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Posts Tagged ‘Renegotiation’

Breaking Down Russell Westbrook’s Complex Situation

July 24th, 2016 No comments
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Two months ago, the Oklahoma City Thunder were positioned to perhaps consider themselves the best team in the NBA. They had pushed the defending champion and all-time regular season winning percentage record-holding Golden State Warriors to brink of elimination in the Western Conference Finals, with a home game among three opportunities to close the deal. A single win in three chances, followed by a series win versus a Cleveland Cavaliers team against whom they were projected to be favored, and the Thunder would be NBA champions for just the second time in franchise history, and the first since 1979.

Things didn’t work out as planned.

The Warriors went on to eliminate the Thunder in seven games. A short time later, Kevin Durant went on to join the Warriors, leaving Russell Westbrook and the Thunder to pick up the pieces.

Westbrook is set to become an unrestricted free agent next summer. With the balance of power in the Western Conference dramatically shifted, if a return trip to the NBA Finals is a priority, he may not want to remain in Oklahoma City.

The concept has sparked a fire-storm of speculation about a potential trade, which would at least allow the Thunder to avoid losing two top five NBA players to free agency in the span of a single year without receiving back anything in return.

The ability of Westbrook to leave in free agency next summer, however, is just as problematic for a trade partner as it is for the Thunder. If Westbrook were to leave the following summer, the trade partner would not only lose him without receiving back anything in return but also sacrifice the assets it took to acquire him. To that end, if a trade partner is to risk the type of assets the Thunder will demand for him, it is likely to demand that Westbrook agree to an extension.

The Thunder, for their part, haven’t given up hope of retaining their star point guard either. In fact, it’s very much the opposite. They, too, are positioning to offer Westbrook an extension that would provide the certainty required to build the team’s future around him. And they could make it quite tempting.   Read more…

Breaking Down James Harden’s Renegotiation and Extension

July 19th, 2016 No comments
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Heading into the 2016-17 NBA season, extensions for veteran players had all but vanished for several years — the result of changes to the league’s Collective Bargaining Agreement that make it more beneficial for players to finish out their existing contracts and enter free agency thereafter, even if they plan to re-sign with their prior teams.

The rapidly rising salary cap – which has reached an all-time record $94.1 million this season, a whopping 34.5 percent increase from $70 million in 2015-16 – has, however, created a short-term opportunity for teams to leverage intricate salary cap rules to offer key players extensions that, in some cases, can be too tempting to pass up.

Many teams are finding themselves with more salary cap space than quality free agents on which to spend it. For these teams, that cap space can be used to simultaneously renegotiate and extend the contracts of its key players, giving them more up-front money in exchange for more seasons under team control.

This is exactly what the Houston Rockets elected to do with its key player, James Harden, in what to this point has been the most intriguing utilization of cap space thus far this summer.

Contract renegotiation is a concept largely attributed to various other sports. Only very rarely do they occur in the NBA. They can only occur on or after the third anniversary of the original signing date of a contract (or extension or renegotiation), and they can only increase a player’s salary. To do so, a player’s team must have salary cap space to cover the full amount of the proposed increase.

Heading into this season, Harden had two seasons remaining on his contract — $16,784,032 for this season, and $17,811,626 for next.

Though he signed a “maximum” five-year rookie-scale contract extension in October 2012 that ran through the 2017-18 season, the subsequent jump in the salary cap meant that he was set to earn far less than his current maximum salary for this season.  Read more…