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Ravell Call, Deseret News

Gordon Hayward has a lot of options for his next big contract

By Andy Larsen  |  Posted Dec 30th, 2016 @ 4:45pm


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SALT LAKE CITY — Let's start here: Gordon Hayward is going to make a lot of money. More than a lot of people are going to be comfortable with.

Why? Well, under the NBA's current money-making reality (remember, the league signed a 9-year, $24 billion TV deal that kicked in this season), there's a lot of money to go around.

Even more important, Hayward's skillset is one a lot of teams would love to have. He's averaging 22 points per game this season, along with six rebounds and nearly four assists. He's an efficient scorer, thanks to his penchant for getting to the line, and he's a solid defender. He's versatile, you could plug him into nearly any NBA situation. Finally, there's the reality of positional scarcity. The wing positions, shooting guard and small forwards, are less deep than ever, and teams are playing more of them at a time.

In other words, he's definitely going to demand a maximum contract. As of now, 14 teams could open space to offer Hayward's maximum in this offseason, and a few more could open up that space with only a little bit of imagination. Hayward's ranked as the fifth best player likely to be available on the market.

Thanks to some new wording in the recently agreed to NBA collective bargaining agreement, he's got some choices about how he wants to make his maximum salary. The new agreement includes a Designated Player Contract that would apply to Gordon Hayward in certain situations. Here's a great explanation from Albert Nahmad of HeatHoops.com:

In the NBA, all max salaries aren’t built equal. There are three levels based on a player’s tenure: those with 0-6 years of experience are eligible for up to 25 percent of the salary cap (a Tier 1 max salary), those with 7-9 years of experience are eligible for up to 30 percent of the salary cap (a Tier 2 max salary), and those with 10+ years of experience are eligible for up to 35 percent of the salary cap (a Tier 3 max salary).

The new deal will introduce a “Designated Veteran Player” concept, which will allow players who qualify to sign five-year Tier 3 max salary contracts (that start at 35 percent of the salary cap), even though they don’t meet the league’s tenure-based eligibility requirements for it.

...

To qualify for it, a player must be entering his eighth or ninth season in the NBA (in the case of extensions) or have just completed his eighth or ninth season in the NBA (in the case of free agent signings), and must meet one of the performance criteria. Included on the list: Making one of the three All-NBA teams in either the previous season or the prior two, winning Defensive Player of the Year in either the previous season or the prior two, or winning MVP in one of the previous three seasons.

You must also have never changed teams as a free agent. You could have only been traded during your first four years in the league. You must be a free agent (in the case of a free agent signing) or have one or two years left on your contract (in the case of extensions). And if it is an extension, three years have to have passed since you signed your original contract.

In the end, then, a lot of Hayward's choices are going to be based around chasing this 35 percent salary cap figure, because it's a big difference in the amount of money he ends up making. In reality, Hayward's probably not going to be the league's MVP or defensive player of the year, but he has a real shot at making one of the All-NBA teams. How?

There are three All-NBA teams, each featuring two guards, two forwards, and a center. As a small forward, Hayward has some superstar-level competition: LeBron James, Kevin Durant, Kawhi Leonard, etc. But last year, the All-NBA third team featured Paul George and LaMarcus Aldridge in the forward spots.

Hayward's having a better season than either George or Aldridge in 2016-17. But, there definitely are other candidates to replace those two players, too: Giannis Antetokounmpo, Jimmy Butler, Paul Millsap, Kevin Love, Blake Griffin, and Anthony Davis (if you consider him a forward, not a center) among them. Can Hayward be among the two forwards named on the third All-NBA team? It probably depends on how good those players' teams are, and the injuries of the players involved. At this point, I'd have to say it's possible, but unlikely.

But is it likely at any point over the next three seasons? That's what Hayward has to figure out now, because it will make a big difference in the kind of contracts available to him. To show you what I'm talking about, let's look at his options, and the pros and cons of each.

By the way, the rest of this article contains a lot of salary numbers. Those salary numbers are estimates, based on a lot of byzantine CBA logic, NBA salary cap estimates reported by league sources, and more. They're also the maximum salaries that he's eligible to sign for, so he could agree to sign for less money with a team in compromising fashion.

(A quick breakdown, for those curious: the NBA is expecting the salary cap for the 2017-18 season to be set at around $103 million, according to a memo delivered to teams before the season. Earlier this month, The Vertical's Shams Charania reported that the league expects the salary cap to be set at $118-120 million for the 2020-21 season. Doing some reverse math, I'm modeling 5.0 percent salary cap growth each year. That seems fair.

Furthermore, there's also this weird thing where the NBA uses a different cap calculation for maximum salaries, where it ends up being 42.14 percent of BRI rather than 44.74 percent. But, in 2012-13, they approved a 5.8 percent increase to make up for that. We don't know if that different cap calculation made it into the new CBA, because the exact terms haven't yet been released. But since we're guessing on the other numbers anyway, I decided to keep it as simple as possible and just use straight calculations based on the percentages of the normal salary cap.

In very simple terms, the actual numbers Hayward or other max players in his situation actually sign for will differ, but not by that much.)

Option 1: Opt in to the last year of his current contract, then sign a 5-year Designated Player Extension with Utah

Hayward would do this if:

  • He makes any of the All-NBA teams in 2016-17
  • He wants to make the most amount of guaranteed money possible
  • He's okay with making a non-maximum contract amount in 2017-18
  • He trusts the Jazz and wants to stay in Utah for as long as possible

Hayward signs DP Extension with Jazz
YearAmount
2017-18$16,736,710
2018-19$37,852,500
2019-20$40,880,700
2020-21$43,908,900
2021-22$46,937,100
2022-23$49,965,300
Total:$236,281,210

In the end, this is the highest amount of guaranteed money Hayward can assure for himself this offseason, taking advantage of the new Designated Player contract to sign for 35 percent of the cap with 8 percent raises after 2017-18. Note that he's not eligible to sign a new free agency Designated Player contract with the Jazz, because he's only finishing his seventh NBA season. Instead, he has to opt in to the last year of his current deal before his contract expires on June 30, then trust that the Jazz will offer him a Designated Player 5-year extension later in the offseason.

But if he does have that trust in the franchise and makes All-NBA, this makes him just an incredible amount of money, about $236 million over the next six years of his life. That would make him one of the highest-paid players in NBA history, and earn him nearly $50 million by the time he's in his sixth year. It's hard to turn down that level of generational wealth: not only is it enough to secure his future, but his children's future, grandchildren's future, great-grandchildren's future, etc.

Option 2: Opt out of his current contract, sign a 5-year max free agency deal with Utah

Hayward would do this if:

  • He doesn't want to risk being named an All-NBA player
  • Wants to make the most amount of guaranteed money possible now without that risk
  • Wants to stay in Utah for the next 4-5 seasons

Hayward signs 5-year non-DP max with Jazz
YearAmount
2017-18$30,900,000
2018-19 $33,372,000
2019-20 $35,844,000
2020-21 $38,316,000
2021-22 $40,788,000 - Player Option
2022-23
Total:$179,220,000

Hayward could also just sign the standard maximum contract while staying on the team, a 5-year maximum deal at 30 percent of the salary cap. That contract allows the Jazz to give him an additional year that no other team can offer him. Furthermore, he'd be making the maximum amount of money possible in 2017-18. About $179 million over the course of five years is nothing to be upset about. He can also add on a player option for the final year, if he'd like to potentially become a free agent after four years, rather than five.

Or, here's another sub-option. It may make sense for Hayward to sign a 4-year deal with the Jazz, with a player option on the last season. Why? Because that means he could, if he'd like to, be a free agent as soon as he's a 10-year veteran and eligible for 35 percent of the salary cap. In that case, there's not too large of a difference between what the Jazz can offer (8 percent raises) and what any team can offer (5 percent raises, as in Option 3 below).

Option 3: Opt out, then sign a 4-year maximum free agency deal with another team

Hayward would do this if:

  • He wants to leave Utah
  • He wants to get the most amount of money possible now

Hayward signs max with another team
YearAmount
2017-18$30,900,000
2018-19 $32,445,000
2019-20 $33,990,000
2020-21 $35,535,000
2021-22
2022-23
Total:$132,870,000

Other teams are limited in the length of contract and the size of yearly raises they can offer Hayward. While the Jazz can offer a 5-year deal at 30 percent of the cap, with 8 percent raises every year, other teams can only offer a 4-year deal, with 5 percent raises every year. If Hayward signs with another team, he also becomes ineligible to ever sign a Designated Player deal. That's missing out on potentially 35 percent of the cap for the next three seasons, until he has those 10 years of NBA experience. In other words, he'd be losing out on about $45 to $100 million of guaranteed money, depending on whether or not he qualifies for DPE status.

There are a few good situations around the league for Hayward, but not a ton. A Hayward-led Celtics team might make it to the Eastern Conference Finals. He'd probably make some noise, I guess, next to Jimmy Butler in a big market in Chicago. But a lot of situations don't look as rosy as they once did: Dallas looks ugly right now, Minnesota hasn't put it together at all, and the Lakers have lost nearly all of their games in December. Is Hayward going to go somewhere he's likely to lose?

Probably scarier is the teams that are on the verge of having that max cap space: San Antonio could open room for him (maybe by moving Tony Parker?), and his hometown Indiana Pacers could make some moves in that direction too (can they find a taker for Monta Ellis or Thaddeus Young?). Still, it's not a sure thing at all.

Option 4: Opt out, sign a 1+1 max deal with Utah, and hope to make All-NBA in the next two seasons

Hayward would do this if:

  • He's comfortable giving up guaranteed money now, to bet on himself making the All-NBA team in the next two seasons
  • He wants to stay in Utah in the short term, with the most flexibility in terms of where he plays on a year-to-year basis if All-NBA doesn't work out

Hayward opts out, signs 1+1 max
Makes All-NBA in 2017-18Makes All-NBA in 2018-19
YearAmountYearAmount
2017-18$30,900,0002017-18$30,900,000
2018-19 $37,852,500 2018-19 $33,372,000 - PO
2019-20 $40,880,700 2019-20 $39,745,125
2020-21 $43,908,900 2020-21 $42,924,735
2021-22 $46,937,100 2021-22 $46,104,345
2022-23 $49,965,300 2022-23 $49,283,955
2023-24 2023-24 $52,463,565
Guaranteed Total:$30,900,000Guaranteed Total:$64,272,000
Potential six-year max: $250,444,500Potential seven-year max: $294,793,725

Here's a clever option that probably wouldn't have been terribly likely before the new CBA was signed. If Hayward doesn't make the All-NBA team in 2016-17, but he thinks he can in 2017-18 or 2018-19, then he could sign a two-year deal with a player option on the second year. That way, he still allows himself to make Designated Player money before becoming a 10-year veteran, if he ever becomes an All-NBA talent. He just has to opt-out of his deal in the offseason after becoming All-NBA.

The 1+1 deal has become vogue for NBA superstars in a world with a rising salary cap, with players like LeBron James and Kevin Durant knowing they're going to be making the max anyway, so they might as well have as much control of the process as possible.

There are risks. Hayward is a sure thing max player now, but maybe something happens in the next season or two that reduces his earning potential. But this option makes a lot of sense if Hayward feels he will be an All-NBA player soon, but doesn't make it this season.

Option 5: Opt out, sign a 2+1 max with Utah hoping to make All-NBA in 2018-19

Hayward would do this if:

  • He wants to guarantee himself nine figures of money, while still maintaining flexibility long term
  • He wants to set himself up to make 35 percent of the cap in two different ways

Hayward opts out, signs 2+1 max
Makes All-NBA in 2018-19No All-NBA
YearAmountYearAmount
2017-18$30,900,0002017-18$30,900,000
2018-19 $33,372,000 2018-19 $33,372,000
2019-20 $39,745,125 2019-20 $35,844,000
2020-21 $42,924,735 2020-21 $41,732,381
2021-22 $46,104,345 2021-22 $45,070,972
2022-23 $49,283,955 2022-23 $48,409,562
2023-24 $52,463,565 2023-24 $52,015,240
2024-25 2024-25 $55,888,005
Guaranteed Total: $64,272,000 Guaranteed Total: $100,116,000
Potential seven-year max: $294,793,725 Potential eight-year max: $343,232,160

This is kind of a middle ground between Option 4 and Option 2. This would allow Hayward to be guaranteed to make about $100 million over the first three years of his contract, but still have the option of signing a 35 percent contract in two different ways.

Essentially, if Hayward was named an All-NBA player in 2018-19, he'd opt out in the summer of 2019 and sign a 5-year, 35 percent max at that point if he felt comfortable playing for the Jazz for a long time. If not, he could simply wait until three full years of the contract have played out, when he'd be eligible for the 35 percent maximum as a 10-year veteran.

On the other hand, Hayward making All-NBA in 2017-18 would be worthless, as it wouldn't guarantee his DP status for the upcoming year. That might be a missed opportunity for Hayward. And who knows if he'll be worth a 35 percent max two to three years from now?

Wrapping this up, you can see Hayward has lot of choices available to him. Much of it boils down to a couple of big questions. Does Hayward want to leave a lot of money on the table in order to leave Utah? How good does he think he'll be in the future? He's got about six months to think about it.

Andy Larsen
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