The Benefits of Being a Restricted Free Agent

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With the NBA officially announcing their salary cap numbers for the 2014-15 season, scores of free agents will be laughing their way to the bank over the coming days and weeks.

But none, perhaps, more than Gordan Hayward of the Utah Jazz.

While Eric Bledsoe and Greg Monroe and some of the other restricted free agents who still find themselves on the open market ponder what their financial futures hold, Hayward is content with the knowledge that over the course of the next four years, he will be paid $63 million by either the Charlotte Hornets or Utah Jazz. This is the result of Hayward, a restricted free agent, coming to terms on the maximum-allowable four-year offer sheet with the Hornets.

Is Hayward worthy of being paid the maximum-allowable salary? It is a subjective question. Statistically, he has shown upside and growth over the course of his first four years in the NBA. Despite the fact that his Jazz have gone a combined 143-169 since his entry into the league, Hayward has progressed admirably and is coming off of a career-best year in which he averaged 16.2 points, 5.1 rebound and 5.2 assists per game.

In the past, players who have put up better numbers on winning teams have seen far less lucrative paydays. For his riches, Hayward should thank the NBA’s restricted free agent system. By its very nature, it has been the golden egg for youngsters who have shown promise over the course of their rookie deals.

If Hayward were not restricted, he would not have received such a lucrative offer. The system in and of itself required non-incumbent NBA teams to overpay for fringe or marginal players. In the NBA, youngsters are often paid based on promise and this is no fault of Hayward.

It’s a systematic issue that makes those who understand the NBA’s financial model and the minds of its collective athletes wonder if there is merit behind the elimination of a maximum salary. We have seen the maximum-allowable salary become the opposite of a glass ceiling. In many ways, it has become a line in the sand that a non-incumbent team must be willing to step to in an attempt to both show a restricted free agent that they covet his abilities, as well as dissuade the incumbent team from matching their offer.

Hayward—whether the Jazz let him walk or not—is just the latest to prove a now-obvious truth: It pays to be an in-demand restricted free agent.

Bledsoe and Monroe—the market’s other in-demand restricted free agents—are next in line.

By NBA rule, a restricted free agent is one who is coming off of his rookie contract and has been tendered a one-year qualifying offer by his incumbent team. At that point, he may either accept the one-year qualifying offer and become an unrestricted free agent the following summer or go out on the open market in pursuit of multi-year offer sheet. If he is offered one and he signs it, his incumbent team has three days to determine whether or not they will match its terms. If they do, the incumbent team will retain the player’s rights for the duration of the tendered term. If not, he becomes the property of the offering team.

In recent memory, Landry Fields (three years, $20 million), Jeremy Lin (three years, $25 million), Omer Asik (three years, $25 million), Roy Hibbert (four years, $60 million) and Brook Lopez (four years, $60 million) have cashed in, at least partially, due to the restricted free agency system.

We have seen astute and lucid general managers both uncover and utilize loopholes in the NBA’s current collective bargaining agreement to use lump sum payments, poison pills, trade kickers and contracts that are just, all-around, difficult to move.

Though his basketball talent is undeniable, nobody illustrates this point better than Lin. It was just two shorts years ago that Linsanity took the world by storm. Back then, the Rockets came running with a well-renowned, back-loaded poison pill contract that saw Lin being forked over a guaranteed $25 million. He was essentially rewarded with that contract based merely on 25 exceptional starts as a member of the New York Knicks.

Now, before the three-year duration of his contract expires, he and his contract have become a mere pawn in the Rockets’ maneuvering to sign a third player to complete their vision of a “Big Three” in Houston with James Harden and Dwight Howard.

Across the league, Fields—coincidentally, Lin’s best friend and former teammates as a member of the Knicks—was offered his current contract by the Toronto Raptors. At the time, the Raptors were attempting to lure Steve Nash from the desserts of Phoenix to Toronto and extended the rich offer to Fields merely as a means to keep Nash from the Knicks, whom they thought was their biggest competitor for Nash’s services.

Fields was given the offer because, by rule, once a restricted free agent signs an offer sheet, his incumbent team is not permitted to sign-and-trade him. The Raptors thought they were helping themselves acquire Nash but really only ended up with one of the most questionable contracts we have seen doled out in quite some time.

After two seasons with the Raptors, Fields has appeared in 81 total games, averaging 3.8 points and 3.3 rebounds in 16.8 minutes per game.

Asik—also signed by the Rockets—is the most productive of this trio, but that the Rockets agreed in principle to trade him to the New Orleans Pelicans in what amounts to a salary dump is somewhat proving the general point here: attempting to steal a restricted free agent away from their incumbent team is often a risky, if not all-around fruitless, proposition.

The system in and of itself forces the non-incumbent team to overbid for the restricted free agent’s services. Put quite simply: if the offered contract is reasonable, the incumbent team is likely to match.

Back in 2012, Hibbert signed a maximum-allowable, four-year, $58 million offer sheet with the Portland Trail Blazers. His Indiana Pacers decided to match. Now, after his pitiful playoff performance this past spring, Hibbert just might be the most available maximum-salaried player in the entire league.

That same summer, Lopez was a restricted free agent and was left twisting in the wind while the Brooklyn Nets attempted to figure out a way to steal Dwight Howard away from the Orlando Magic. Once the Nets realized that either the Blazers or Charlotte Hornets would offer Lopez a maximum-allowable offer sheet, they opted to jump, rather than be pushed.
Lopez signed a four-year, $61 million deal to remain with the Nets, whose management was cognizant of the aforementioned perilous contract features that the Hornets could have used to make matching the offer more painful for the deep-pocketed Nets.

Now, as questions persist about Lopez’s faulty feet, the Nets are still on the hook to him for two more years at the tune of about $32.5 million.

Hayward is a great player with great days ahead. The same can be said of both Bledsoe and Monroe.

And yes, there have certainly been instances in which pilfering a restricted free agent from his incumbent team has worked out for all parties, but the recent past has shown it to be a risky proposition.

So, to you Mr. General Manager, think twice before you extend that maximum offer sheet because recent history shows that what may seem like a coup today, may be a bit of a hindrance two years from.

In the end, whether it be Hayward or Bledsoe, in year two of his four-year deal, he may simply end up being Lin or Asik.

In the end, your prized signing may ultimately just end up being a pawn twisting in the wind, not a player leading a franchise’s revival.