Wade will re-sign for the full six years

Dwyane Wade employed a brilliant strategy the last time he was a free agent, back in July of 2006 — with a six-year extension offered by the Heat, he instead took just three.

It was brilliant because it kept his options open. It kept pressure on the Heat organization to build a title contender around him (which is certain to pay big dividends in the coming off-season). It also allowed him to secure the best possible contracts for himself as his career progressed (players with seven years tenure are eligible to receive up to 30% of the adjusted salary cap).

Will it happen again? Will Wade ink a new three-year deal next month?

Don’t count on it.

There is one key difference this time around – the current collective bargaining agreement is set to expire in the summer of 2011. While nobody knows exactly what to expect from the new agreement (if one is successfully negotiated), initial indications have not been promising.

Commissioner David Stern, after witnessing a decade of horrific, franchise-crippling contracts that have left teams hemorrhaging cash to the tune of $200 million annually, wants to make some huge changes.

A hard salary cap, drastic reductions in the value of maximum salaries, shortening of contract lengths, and the loss of Bird rights have all been suggested by Stern. There are also rumors of potential reductions to the guaranteed nature of contracts as well as reductions in the share of basketball related income earned by players from the current 57% to as low as 45%.

In such an uncertain climate, Wade would be foolish to leave guaranteed money on the table. Taking a three-year deal rather than the six the Heat will undoubtedly offer would be doing just that.

Every potential free agent will be looking for a full value, full length contract this off-season. Even Dirk Nowitzki insinuated as much by deciding to opt out of his $21.5 million next season salary.

That doesn’t necessarily mean that Wade can’t negotiate a longer-term contract with an opt-out provision after three seasons. Such an arrangement would still provide him significant leverage and put pressure on the Heat to maintain a winning product.

But the issues would be substantial.

There are two mechanisms which would afford Wade the right to opt out of a longer-term contract – a Player Option and an Early Termination Option. A Player Option clause can allow a contract to be extended for only one addition season, which implies that a contract which contains a Player Option after three seasons can only be four total seasons in length. A contract can contain multiple seasons following an Early Termination Option. However, an Early Termination Option cannot occur prior to the end of fourth season of a contract.

Therefore, the collective bargaining agreement will not allow Wade to sign a six-year contract with the ability to opt out after just three seasons.

The earliest he would be eligible to opt out of a six-year contract would be in the off-season of 2014, after four seasons have expired. At that point Wade would be 32 years old, and would have two seasons and $45.0 million left on his contract.

If he did choose to opt out of these two seasons, he would then be forced to negotiate a new contract in a far more restrictive salary cap environment. That means he would most likely be unable to duplicate anywhere near equivalent money, even if he were able to secure a maximum contract. Things would need to be pretty ugly in South Florida for that to happen.

Dwyane’s age would be another complicating factor. At just 25, Lebron could conceivably opt out of a new six-year contract after four seasons and still command another maximum contract. He’d be just one year older than Wade is today. Dwyane, however, would be 32. The purse strings may not be as loose for a player on the downside of his career, particularly for one that relies so significantly on his explosiveness and so little on his shooting touch. And any deviations from maximum money would only widen the disparity from the guaranteed salary he will have opted out of.

At the end of the day, financials will dictate Wade’s decision to sign a full length six-year maximum contract. Dwyane is simply too smart to pass up such guaranteed money. As far as a three-year opt-out provision is concerned, logistics would eliminate such a possibility.

Wade continues to insist that he wants to stay with the Heat. If he follows through on his word, he’ll be around for at least the next six years.

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4 Responses

  1. Vincent says:

    I totally disagree with you on this…..

    WADE will opt-out in 2013
    31 is not over the Hill .look at KIDD,KOBE,Jordan etc. etc.

    At 31 Wade will play a lot more PG
    I can see WADE playing a role like C.BILLUPS

    I see no reason Dwyane can’t play until he 34,35,36 at MAX money
    (no I’m not his agent)
    At VERY HIGH LEVEL….

    hIS pg SKILLS IS ABOVE AVG.
    His 3 point shoot will improve
    Wade at 34,35,36 should be able to create for other, still…

    • Albert says:

      Vincent,

      I believe you may have missed the point of my post (and perhaps that is because I didn’t write it very well). Wade cannot sign a 6-year deal this off-season and opt out in 2013. The collective bargaining agreement doesn’t allow it.

      The earliest he would be able to opt out is 2014. At that point he would be 32 years old, and would have 2 years and $45 million left on his contract. If he opted out of these two years, he would be negotiating a new contract in a far more restrictive salary cap environment (at which time there could be drastic reductions in max contracts). He would most likely be unable to duplicate anywhere near that type of money, even if he were able to secure a maximum contract. And any lack of willingness on the part of teams to offer him that max contract at 32 years of age would only be further damaging.

      In my experience, NBA players are typically unwilling to forgo such enormous quantities of money.

      I certainly agree with you that Wade can continue to play at a high level into his mid-30s. The point of my post was to suggest that the terms of the collective bargaining agreement make what would logically seem like a very good idea difficult to employ.

  2. Vincent says:

    OK I got…

    damn man, you know your $**t….lol

  3. Mike says:

    lol you definitely do Albert. Kudos for this written piece.

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