impair the Warriors in anyway going forward to pay Barnes.
Matching an offer sheet includes getting the lower annual raises and the shorter-term deal, both of which are meaningful to the Warriors.
It’s possible a team like the Lakers or the Magic construct an unfavorable contract structure to try and steal Barnes away, but the reality is a shorter deal like the two-plus-one structure that Chandler Parsons signed with Dallas wouldn’t be nearly as bad for the Warriors as it was for the luxury tax skirting Rockets a few seasons ago.
The smart money says Barnes is back in Oakland next season, even at max money, mainly because the Warriors can pay that without consequence to anything they are planning. The only wrinkle is the Warriors’ pursuit of Durant. If that pitch gets life, there may be a window for someone else. But the truth of the matter is, that’s not very likely.
Like Barnes, opinions on the contract value for Batum vary among fans; however, in NBA circles, there is little doubt Batum is going to get a max deal and it sounds more likely than not that it will be with the Charlotte Hornets.
There are a few teams that have planted seeds with Batum – the Knicks would do a deal in a heartbeat but can’t get to the $25.9 million in space they would need to offer a max deal to Batum without dumping off salary cap cash.
The Raptors are said to have serious eyes for Batum, but like the Knicks, they can’t get to $25.9 million in cap space without making two significant cap dump trades.
If things don’t go fluidly with the Hornets, there is always a chance that Batum moves on but the narrative around him is that he’s really happy in Charlotte and feels like head coach Steve Clifford is the right coach for him. Assuming the team ponies up the dollars, which they absolutely can do without much issue, it seems more likely than not that Batum is staying where he is.
This may be the easiest free agent synopsis to write. Say it with me: DeRozan is re-signing in Toronto.
Both sides want to do a new deal. The Raptors are prepared to pay DeRozan and unless something goes terribly wrong over the next four weeks, he’ll be back with the Raptors on a new max deal.
There were reports suggesting DeRozan would look at other situations, but sources close to his camp say it’s going to be a short process for DeMar.
Drummond, Beal and Clarkson
There are three notable soon-to-be restricted free agents and while they have the option of seeking offer sheets, it’s unlikely that any of them would.
Detroit’s Andre Drummond passed on a contract extension last summer mainly to help the Pistons create cap space this summer. Had Drummond done a deal in October, his new contract would hit the Pistons’ cap on the first day of free agency. By opting to wait, Drummond’s $8.180 million cap hold gives the Pistons some cap space to play with in July and then exceed the cap to re-sign him to his max deal. This one is basically cap management and it’s unlikely Drummond even takes a meeting with another team.
Washington’s Brad Beal is in a similar situation. While his $14.236 million hold is higher than Drummond’s, it’s still less than the $21.5 million max salary Beal will receive after the Wizards finish their free agent shopping. This one is also mostly cap management. There is no sense that the Wizards are going to play games with Beal; they simply needed to wait to maximize their salary cap space.
Lastly is the Lakers’ soon-to-be free agent Jordan Clarkson. Unlike Drummond and Beal, Clarkson is a little harder to poach because of his status as a Gilbert Arenas rule player. Sometime ago, a rule was put in place in the Collective Bargaining Agreement for second-round picks like Clarkson that limit what another team can offer in salary. The Lakers and Clarkson have had talks on a new deal and it seems more likely than not that the Lakers are going to pay Clarkson quickly and settle the situation.
It’s possible Clarkson’s camp seeks an offer sheet, simply to set more favorable terms, but the odds of Clarkson being anywhere but the Lakers next year are extremely small.
Over the next few weeks, we will try to spend more time on the pending free agent market, but as a handful of agents pointed out during Pro Days this past weekend, this will not be a normal free agency where there is a lot of early information on what players and NBA teams are doing. There will be something of a Wild West mindset and a lot of teams are keeping their wish list close to the vest to try and keep something of an advantage.
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