The Vertical Front-Office Insider Bobby Marks, a 20-year executive with the Nets, looks at the Russell Westbrook renegotiation and the short- and long-term salary cap impact for Oklahoma City.
The top NBA offseason storyline has shifted from the defection of Kevin Durant to Golden State to Russell Westbrook’s contract renegotiation with Oklahoma City.
With Westbrook under contract for the next two seasons (he has a player option for 2018-19), the Thunder now turn their attention to their young core of players and their options for the future, which could include the pursuit of an additional max player.
THE WESTBROOK RENEGOTIATION
Players currently under a four- or five-year contract can either extend or renegotiate after the third-year anniversary of when that contract was signed.
In Westbrook’s case, Oklahoma City added two years to his current contract (including the aforementioned option year) and used cap space to change the salary parameters.
Durant signing with Golden State and the Thunder withdrawing the qualifying offer on Dion Waiters, who signed with Miami, allowed Oklahoma City to create the necessary cap space for Westbrook’s new deal.
Choosing the renegotiation route not only rewards the player financially but also gives the franchise more time.
Although Oklahoma City could have renegotiated a contract for an additional three seasons the short-term approach gives Westbrook financial flexibility while boosting his salary to the current max level.
Westbrook, currently with eight years of service, renegotiated his salary for this season and extended his contract an additional two seasons, with the final season being a player option.
This approach allows Westbrook to become a free agent in 2018 when his years of service reach 10 and he becomes a Tier 3 max player.
The Westbrook renegotiation should end any speculation of the All-Star changing teams in the near future.
Unlike free agents who sign during the summer and cannot be traded until Dec. 15, the Thunder would need to wait six months (Feb. 4) from when the contract was executed if they want to Westbrook.
This scenario however is unlikely.
The new pact gives Westbrook an additional $8.8 million this season while providing the Thunder with security for an additional season in 2017-18.
Westbrook, who was due to earn $17.7 million this season, will see his contract increase to $26.5 million in 2016-17 and $28.5 million in 2017-18 with a player option in 2018-19 for $30.5 million.
Projected contract in 2018
If Westbrook opts out of after the 2017-18 season, he would be in his prime at 29 and in line to receive the largest contract in NBA history if he elects to stay with the Thunder.
With OKC With Team A
2018-19 $35.4 million $35.4 million
2019-20 $38.1 million $37.0 million
2020-21 $40.8 million $38.6 million
2021-22 $43.4 million $40.2 million
2023-23 $46.1 million
Total $203.8 million $151.3 million
What to do with rookie extensions
Oklahoma City has an established track record of rewarding players with rookie extensions.
In the cases of Durant, Westbrook, Serge Ibaka and Nick Collison, the Thunder were aggressive in locking up their youth before they hit restricted free agency.
However, in past extensions Oklahoma City has been able to get each former first-round pick to sacrifice either money or years.
From Durant signing a five-year commitment without a player option to Westbrook not negotiating the “Rose rule” to provide cap flexibility to Ibaka committing to an average salary of $12 million, each player helped the organization when signing a new pact.
Now, newly acquired Victor Oladipo and starters Steven Adams and Andre Roberson are eligible for extensions and large salary increases that would go into effect next summer, but things will likely be different this time.
The Vertical talked to league executives to gauge the three players’ value compared to their current cap holds.
Player FA cap hold Projected FA salary
Steven Adams $7.8 million $21 million
Victor Oladipo $13 million $19 million
Andre Roberson $5.4 million $10 million
Total $26.2 million $51 million
The Thunder will benefit next summer when all three players have a combined $26 million in cap holds.
Oklahoma City, instead of re-signing them now, can retain flexibility by leaving the low holds against their cap.
With each player being a restricted free agent, Oklahoma City has the right to match any offer, and history has shown that restricted free agents rarely change teams.
Keeping flexibility for next summer
Although Oklahoma City will be right up at the salary cap next July, bypassing the rookie extension scenario and leaving all three restricted free-agent cap holds on the books is the best option.
Here’s a look at the Thunder’s cap situation next summer and how they can create a max salary slot.
THUNDER’S CURRENT 2017-18 PROJECTION
Guaranteed salaries 2017
Russell Westbrook $28,530,608
Enes Kanter $17,884,176
Alex Abrines $5,725,000
Kyle Singler $4,666,500
Domantas Sabonis $2,550,000
Oct. 31 team option 2017
Mitch McGary $2,430,982
Cameron Payne $2,203,340
Josh Huestis $1,242,840
Free-agent cap holds 2017
Victor Oladipo $13,015,921
Ersan Ilyasova $12,600,000
Steven Adams $7,851,295
Nick Collison $7,125,000
Anthony Morrow $6,627,200
Andre Roberson $5,457,680
Total Salaries $117,910,542
Salary Cap $102,000,000
Cap Space None ($15,910,542 over)
The Thunder will have the flexibility because of the team options of McGary, Payne and Huestis.
Besides the $26 million in free-agent cap holds of Oladipo, Adams and Roberson, Oklahoma City has an additional $26 million in holds with Collison, Ilyasova and Morrow.
THE MAX SALARY SLOT SCENARIO
The Thunder, known for building through the draft and trades, could clear $29 million in cap space with the following steps:
1. Do not pick up the rookie options of McGary and Huestis
2. Release the cap holds of Ilyasova, Morrow and Collison
3. Trade the contract of Kanter to a team with room
With the Ibaka trade to Orlando this past June and the development of rookie Domantas Sabonis, Oklahoma City could be a player in next summer’s free-agent class that includes All-Star Blake Griffin and Paul Millsap.
The challenge for Oklahoma City would be to sell free agents on a future past the 2017-18 season.
With Westbrook likely on an expiring contract heading into 2017-18, free agents would likely only commit to a short-term contract.
With a core group of Westbrook, Oladipo, Roberson, Adams, Payne, Sabonis, Abrines, Kanter and Singler still in their primes, the Thunder could continue to build upon their current roster or enter the unpredictable world of free agency.
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