Dirk Nowtizki won’t be available this summer
Rumors are swirling in South Florida now that Dirk Nowitzki is reportedly planning to opt out of his contract and test the free agency market this summer.
Everybody calm down. It means absolutely nothing.
Media outlets and fans are confused as to why the eleven year veteran would consider leaving an organization so committed to winning and so supportive of its players. In short, he isn’t. Dirk’s decision is purely for peace of mind, nothing more. He’s not leaving Dallas.
Dirk has one year remaining on his current contract, which will pay him $21.5 million next season. However, he has an early termination option that would make him an unrestricted free agent this off-season if exercised.
Dirk wants to lock in a long-term contract under the terms of the current collective bargaining agreement, which is set to expire after the upcoming season, because it is generally regarded to be significantly more favorable than any new agreement to come. So he needs to act now.
Dirk turns 32 years old on June 19. Due to the overly complex “Over-36 Rule” (which I won’t bother to explain unless you ask me to), if he wants to secure maximum dollars, he has two options: (i) he can sign a three-year extension (in addition to the year remaining on his existing contract) or (ii) he can terminate his existing contract and enter into a new four-year deal.
If he enters into a new four-year deal, Nowitzki is eligible to make up to $96.2 million from Dallas. The contract could be written in July, based on the current agreement through the life of the contract.
If he signs a three-year extension, things get a bit more complicated. Utilizing the terms of the current collective bargaining agreement, Nowitzki would be eligible to make nearly equivalent money – up to $96.1 million or more over the next four years. The difference, however, is that, by rule, extensions do not actually take effect until the summer before the first extended season. Dirk still has one year left on his existing contract, which means his extension would take effect in the 2011 off-season. By then, the new collective bargaining agreement will (hopefully) already be in place, which would expose Nowitzki to potential after-the-fact reductions to his annual wage if league owners are successful in their attempts to lower the value of maximum salaries.
I would imagine it to be highly unlikely that a reduction in maximum salaries in any new agreement would affect an extension that has been signed under the terms of a previous agreement. I just can’t see the players association agreeing to that.
But let me put it to you this way – what does Dirk have to lose?
By opting out, he gets the peace of mind of having his entire contract fall under the terms of the current agreement. He gets the ability to include a no-trade clause in his contract, something he couldn’t include in an extension. And he gets an additional $178,978.95.
What does he lose? Nothing. Mavericks owner Marc Cuban is clearly willing to offer him a full, four-year maximum contract. So he’s taking no risk in sacrificing his guaranteed $21.5 million upcoming salary.
There will continue to be widespread panic in Dallas for the next two months, particularly given the Mavericks’ first round exit at the hands of the Spurs. But Cuban has shown a commitment to spend beyond the tax threshold in order to retool. This summer, he has his sights set on LeBron James (which he illegally made known to the world, at a cost of $100,000). Whether or not he is ultimately successful need not matter. He will always do right by his players.
Dallas fans need not worry. Dirk isn’t going anywhere. It’s all just minor contract stuff.
Most of the time, players can make more money by waiting until their contracts expire and then signing a new contract rather than signing an extension to their existing contract. Thus, players will naturally want to wait until their contracts expire rather than sign an extension. This gives players more time to decide to leave their current teams and gives other teams an opportunity to sign them away from their incumbent teams.
The new 2017 CBA partially addresses this issue by allowing extensions to start at 120% of the final season in the existing contract (up from 107%, I believe) but this is still smaller than if players wait until their contracts expire. This problem should be less of an issue going forward as the overpriced contracts signed during the 2016 salary cap spike expire. Maybe the next CBA will increase the extension max further (i.e. from 120% to 150% or to the same max as free agent contracts or new contracts), giving players more incentive to extend with their current teams rather than wait until free agency.