SALT LAKE CITY — The announcement Thursday afternoon of the three All-NBA teams will likely have a major financial impact on the Utah Jazz both this summer and especially in the years to come.
In an effort to give teams more leverage in keeping star players rather than lose them for nothing in free agency, the league two years ago instituted what is called the designated veteran contract extension, which has become more commonly known as the “supermax.” Using this mechanism, teams can sign their own players to an incredibly large contract extension if those players meet certain criteria.
The criteria consists of the following:
- Players have to be on the team they were on at the end of their rookie contract and be entering their eighth, ninth or 10th seasons in the league
- They had to have either won the league MVP in one of the three most recent seasons, won Defensive Player of the Year in the most recent season or in both of the previous two seasons or get named to one of the All-NBA teams in the most recent season or in both of the previous two.
ESPN’s Bobby Marks reported Thursday that if there’s a combination such as winning Defensive Player of the Year one year and being named to an All-NBA team the next, that player would be eligible for the supermax.
The reward: A contract up to 35 percent of a team’s salary cap, with eight percent annual raises. Players with two years left on their deals at the time of becoming eligible can sign a four-year extension at this amount, while players with one or no years left can sign a five-year deal.
With Utah’s Rudy Gobert having been named third team All-NBA on Thursday, he is now eligible to sign a supermax extension next summer (he is not eligible this summer only because the 2019-2020 season will be just his seventh in the NBA). Marks reported that Gobert next summer will be eligible for a five-year, $247.3 million deal.
That number would clearly have major future implications on the Jazz’s salary sheet should an agreement be made next summer (the offer not coming or Gobert turning it down would also have obvious roster implications, but that is a separate conversation that is a year away), but it also matters this summer.
Operating under the idea that Utah will offer Gobert the full supermax next summer and that he’ll take it, the Jazz are running out of time in which they’ll have much financial flexibility to shape the roster into a real contender. Beside Gobert’s big money next summer, Donovan Mitchell is on track two summers from now to command a contract worth 30 percent of the cap given how long he will have been in the league.
In other words, it’s likely in two years that about 65 percent of Utah’s salary sheet will be tied up in just Gobert and Mitchell, which will make it challenging for management to put together a complete roster. They would be allowed to go over the salary cap to resign their own free agents, but can’t go over it to sign other free agents, and they would be subject to what’s commonly known as the luxury tax if they go too far over the salary cap, even if it’s to bring back their own free agents.
This summer, the Jazz could open up north of $30 million in salary cap room, which, to put 65 percent of the salary cap in perspective, would have been about 30 percent of the cap in the 2018-2019 season, although the cap increases some each year so it’s difficult to peg exactly how much 65 percent will be in two years. It’s one of management’s final big opportunities to shape the roster before Gobert and Mitchell get huge money.
Thursday’s All-NBA announcements will certainly impact one player who many Utah fans have talked about as a free-agent target. Charlotte’s Kemba Walker also made the third team, and will be eligible for a five-year, $221 million deal from the Hornets. Given that he’s a free agent anyway and it wouldn’t be an extension of an existing contract, Charlotte could also offer him a regular maximum of five years for $190 million.
Here’s the kicker as it relates to Utah or any other team interested in Walker: The biggest contract any other team beside the Hornets can offer him is a four-year deal for $141 million, $80 million less than a supermax. Walker has indicated he wants to play for a winner and Charlotte likely won’t be a contender for quite a few years, but will Walker leave $80 million or even $50 million on the table to go to another team?
One last player with local connections whose financial situation will surely benefit from the All-NBA selections is former Weber State star Damian Lillard, who is now eligible for a four-year extension from the Portland Trail Blazers valued at $191 million after getting second team All-NBA honors Thursday. He still has two years remaining on his current deal, meaning if he signs the supermax this summer, he’ll be under contract for the next six seasons.10 comments on this story
Even in its relative infancy, the supermax has played an interesting role in the NBA given the incredible financial obligation it brings. In the cases of Golden State’s Stephen Curry and Houston’s James Harden, it has worked out well for both sides. On the flip side, Washington is surely having a hard time stomaching its huge contract with John Wall given his injury trouble.
Perhaps even more fascinating are the cases of players such as Paul George and Kawhi Leonard, who were eligible for supermaxes with Indiana and San Antonio, respectively, but opted not to sign them and ultimately got traded.
Soon, Utah will get to see firsthand the impact of the supermax on its roster.