The Warriors officially signed Klay Thompson to an extension hours before the October 31st deadline. Thompson’s extension is a full 4 year max with no opt-out clauses, keeping him with the Warriors through the 2018-19 season. The max contract for players coming off of the rookie pay scale is worth approximately with 7.5% raises.
Using Larry Coon’s current 2015-16 cap projections, Klay Thompson’s contract would look like this:
We will not know the official numbers until July 2015 when the NBA has completed its audit of Basketball Related Income (BRI) and sets the official salary cap and luxury tax numbers for the season.
What does this mean?
Assuming the Warriors decline their team option on Marreese Speights and Brandon Rush declines his player option, the Warriors 2015-16 cap situation projects to look like this (the red signifies cap holds for restricted free agents):
While both Kuzmic and Draymond Green will be restricted free agents next summer, Green represents a trickier situation. As a Restricted Free Agent, Draymond can sign an offer sheet from another team (provided they have the space to do it, of course) and the Warriors would have three days to decide whether or not to match it. Unless they move a contract already on their books, Golden State will be unable to retain Draymond Green without dipping into the luxury tax, currently projected at $81 million. Tim Kawakami of the San Jose Mercury News has already speculated the Warriors are considering their options:
Warriors brass will deny this, but to keep Draymond Green next summer they almost have to dump Iguodala or Lee’s contracts before then.
— Tim Kawakami (@timkawakami) October 31, 2014
I presume GSWs are already testing the trade market for DLee and/or Iguodala. RT @ZetrixLightyear Do you think Dlee gets moved next summer?
— Tim Kawakami (@timkawakami) October 31, 2014
Gauging the trade market for either will be difficult without more concrete knowledge of how the salary cap will look in 2015-16. David Lee will have only one year left on his contract making him easier to move than in previous seasons while Iguodala will have two years and $22.8 million remaining and most likely a larger trade market.
The 2015-16 projections are especially difficult to verify because of the NBA’s massive new TV contract. The NBA’s new television deal goes into effect in 2016 and will increase BRI anywhere from 20-30%. Zach Lowe of Grantland reported that the NBA is pushing for a smoothing out process of the new revenue to avoid a gigantic single-season increase which could take the salary cap from $66.5 million to $85 million or higher.
Lowe reported:
“Smoothing” is a popular word now around the league. There is no way to avoid some shock to the cap figure at some point, but there are ways to ease the trauma. The league and its TV partners, the same partners as under the old deal, could agree to make 2015-16 sort of a hybrid year, at some price point between the old $930 million and the new $2 billion–plus. That would raise revenues more than anticipated for 2015-16, and thus raise the cap beyond the current $66.5 million projection.
If any ‘smoothing out’ of the cap happens, Thompson’s max salary would increase since his first-year salary is a percentage of the total cap for the 2015-16 season. Should the cap increase approximately 10% from current expectations to over $70 million for 2015-16, Thompson’s contract could look more like:
Taking the Warriors total cap situation to:
Any ‘smoothing’ benefits the Warriors in the short term as it would increase the luxury tax line more than it would increase Thompson’s first-year salary. The Warriors are almost certainly now one of the teams rooting for a ‘smoothing out’ process.
Should the NBA elect not to ‘smooth out’ the cap, Joe Lacob and co. will be faced with tough decision of how much luxury tax they are willing to spend. Even if the Warriors do not retain Draymond Green, they will have to dip into the tax or sacrifice something to duck it again. Golden State has their own 2015 1st round draft pick (should they choose to retain it), which will likely represent a cap hold of $1.2 million or so, and simply filling out the roster with league minimum contracts will take the Warriors above the currently projected $81 million tax threshold without larger changes.
Whatever direction the NBA elects to go, one thing is for certain: the Warriors will have some difficult choices to make next summer and Klay Thompson’s lucrative extension puts those decisions into sharper focus.
Sources: Shamsports, Larry coon CBA, Grantland, Tim Kawakami
Note: Daniel Leroux contributed to this article