Update (3/2/17): The Utah Jazz lost a potentially significant opportunity to ease its future cap sheets when it couldn’t come to agreement with George Hill on a renegotiation and extension by the Mar. 1, 2017 deadline, one that could’ve paid out up to $88.7 million in new money in exchange for a commitment through the 2019-20 season. The Jazz would’ve been able to frontload $13.6 million of that payout to this season – reducing future season payouts to no more than $23.3 million in 2017-18, $25.0 million in 2018-19 and $26.8 million in 2019-20, an effective per season cap hit reduction of about $4.5 million – and reduce the commitment to just three new seasons.
Instead, Hill will reportedly be gunning for a maximum contract in free agency. The Jazz will be able to offer him a contract of up to five years in length, but they surly won’t be willing to give the soon-to-be 31-year-old any more than the four seasons other teams can offer. The most Hill can get with any other team: 4 years, $131.6 million. It remains decidedly unclear as to whether the Jazz, or any other team, will give it to him. Is Hill truly that valuable (or even anywhere close to it)? If you feel he is, it could subtract at least an extra $4.5 million (for a contract that has an equivalent $88.7 million payout over the next three seasons), and maybe as much as $7 million (for a max contract), from Utah’s cap sheet in future seasons.
A key number for the Jazz in its negotiations with Hill next summer: 4 years, $103.8 million. That’s the point at which the contract would produce an equivalent payout over the first three years as that which Hill apparently rejected. Anything below that and the Jazz will have been better served over the next three seasons by not signing Hill to a renegotiation and extension, albeit in return for a very costly fourth-year guarantee. Anything above that and the Jazz lose out.
It’s difficult to imagine Hill will break $103.8 million over four years on the free agent market. But, by rejecting a renegotiation and extension of up to $88.7 million over three years, he clearly thinks he can.
How much it takes to re-sign Hill will have implications for how the Jazz proceed in constructing the rest of their roster, including what they might offer Gordon Hayward if he qualifies for a designated player veteran extension this summer in the unlikely event he earns All-NBA honors and exercises his player option (if he doesn’t, what the Jazz will offer is clear – the full max), whether they will look to trade Derrick Favors, whether they will retain Boris Diaw, how they will approach negotiations with Rodney Hood, etc.
While I have chosen to focus solely on Hayward in this post, how the Jazz choose to manage their entire roster this summer will be equally fascinating.
It’s tough to get a great read on where exactly the Utah Jazz stand.
They’ve got an undeniably talented and youthful core which has the potential for excellence. They’re one of four teams which rank top 10 in the NBA in both offensive efficiency and defensive efficiency. And they have a top 10 NBA record.
On the other hand, they sit in the bottom half of the Western Conference playoff standings and aren’t really in the same class as the top three. They haven’t won a single post-season game since 2010. And they’ve been waging a losing battle against injury for years, which makes it nearly impossible to tell just how good they can be.
The lack of clarity is becoming a serious problem for the small-market organization, as it navigates whether it’s even possible to pay its five when-healthy starters — George Hill, Rodney Hood, Gordon Hayward, Derrick Favors and Rudy Gobert – within the confines of a luxury tax threshold which they have been historically adverse to cross.
Gobert already got his big-money extension this past October – a four-year, $94 million payout that kicks in next season. His fate is secure.
Hill and Favors are each currently eligible for extensions of their own, ones that could leverage Utah’s $13.6 million of available cap space to renegotiate their current salaries as the baseline for it.
Favors is five years younger than Hill and still very much in his prime, but he’s also under a low-value contract through next season and could be the odd man out if there is to be one. Among the team’s when-healthy starters, his long-term tenure in Utah would appear the least secure. So he’s not likely to get an extension.
Hill is a guy the Jazz would love to renegotiate and extend, and they can make a offer to do so — one that pays out up to $88.7 million in new money in exchange for a commitment through the 2019-20 season, which, for the Jazz, would: (i) deflect $13.6 million of the associated future cap hits by paying it out this season (effectively a cap savings of $4.5 million per future season), (ii) render $4.2 million of that $13.6 million as essentially free (since the Jazz are below the salary floor, they’d need to pay that $4.2 million out anyway), and (iii) reduce the maximum term of the deal for the soon-to-be 31-year-old to three new seasons (vs. up to five in free agency). But he seems to prefer to hash things out in free agency.
Hood will be eligible for an extension of his own starting this coming July, which would kick in when his rookie-scale contract expires at the end of next season. He’s a solid two-way talent. He won’t be cheap.
And then there’s Hayward, the heart and soul of the franchise, who will become a prized free agent this summer if he declines his $16.7 million player option by his June 29 deadline.
The last time Hayward hit the open market, as a restricted free agent in the summer of 2014, talks with the Jazz broke down to point where he was forced to pursue other options. Utah could have kept him off the market had they negotiated a contract extension the prior October, but Hayward was reportedly seeking a four-year deal valued at $50 million while the Jazz reportedly held firm at $48 million. The hard line ultimately proved costly.
Rather than even attempt to negotiate a new deal that could have extended as long as five years the following July, the Jazz made known its intention to match any offer sheet Hayward signed. He went on to sign a four-year, $63 million max offer sheet with the Charlotte Hornets on July 10, 2014. To make the deal particularly unpleasant for Utah, the Hornets threw in a 15 percent trade kicker and a player option on the final season. They matched anyway.
Nearly three years later, that contract sets Hayward up for one of the league’s most intriguing summer scenarios. Read more…