Rockets open to, but not burdened by, contract extension talks with Jalen Green and Alperen Sengun

As first-round picks from the 2021 NBA draft, Jalen Green and Alperen Sengun are set to enter the fourth and final seasons of their initial rookie-scale contracts with the Houston Rockets.

Both have improved while flashing moments of brilliance, and Sengun drew All-Star consideration earlier this year. On paper, there is a case to be made to consider a contract extension for both players, which could keep them formally under club control for years to come.

Yet, for general manager Rafael Stone, there’s also math to consider. If the Rockets let Sengun and Green play out the final year of their current deals, they would hit restricted free agency in the 2025 offseason, which — beyond standard negotiating rights — gives the Rockets the right to match any outside offer and retain each player.

To make both restricted free agents, the Rockets would have to put a “cap hold” on their initial 2024-25 salary books. That figure is determined relative to each player’s original contract and draft slot.

For Green, the No. 2 pick in 2021, his cap hold is projected at a starting annual salary of $31.2 million for the 2024-25 season. For Sengun, the No. 16 pick, it’s $16.3 million.

In that 2025 offseason, the Rockets could have significant financial flexibility should they not pick up the team option on the final year of Fred VanVleet’s contract. Yet, if the Rockets give Sengun or Green an extension in 2024, each cap figure for the 2025 offseason would change from the aforementioned hold amounts to the starting salary of the new contract.

Both figures are below the NBA’s maximum-salary contract — and well below it, in the case of Sengun. So, if the Rockets plan to give either player the maximum deal or anything close to it, it benefits their 2025 cap flexibility to wait until that offseason. For the players involved, any new contract wouldn’t start until the 2025-26 season in either scenario, so there’s not significant harm from waiting.

Here’s how Stone characterized the extension situations during his end-of-season media availability on Tuesday:

I’ll always talk to any player, at any time, about any thing. We want to have a relationship with them that is based on communication. We will definitely talk about it.

The way the CBA (collective bargaining agreement) is set up, you can extend, but you don’t have to, and you can always revisit next summer. In that sense, there’s no gun to our head, or anything else.

We’ll have conversations. We’ll see what makes sense for us, what makes sense for them, and both sides will make whatever decisions we make.

It’s an opportunity to have good discussions with them, and we look forward to that. But it’s not a burden or a crushing pressure.

If either Sengun or Green is open to a new contract with a starting annual salary at or below those projected cap-hold figures — or below what the team feels they may potentially command in free agency — there could be a mutually beneficial scenario to extend in 2024.

The player would get the benefit of added financial security from signing that contract a year early, and the team would protect itself from the risk of potentially paying more money — should that player’s performance in 2024-25 make them worthy of a larger deal.

But if the player is set on a higher figure, as is his prerogative, there’s only downside to the team in doing a 2024 deal. The Rockets could offer the same contract in a year, with an identical starting date, yet with a lower salary figure on their initial 2025 books.

By waiting until 2025, the team is also more protected in the event of a major injury or disappointing season that might unexpectedly lower the player’s future value, relative to what is known now.

So, the question for 2024 is whether either player is open to a compromise scenario where both sides benefit. Time will tell.

Regardless of how those 2024 talks end up, it’s all a matter of timing. When asked Tuesday, Stone was adamant the Rockets have the financial backing to keep all of their core six of young players (Green, Sengun, Jabari Smith Jr., Tari Eason, Cam Whitmore and Amen Thompson) beyond their initial NBA contracts.

“We do,” Stone concluded.

Story originally appeared on Rockets Wire