Front-Office Insider: Rookie-scale options

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It’s safe to say Karl-Anthony Towns’ option is getting picked up. (Getty Images)
It’s safe to say Karl-Anthony Towns’ option is getting picked up. (Getty Images)

The Vertical’s Bobby Marks, a 20-year executive with the Nets, looks at the decision teams face with their third- and fourth-year rookie options.

Fifty-seven players are operating under rookie-scale contracts that will have their third- or fourth-year options either exercised or declined by Oct. 31.

Though the paperwork on the third-year option for NBA Rookie of the Year Karl-Anthony Towns is a mere formality, the fourth-year options of the Grizzlies’ Jordan Adams and the Celtics’ James Young, for example, are no such thing.

The next few weeks will determine if players on the bubble will be on an NBA roster next summer, or join the NBA Development League pool or perhaps venture overseas.

In the cases of Adams and Young, in addition to their options, both players find themselves in a numbers crunch to make their respective opening-day rosters.

Here’s a look at the evolution of rookie options and the decision teams face leading up to Oct. 31.

The Wild West before 1995
First-round picks who entered the NBA before 1995 worked in a free-market system.

There were no limitations on salary and years, and teams often found themselves in drawn-out negotiations that would last until training camp.

Starting with the Nets in the summer of 1995, the first contract I worked on was the three-year, $3.9 million rookie scale contract of No. 9 overall pick Ed O’Bannon.

In the previous year in the same spot in the draft, Eric Montross signed an 11-year, $22 million contract.

Though the $22 million figure stands out, it would be the only contract Montross signed in his eight-year NBA career.

The evolution of the rookie option
Since the introduction of the rookie scale in 1995, the NBA in subsequent CBA negotiations (1999 and 2005) has tweaked the rules.

In 1995 the rookie contract was three years with no team options and the salary was based on draft position.

Unlike the eight-year, $45 million contract Grant Hill signed a year earlier, the 76ers’ Jerry Stackhouse, drafted in the same spot as Hill, signed a three-year, $6.8 million contract in 1995. Stackhouse, however, entered free agency at an earlier age and signed a three-year, $39 million contract with Detroit.

The 1999 CBA introduced a fourth-year team option on rookie deals.

In 2005, the NBA introduced third- and fourth-year team options that needed to be exercised before Oct. 31.

Third-year option
Though not a career killer, all signs point to a short stay in the NBA if a team declines the third-year rookie option.

Since 2010, players such as Kendall Marshall, Royce White, Shane Larkin, James Anderson, Nolan Smith, Craig Brackins, Fab Melo, Jared Cunningham, Damion James, P.J. Hairston, JaJuan Johnson, Daniel Orton and Nemanja Nedovic have had their rookie deals end after two seasons.

Each of the 13 former first-round picks – with the exception of Hairston, who signed a camp contract with Houston – is no longer in the NBA.

With the rising cap and the excellent value of first-round picks, it will be highly unlikely if any of the players listed below have their third-year options declined:

D’Angelo Russell is expected to improve with coach Luke Walton and the Lakers. (Getty Images)
D’Angelo Russell is expected to improve with coach Luke Walton and the Lakers. (Getty Images)

Boston: Terry Rozier ($2 million) and R.J. Hunter ($1.3 million)
Brooklyn: Rondae-Hollis Jefferson ($1.5 million) and Chris McCullough ($1.2 million)
Charlotte: Frank Kaminsky ($2.8 million)
Chicago: Bobby Portis Jr. ($1.5 million) and Jerian Grant ($1.7 million)
Dallas: Justin Anderson ($1.6 million)
Denver: Emmanuel Mudiay ($3.4 million)
Detroit: Stanley Johnson ($3.1 million)
Golden State: Kevon Looney ($1.2 million)
Houston: Sam Dekker ($1.8 million)
Indiana: Myles Turner ($2.6 million)
L.A. Lakers: D’Angelo Russell ($5.6 million) and Larry Nance Jr. ($1.3 million)
Memphis: Jarell Martin ($1.3 million)
Miami: Justise Winslow ($2.7 million)
Milwaukee: Rashad Vaughn ($1.9 million)
Minnesota: Karl-Anthony Towns ($6.2 million) and Tyus Jones ($1.4 million)
New York: Kristaps Porzingis ($4.5 million)
OKC: Cameron Payne ($2.2 million) and Josh Huestis ($1.2 million)
Orlando: Mario Hezonja ($4.1 million)
Philadelphia: Jahlil Okafor ($5 million)
Phoenix: Devin Booker ($2.3 million)
Sacramento: Willie Cauley-Stein ($3.7 million)
Toronto: Delon Wright ($1.6 million)
Utah: Trey Lyles ($2.4 million)
Washington: Kelly Oubre Jr. ($2.1 million)

Fourth-year option
DeMarre Carroll, Solomon Hill, Al-Farouq Aminu and Austin Rivers each had their fourth-year options declined but eventually found their footing in the league – and lucrative contracts.

In Hill’s case, because the Pacers declined his fourth-year option, Indiana was limited to offering the unrestricted free agent a starting salary of $2.4 million – the amount he would have earned if his option were exercised.

Though each of the players below had their third-year options exercised last October, history has shown that at least three of them will enter free agency a year early as an unrestricted free agent:

Boston: Marcus Smart ($4.5 million) and James Young ($2.8 million)
Chicago: Doug McDermott ($3.3 million)
Denver: Jusuf Nurkic ($2.9 million) and Gary Harris ($2.5 million)
Houston: Clint Capela ($2.3 million) and Tyler Ennis ($2.6 million)
L.A. Lakers: Julius Randle ($4.1 million)
Memphis: Jordan Adams ($2.4 million)
Milwaukee: Jabari Parker ($6.8 million)
Minnesota: Andrew Wiggins ($7.5 million), Zach LaVine ($3.2 million) and Adreian Payne ($3.1 million)
Oklahoma City: Mitch McGary ($2.4 million)
Orlando: Aaron Gordon ($5.5 million), Elfrid Payton ($3.3 million) and C.J. Wilcox ($2.2 million)
Philadelphia: Joel Embiid ($6.1 million) and Nik Stauskas ($3.8 million)
Phoenix: T.J. Warren ($3.2 million)
Portland: Noah Vonleh ($3.5 million) and Shabazz Napier ($2.3 million)
San Antonio: Kyle Anderson ($2.2 million)
Toronto: Lucas Nogueira ($2.9 million) and Bruno Caboclo ($2.4 million)
Utah: Dante Exum ($4.9 million) and Rodney Hood ($2.4 million)

Even with the majority of third- and fourth-year options likely to be exercised, expect teams to wait until after the final preseason game to make their decisions.

In 2014, the contract of Marquis Teague became valuable because the Nets had not yet made a decision on his fourth-year option.

Facing a roster crunch, Teague was traded to Philadelphia four days before the Oct. 31 deadline and was eventually waived.

Had a decision on Teague been made in mid-October, his contract would have had little value based on the two years of guaranteed money.

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