Will the Thunder’s Big Gamble Pay Off?

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Now that the Oklahoma City Thunder’s moves for this 2014-15 season appear complete, let’s return to simpler times – last September before Kevin Durant’s foot injury was revealed.  Oklahoma City was one of the elite contenders, and my personal pick for the 2015 Championship.  The Thunder had fastidiously hoarded assets, and in fact had so many recent draft picks that they felt comfortable reaching with the 29th selection on Josh Huestis, on the condition he play for a year in the D-league.  With Steven Adams poised to ascend to the starting lineup, the only real hole was a bonafide two-way wing who could play above-average defense and reliably drain threes.  In the last few years the Thunder had been forced to choose between offensive and defensive units, with one-way options like Thabo Sefolosha and Andre Roberson (defense) and Jeremy Lamb, Kevin Martin and Anthony Morrow (offense) as the options on the wings.  With better scouting in the playoffs, teams helped off the defensive wings with impunity (the San Antonio Spurs rendered Sefolosha unplayable in 2014), while the Thunder had struggled to stop elite wings and point guards.  With Morrow, Lamb and Roberson the main options this year, the situation had not much improved, although Morrow is at least a knockdown shooter.  What’s more, the lack of quality wings limited Scott Brooks’ ability to unleash small lineups with Durant at power forward.  Opposing teams could either hide their power forward on the defensive wing, or the Thunder’s defense would suffer too badly if they went with the offensive guy.

The Thunder of course got off to a very rough start to the year.  Durant missed almost the first two months, has missed more time since with smaller injuries and now is out again for an unknown amount of time.  Westbrook missed time with a broken hand, while a Reggie Jackson trade became fait accompli after he refused a reported four-year, $48 million extension offer.  With this year slipping away and Durant’s impending 2016 free agency on the horizon, the Thunder–long trade season bystanders–sprung into action.  They moved most of their expendable assets, namely Jackson, their 2015 first-round pick and another first-rounder in the first allowable draft two-years after the first pick is conveyed.*

*The protections on those picks, per our essential Basketball Insiders Team Salary pages: 2015 (top-18 protected, top-15 protected in 2016 and 2017, otherwise converts to 2017 and 2019 second-rounders). Then a first-rounder two years after first pick is conveyed, which is lottery protected from 2017-2019, otherwise converts to two second-rounders).

In return, the Thunder obtained potential rotation players Dion Waiters, Enes Kanter, D.J. Augustin and Kyle Singler.  All four are useful players, the former two possessing considerable upside. Waiters essentially fills Jackson’s role as a shot-creator for the second unit.  The 22-year-old Kanter is a very talented old-school brute with a skilled post game who can beast on the offensive glass.  Singler is a quality wing who is shooting over 40 percent on threes and won’t kill the Thunder on defense.  Augustin struggles on defense, but is a better fit offensively than Jackson since he provides more shooting and distribution. He can play off the ball with Westbrook in small lineups.

But conspicuous by absence is the true two-way wing the Thunder really needed.  In the course of firing so many prized bullets, the Thunder behaved more like they were still in asset accumulation mode than a team trying to fill the holes on a championship contender.  Kanter and Waiters are both young players with intriguing offensive ceilings (Kanter more than Waiters in my book), but very few who watched them in their first NBA homes would deem them winning basketball players at this point.  Both struggle with defense and execution at this point in their careers despite gaudy numbers on occasion.  Their best skills, individual scoring, are fairly uncomplementary when paired with Westbrook and Durant, who are far better at that than they are while still creating for others as well. What’s more, Waiters and Kanter have been prickly when asked to accept reduced roles in the past.  Kanter in particular may chafe as he seeks to build his value entering restricted free agency in the summer.

With the recent news of Durant’s upcoming absence, acquiring more wing depth and scoring should help the Thunder maintain playoff position in his stead.  It bears asking if the Thunder knew more missed time for Durant was likely, in which case obtaining a starting-quality small forward in Singler was an excellent move to preserve their playoff chances.

Nevertheless, with the number of viable options on the Thunder roster, reduced roles for everyone are coming in the playoffs. If Westbrook and Durant play 36 minutes per game (and possibly more in the playoffs), that leaves only 72 minutes distributed between Roberson, Singler, Morrow, Waiters, and Augustin among the smalls.  With Serge Ibaka playing 36, Kanter and Steven Adams would presumably get the lion’s share of the remainder at the four and five.  But that leaves no minutes for Nick Collison and Mitch McGary, not to mention Steve Novak, Perry Jones, and Lamb.  Frankly, the Thunder now have a ton of talent that simply cannot be used in the playoffs.  Consolidating their assets into a real two-way wing like Arron Afflalo (available for less than Kanter),* or even moving on other available players like Iman Shumpert or Wilson Chandler might have rounded out the roster in a much more useful fashion.

*Perhaps an overrated defender, but still better on that end than any of the OKC wing brigade aside from the offensively punchless Roberson.

Make no mistake, the Thunder certainly have a better overall roster than at the start of the year.  Singler and Augustin in particular should be upgrades for this year over their departed counterparts.  But overall OKC resembles an 18th century ship of the line that can only bring some of it’s considerable broadside to bear on the enemy at once.  Consolidating that firepower into a cogent eight-man rotation might have been a more useful application of the assets expended.

But perhaps more interesting are the financial implications.  Oklahoma City will be taxpayers for the first time this season, doling out $2.9 million in tax payments while foregoing the league’s tax distribution, usually around $3 million per team. That in itself is a surprise, given the Thunder’s famous reluctance to pay the tax likely cost them James Harden.  It is a bit odd the Thunder did not make an effort to get under by trading Jeremy Lamb given his complete absence from the rotation, although that may have been an impossibility at the late hour when the Kanter and Novak deal came together.

Depending on who re-signs and for how much, the potential tax implications beyond this season are massive.  Here is the Thunder cap sheet for the upcoming summer:

Thunder Current

The Thunder have $78.3 million committed without including restricted free agents Kanter and Singler.  Both will expect significant raises.  If either leaves, OKC will likely be unable to use the full mid-level exception due to their proximity to the apron.*  If they did, they could face big problems with the resultant hard cap, like the Clippers have this year.  In any event, Singler and Kanter are both better players than could likely be obtained via any cap exceptions this summer.  Thus there will be considerable pressure to retain them, especially considering the assets surrendered in exchange.  No doubt the Thunder will be going all out for their final audition season to secure Durant’s long-term commitment.

*There might be some ways around this, such as dumping Jones and Lamb or using the stretch provision on Novak’s $3.7 million to spread that amount over three years.

What kind of contracts will Singler and Kanter command? Assessing the overall market for this summer would be an entire series of articles in itself, but suppose Singler re-signs for a three-year, $18 million deal and Kanter for four years, $48 million.*

*Either of these estimates could end up too low given the potential volatility of the market and what are reputed to be Kanter’s outsized demands.  The Thunder would also likely start their deals as low as possible and give them the maximum raises to reduce the tax payment in year one.  This is just a rough estimate.

In that case, the Thunder would be deep into the tax, $14.2 million over the tax line with $26.6 million owing to Uncle Adam.

Kanter re-sign

This scenario does not even consider this summer’s signing of 2014 first-rounder Huestis, which the Thunder promised to induce a year of indentured servitude in the D-league.  Any additional signings at that point would cost $2.50 per $1, or even $3.25 per $1 once they exceed $15 million over the tax.  Even if Clay Bennett and his ownership group have turned over a new leaf, that leaf would have to be gilded indeed to stomach a tax payment over $25 million.  Even if Singler were allowed to walk, Huestis and Kanter alone probably put Oklahoma City around $10 million over the tax line with a $16 million payment.

Another interesting note is the scenario if Durant re-signs.  OKC will catch a slight break for 2016-17 as he will have nine years of experience, making him eligible for the 30 percent rather than 35 percent max for players with 11 or more years of experience.  As a result we may see Durant sign a three-year maximum deal with a third-year player option so that he can become a free agent again after 2018 when he will be eligible for the 35 percent max (and the cap will likely have gone up quite a bit more than even in 2016).

Nevertheless, Durant’s cap hold for his projected $25.4 million max salary in 2016 will likely preclude OKC doing much in free agency even if he re-signs, assuming Kanter and Singler are retained this summer.  And that is to say nothing of retaining 2016 free agents Waiters, Augustin, and Morrow.

The upshot of the last two months’ activity is OKC going all-in for this year–and possibly for the years to come–with this supporting cast.  It was probably their last chance at acquiring young players who can both help now and continue to grow.  But if that strategy is continued to its ultimate end, it is going to cost Bennett a pretty penny next year.  If Kanter or Singler fail to become major contributors this year, that kind of tax bill could prove very difficult to stomach.  And if Kanter’s contract demands prove too exorbitant or he wants to go somewhere he can start, it is not impossible that the Thunder would move on from him after the season in part to lessen the tax bill.  They are making all the right noises about re-signing him for the long term, but every team with a restricted free agent says that to dissuade higher offers they might have to match.

Even if Singler and Kanter are retained, it is very likely the Thunder will feel the need to engage in significant cost-cutting moves this summer.  For that reason, they may regret failing to find takers for Lamb and Jones during this season before their fourth-year salary increase and another season on the bench makes trading for them less palatable.  It also calls into question the $3.7 million per season extension for Collison.  “Mr. Thunder” was rewarded for his loyalty using a rare CBA provision for players with more than 10 years of service with the same team, which allowed his extension to start at a higher amount.  But he is probably a minimum contract-quality player at this point in his career, and probably will not really be in the rotation if Kanter is around.  If the Thunder have to surrender assets to dump salary, or give up a valuable player to reduce the tax bill, the needless overpay for Collison could end up looking bad.

Regardless of how this season turns out, the Thunder finances will be a key question this offseason.