The Vertical Front-Office Insider Bobby Marks, a 20-year executive with the Nets, looks at the options for Russell Westbrook and the Oklahoma City Thunder.
With the Kevin Durant defection to Golden State now in the rear-view mirror, the focus now turns to Russell Westbrook.
The recent cap spike caused the perfect storm that allowed the Warriors to land Durant, but now presents the perfect opportunity for Oklahoma City to retain Westbrook.
Westbrook, entering the final year of his five-year rookie extension, is eligible to have his current contract renegotiated to add both salary and years.
The path Oklahoma City chooses with Westbrook will certainly shape the direction of the organization.
Players under four- or five-year contracts can either extend or renegotiate after the three-year anniversary of when the deal was signed.
The amount of years added to the contract cannot exceed four, including what is currently left on the contract.
In Westbrook’s case, Oklahoma City can add an additional three years to his current contract but would need to use cap space now to change the salary parameters.
Like the Rockets recently with James Harden, the benefit of choosing the renegotiation route not only rewards the player financially but also the team.
Harden, who was set to become a free agent in 2018, is now signed to a max contract that reflects the new TV money but also makes a longer commitment to the Rockets.
Creating cap space
The restricted free agency of Dion Waiters will play a role in determining cap space for the Thunder.
Although the Thunder currently have $7.1 million in room, including Waiters’ $12.8 million cap hold, Oklahoma City is still $1.6 million short in pushing Westbrook’s salary from $17.8 million to the $26.5 million max.
For Oklahoma City to preserve cap space, Waiters’ first-year salary would have to start at $11.1 million.
Anything above the $11.1 million figure would have the Thunder relegated to the trade market to create additional room.
There are also two different options with Oklahoma City and Waiters.
Waiters can sign the one-year, $6.7 million qualifying offer or the Thunder can withdraw the qualifying offer and renounce Waiters.
These scenarios would allow the Thunder to have cap flexibility next summer and leave the option open to land a marquee free agent.
The Westbrook renegotiation would be different than Harden’s with the Rockets.
Harden had an additional two years left on his contract and earned an additional $20 million combined in the 2016-17 and 2017-18 seasons. They were the remaining years under his 2012 rookie extension.
Westbrook only has one year remaining on his contract and a renegotiation would see his deal increase from $17.7 million to $26.5 million.
The difference in salary for the 2017-18 season in a renegotiated contract compared to signing as a free agent is a wash.
Westbrook must decide if an additional $8.8 million presents a fair trade-off to bypass free agency next summer.
Although Oklahoma City could renegotiate his contract for an additional three seasons, the best approach for Westbrook would be to look at a short-term commitment.
Westbrook, currently with eight years of service, could renegotiate his salary for this season to reflect a max-level contract while adding two additional years, with the third being a player option.
This approach would have Westbrook becoming a free agent in 2018, when he reaches 10 years of service and becomes a Tier 3 max player.
Waiting another year for free agency would see Westbrook’s salary start at $35 million in 2018 instead of $28.6 million.
The short-term commitment
Current salary OKC renegotiation
2016-17 $17.8 million $26.5 million
2017-18 $28.7 million (FA max contract in 2017) $28.5 million
2018-19 (Player option)
$30.8 million $30.5 million
Total (Opting out) $46.5 million $55 million
An eye toward 2018
Westbrook faces the same decision next summer as Durant did during his recently concluded free agency.
The short-term renegotiation with Oklahoma City could lead to a financial windfall in 2018.
Westbrook could become the league’s first $200 million player.
With OKC With Team B
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
2022-23 $46.1 million
Total $203.8 million $151.3 million
Cap impact for 2017
There is a $3 million cap hit if the Thunder were to lock up Westbrook now compared to waiting until next summer. The Thunder would see a $25.4 million Westbrook cap hold replaced by his new salary of $28.5 million.
The Thunder would enter the summer of 2017 with a projected $18 million in cap room with several expiring deals (Enes Kanter’s) and team options (Mitch McGary and Josh Huestis), giving Oklahoma City the flexibility to create an additional $24 million in room.
Oklahoma City, however, will need to be cautious with the rookie extensions for Steven Adams, Andre Roberson and Victor Oladipo.
All three have low cap holds and would be best addressed next July, not this fall when all three are eligible for rookie extensions.
THE OTHER OPTION
The Thunder learned this summer the harsh reality of free agency.
While no one can criticize the approach Oklahoma City took with Durant, a different philosophy will be needed with Westbrook.
If Westbrook declines renegotiating his contract, the Thunder would be best served to gauge the temperature of teams around the NBA on the value of Westbrook.
The challenge for Oklahoma City is finding a suitable package of players and assets to replace a franchise-level player, with the downside of Westbrook having an expiring contract.
The trade market has shown that teams are reluctant to move valuable assets for players on expiring contracts.
If there is uncertainty of Westbrook remaining in Oklahoma City, Thunder management could work with Westbrook and his representatives to find a team that he would commit to with a new contract.
Oklahoma City could trade Westbrook and gain valuable assets, while the acquiring team could renegotiate Westbrook’s contract for an additional two seasons.
Similar to the Thunder’s initial approach of renegotiating Westbrook’s contract, his potential new team could mirror (with a 4.5 percent raise in year two vs. 7.5 previously) the same salary structure. The team acquiring Westbrook, however, would need to have $8.7 million in room carved out to adjust his 2017 salary from $17.8 million to $26.5 million.
The two additional years would fit into Westbrook entering free agency in 2018, when he would become a Tier 3 max player.
The ball is certainly in Westbrook’s court.
The one thing Oklahoma City cannot afford is to lose a franchise-level player in two consecutive summers.
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