Blog Entry

Class of 2008 still hunting for extensions

Posted on: January 18, 2012 11:50 am
Edited on: January 18, 2012 12:18 pm
 
Posted by Royce Young



The clock is ticking for a lot of players in the 2008 draft class. Kevin Love, Russell Westbrook, Danilo Gallinari, Eric Gordon and Nicolas Batum are all looking for extensions, while Derrick Rose is the only guy to have signed one out of that group.

Blame the new collective bargaining agreement, I guess. I don't think it's any coincidence that the one guy that has his extension plays in Chicago, while the three that are still waiting play in Oklahoma City, Portland and Minnesota.

The deadline for extensions is Jan. 25 and with that just a week away, there isn't a whole lot of time to hammer something out. Don't get a deal done and those guys will become restricted free agents on July 1, which opens up a lot of possibilities. And less money, most likely.

Love reportedly will be getting an offer of four years, $60 million
, which he almost surely will turn down. Batum wants an extension but with his role being complicated behind Gerald Wallace, he's up in the air. Gallinari might be getting closer and Gordon has himself quite the awkward situation in New Orleans.

But what about Westbrook? He was an All-Star last season, second-team All-NBA and a rising star in the league. It should be a no-brainer for him to have an extension in his pocket and five more years in Oklahoma City. Shouldn't he have had his done a long time ago?

Except that situation is complicated and there are a number of reasons that Westbrook very well may not get extended before the Jan. 25 deadline. Why hasn't he been extended? The new CBA certainly has a hand in it, as well as Westbrook's teammates.

Westbrook and the Thunder are "dug in right now," according to Yahoo! Sports, but indications are the two sides will find a common ground between five years $80 million which is reportedly what OKC is offering and the max, which could potentially be five years and $94 million if Westbrook qualifies for the Rose Rule.

Which is exactly what's holding back the Thunder.

Based on observations, instinct and a few conversations with people in the know around and in the organization, the Rose Rule is what’s making the Thunder are bit more conservative than they otherwise would’ve been. Because if you extend Westbrook for the max right now and then he goes on to make an All-NBA team, he’d retroactively get a big pay bump.

What's the Rose Rule and why does it matter? It was added to the new collective bargaining agreement as something to help franchises keep their young stars. If a player is named MVP -- hence "Rose Rule" -- is voted twice a starter in the All-Star Game or makes two All-NBA teams, he qualifies for an extra five percent salary bump. So instead of getting a max extension, which is normally 25 percent of a teams cap, the player would get 30 percent. The rule has good intentions but for a team like Oklahoma City, it could be devastating because it has two players that could be eligible. Which would mean the Thunder could be paying out 60 percent of their cap to just two players.

For instance, Kevin Durant had his contract affected by the new Rose Rule and will make almost $15 million more over the life of his deal because of it. That prospect is something that the Thunder are leery of, especially considering James Harden and Serge Ibaka will be eligible for extensions next season.

Harden could be complicating that as much as anyone because of his rise as a high-caliber player. Harden has been compared often to Manu Ginobili, but that’s exactly the kind of dollar situation OKC wants to place Harden in. In 2010, Ginobili signed a three-year, $38 million extension with the Spurs. It paid him $11.8 million last season, $12.9M this season and $14.1M next season. The Thunder would love for that to be a five-year deal, but the dollar range is similar. Have Harden on the books for around $12 million a year, Durant at $17 million and Westbrook in the $15-16 million range.

That’s about $46 million which leaves room for a potential extension for Ibaka and role players like Kendrick Perkins, Nick Collison, Daequan Cook and others. Remember, the luxury tax line was set at $70 million last season and that’s the number the Thunder want to stay away from. Right now though, because of the Rose Rule bumping Durant’s deal, OKC is actually over the cap. Which isn’t helping things.

There has been a good amount of chatter about “choosing” between Westbrook or Harden and Ibaka, but that’s not the thinking of the Thunder’s front office. Multiple sources have told me that the Thunder’s preference is to keep the entire core. That might sound painfully obvious, but in the team’s mind, they don’t want to be choosing between anything. They want this group to stay intact for a long run together where they grow, mature and develop. It might not be possible, but that doesn’t mean they aren’t going to try. That’s been the plan all along. These guys weren’t drafted just to develop over the life of a rookie deal and then move on. They were drafted to be part of a long-term vision.

That’s the plan. And that’s why there’s a hold-up. It’s a negotiation though. Westbrook and more important, Westbrook’s agent, obviously see Westbrook as a max player. While he probably is, or at least very close to it, in the best interest of the Thunder, he isn’t. I’m not saying it would be good for Westbrook to not play well enough to make All-NBA again, but if he didn’t, it wouldn’t be all bad.

Westbrook wants to remain a part of the Thunder and obviously the Thunder want to keep him. But it’s about dollars and cents lining up for the long-term sustainability of the team. I can’t say with any large amount of confidence that Westbrook gets an extension before Jan. 25, but I do believe he will be in OKC for the next few years.

But I guess we’ll get a better idea of that in about a week.

Comments

Since: Jul 13, 2007
Posted on: January 19, 2012 1:21 pm
 

Class of 2008 still hunting for extensions

This excerpt is from the same article I referenced in my earlier comment,

"Revenue split

2005 CBA: Players receive 57 percent of Basketball Related Income (BRI).

2011 CBA: Players receive 51.15 percent of BRI in 2011-12. In later seasons players receive 49 to 51 percent of BRI (50 percent, plus or minus 60.5 percent of the amount by which BRI exceeds or falls short of projections); 1 percent of BRI (from the players' share) is used to fund a new pool for post-career benefits."

According to that piece from an article by noted CBA authority Larry Coon, the players are not recieving 57% this year or next.

We also have to start thinking about the impact of the new tv deal which will be signed in the next few years. The NBA currently has the worst tv deal of the 4 major sports and will likely see a huge bump when the next deal is put in place.

Accoding to Zach Lowe of Sports Illustrated,

"The NBA’s current deal with its national network partners runs through the 2015-16 season and brings in about $930 million per year. The league signed it during a down period in ratings. Just about everyone agrees the next TV deal, to kick in for the 2016-17 season, will pay the league plenty more. One sports business guru has estimated the next deal , though the price could jump even higher if ratings continue to rise and live sporting events become even more precious to advertisers fearful of the DVR"

Trying to project what the CAP is like weather forecasting. Projecting will be next year is hard enough, trying to predict what it will be in 3 years or beyond is impossible.





Since: Apr 7, 2009
Posted on: January 19, 2012 10:51 am
 

Class of 2008 still hunting for extensions

Westbrook is NOT a max player, don't do it OKC.



Since: Nov 2, 2011
Posted on: January 19, 2012 9:39 am
 

Class of 2008 still hunting for extensions

Are those incentives (MVP, 2 All-Stars, etc.) just over the life of the contract? If not, wouldn't the Heat be toast already? If so, it seems like an argument for shorter and shorter contracts, more player movement and less fan connection with their teams....

Also what if the player wins two MVPs? Does it bump each time? 



Since: Dec 10, 2006
Posted on: January 19, 2012 12:34 am
 

Class of 2008 still hunting for extensions

Any plan that bumps a player's salary retroactively is plain stupid. How can teams structure their salary cap?



Since: Dec 5, 2006
Posted on: January 18, 2012 11:56 pm
 

Class of 2008 still hunting for extensions

This is a reasonable analysis as far as it goes. What is missing is that this year and next have a much higher salary cap and tax line than the third year of the CBA (2013-2014.) In that year the player share of BRI drops from 57% to 50%. That drops the tax line to about $61M meaning that Durant and Westbrook alone will take up more than 50% and with Harden could exceed 72% of the tax line. And the tax that year gets much worse making it nearly impossible for a small market to pay it.

The probable outcome is that one or two of these players will be traded out of OKC. It is just not good tax/cap management to have this many young stars on a team. Durant is going to have to carry more load (much as Duncan has done in San Antonio) with one of these players alongside and more veterans with cheaper contracts or with more players on the rookie scale. No team can have two max contacts in the future and still win. The Heat situation will become really hot for that team in 2013-2014. So maybe not five, or six, or seven championships.



Since: Nov 5, 2010
Posted on: January 18, 2012 10:25 pm
 

Class of 2008 still hunting for extensions

Something will have to give.  If they don't max out Westbrook he will be signed and traded this summer.  I always that was a Starbury/K.G. situation brewing between him and Durant anyway.  I guess we will find out sooner than later.



Since: Feb 1, 2009
Posted on: January 18, 2012 10:13 pm
 

Class of 2008 still hunting for extensions

Westbrook isn't a max guy. He should be making in the $10-$12M dollar range where Rajon Rondo stands. This probably won't happen very often with 2 Rose Rule guys though. OKC just had an extremely good 3 years in the draft. The Thunder were terrrrrrrible in their first couple of years with durant, and are just getting good after picking up Westbrook and Harden off those 2 crappy years.



Since: Jul 13, 2007
Posted on: January 18, 2012 10:07 pm
 

Class of 2008 still hunting for extensions

Contract extensions


2005 CBA: Players coming off their rookie scale contracts can extend for five additional seasons. All other veterans can extend for five total seasons, which includes the seasons remaining on their current contracts.

2011 CBA: Players coming off their rookie scale contracts can extend for four additional seasons, although the team can designate one player who is eligible for five seasons at the maximum salary. A team can have only one designated player on its roster at any time. All other veterans can extend for four total seasons, which includes the seasons remaining on their current contract. The extension in an extend-and-trade contract is limited to three total seasons, which includes the seasons remaining on the current contract.

http://espn.go.com/nba/story/_/page

/CBA-111128/how-new-nba-deal-compar

es-last-one

It seems like the designated player, which can only be one, only limits the number of years and not the % of the CAP.





Since: Apr 1, 2009
Posted on: January 18, 2012 7:59 pm
 

Class of 2008 still hunting for extensions

These Poor Millionaires, I'm just crying my eyes out.
 Let the lazt,greedy bastards get a real job



Since: Jan 18, 2009
Posted on: January 18, 2012 6:55 pm
 

Class of 2008 still hunting for extensions

There is nothing in any of the new cba articles that only say 1 per team.


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