After years of sacrificing short-term relevance to amass and develop young talent, the Utah Jazz have a solid core in place. An extra piece or two would certainly help accelerate the group’s contention, but Utah already has a guy or two at every position who figure to be a part of the team’s return to competitiveness.
However, as the salary cap rises and pulls player salaries up with it, Utah’s going to have to back up a few armored vehicles worth of cash to keep that group intact. A summer 2018 dip will make things tricky for the Jazz.
Just as the cap backtracks slightly, Utah will be in year two of Gordon Hayward’s and Rudy Gobert’s new deals and about to enter new deals with Derrick Favors, Dante Exum and Rodney Hood. As of right now, only Alec Burks and Trey Lyles have deals past June 30, 2018.
Utah can’t pay max salaries all around and avoid the luxury tax, and that’s something Utah will think about as their free agent strategy comes together: how can they afford external reinforcements with so many big paydays pending?.
Based on projected cap numbers and current salary & raise rules1, Utah can stay under the tax and keep the core together long enough to grow into a competitive team. Let’s explore how that might look.
Hayward is a lock to opt out next summer of the final season at $16.7M, as somebody is going to give him a max deal that starts at nearly double that amount.
Hayward’s max based on the 2017 cap would be $30.23M, and he’s extremely likely to get it. He has turned himself into a fringe All-Star, a 20-5-4 guy2 and a top 30 guy in this league. Another team could offer him four years at $129M total. The Jazz, because they can offer higher raises, could go 4/$134M or 5/$173M. That might sound like a high number, but just get over that. That’s just what top-30 guys are going to cost in this new environment.
The Jazz could see if he’d amenable to a deal that starts the the max and then dips to help make that 2018 summer more livable, but that could backfire if Gordon feels slighted at the request. Let’s say they asked him to take the maximum year two decrease, then bounce back to $30.23M for year three and get a max raise in year four. That would amount to a 4/$121M deal, close to a 10% discount over his four-year max figure. Would you take a 10% paycut at your work to make it easier for your company to pay your colleagues?
The Jazz could ask him to stay flat in year two and then get max raises. That would amount to 4/$128M, which is about 5% off the full max, but roughly equivalent to the max he could get elsewhere.
But the safest bet is to offer the max. If Utah tries to get too cute, it could bite them, and Hayward is clearly going to command max money in this market.
Gobert’s next deal will kick in for the 2017-18 season, whether he agrees to an extension by this October or re-ups next year as a restricted free agent. The Jazz can offer up to a four-year extension, or a 5-year contract next summer. They can’t offer a five-year extension without giving him the full max3.
A lot of people seem ready to concede max money to Gobert right off the bat. Before I share my potentially controversial response to those folks, consider the question: is Gobert more of a proven asset than Derrick Favors, Serge Ibaka, Nikola Vucevic or Kenneth Faried were when they signed their rookie contract extensions, or than DeAndre Jordan when he signed his second contract4?
The question here isn’t who you believe will be better someday. It’s where their value sat relative to Gobert’s going into their second contract negotiations. And it looks like Rudy is right in that league.
Those five guys all got deals averaging between $11 and $13 million annually, or about 1/5 of the salary cap when those were signed. Adjust that for the 2017-18 cap and it translates to about 4/$86M or 5/$113M. That could mean a salary starting at $19.5M with raises close to $1.5M annually.
Given the comps, that kind of offer would actually be pretty complementary, tantamount to telling Rudy, “Hey, we think you’re as promising now as Fav, Serge and others were when they were at this point in their careers.”
Of course, Gobert could still say no. What those five didn’t have going for them was a buyer-rich market driving up the bidding. He will prefer to see where his contemporaries — like Hassan Whiteside — land and let that establish his market range. If the Jazz don’t want to pay that up front, they would still have matching rights, but overplaying that hand could put them in a position like they ended up in with Hayward — with a shorter deal than they’d prefer, and early opt-outs.
The point here is that the Jazz don’t necessarily need to start from the max and work backward with Gobert. There is plenty of precedent for guys like him getting a rung below max money. I think that’s the area the Jazz will start in, and if Gobert wants more than that, he may have to get it in restricted free agency.
The idea here is to apply some of his next contract’s money before the salary crunch of 2018. While technically Utah could renegotiate him up to the max AND then give him a max extension, it doesn’t seem as though that would be on the table. The idea is to get him the same money he’d get as a free agent, but get some of it to him sooner and in so doing ease the cap hit of that difficult year.
I still feel like people are missing the optimal structure, though. What BI’s Eric Pincus and others are describing is essentially a 2+2 deal: renegotiate the final two years of his existing contract as soon as it’s legal to do so5 and then tack on two more years. But by waiting just a few more months, the Jazz could instead talk about a 1+3 deal that would keep Favors with the Jazz through the 2020-21 season.
Here’s how the 1+3 option compares to the 2+2 that everybody else is fixated on. This assumes that they’ll give him whatever the 2- or 3-year max money is, just spread out over additional years.
The Jazz have an advantage in that nobody else can negotiate with him at this point, so they could get gutsy and start from the position that Favors should sacrifice a little off his max figure in exchange for the security and the advance payment. They could, for example, recommend an 2+2 extension with an incremental $56M instead of $62.7M, or a 1+3 that gives Fav an extra $90M instead of $97.5M.
But they have to be careful there. Remember, there’s nothing saying Favors can’t get a bump now AND still get a max extension, so his people could easily turn that negotiating strategy around and say, “You owe *us* a premium for keeping him off the market.”
Exum & Hood
Exum and Hood won’t negotiate extensions until next offseason — and if they don’t agree then, they’ll be restricted free agents in 2018.
That makes it almost impossible for us to fathom what their PG comps might be by then, but based on what we know right now, I’d guess Exum tops out around the range Steph Curry got.
Before Steph was a two-time MVP and a champ, he was an exciting young prospect who had missed a ton of games but had his front office believing. He got 4/$44M, which of course now looks like a steal, but at the time was viewed as fair given his mix of talent and developmental questions. Jrue Holiday got 4/$41M, Kemba Walker and Ty Lawson each got 4/$48M. Non-superstar point guards most often top out in that range, with annual value around 15-20% of that year’s cap. Ricky Rubio was the aberration at 4/$55M.
For now, I’d pencil him in an inflation-adjusted Curry/Jrue type of deal: 4/$67M, starting around $15M in year one. Even that feels somewhat bullish at this point… but I’m a believer.
Hood barely has a bigger sample size than Exum: 129 games. And while he has looked like a Hayward Lite in about a third of those games, his value is still a bit hard to nail down.
Take this past season, for example. For a nearly two months stretch from 12/31 to 2/23, he averaged 19-4-3 (rounded) and shot 44% from three. Problem is, for the other 54, he logged 13-3-3 and shot 31.6% from deep.
For now, I’m keeping him in the same ballpark as Exum, just because several recent wing extendees landed in that same range6. It’s entirely possible that Hood makes this guess look silly.
Burks & Lyles
These two are both already locked in at reasonable figures for the 2018-19 season. The Jazz might have to start getting creative if they want to keep both of those into the next cap year, but we’ll save that discussion for another time.
What About The Next Guy?
So where does all that leave the 2018-19 math? Even if all of those fairly optimistic scenarios take place, things are tight.
Assuming Utah wants to keep all seven of those guys, the best case scenario leaves the club with just $17M of wiggle room under the tax and 6-8 roster spots to fill. That doesn’t account for the up to five first round picks Utah could make between now and the summer of ’18, and without slotting a number for keeping any of Shelvin Mack, Raul Neto, Tibor Pleiss, Jeff Withey, Chris Johnson, Trevor Booker or Trey Burke.
If Hood or Exum demand more through their play, they’ll have even less. If Rudy turns down Fav/Serge money and gets some leverage in restricted free agency, even less.
And, as mentioned above, this leaves them with some tough questions entering free agency. The franchise seems interested in adding outside help, but doing so might force them to make some tough choices later.
Unless it’s on a 2-year deal, any signing forces them to divest some assets before the tax man cometh in 2018. Signing even a non-star free agent means the Jazz pretty much need to unload someone like Burks in the next 24 months, or trade a starter for future picks.
So can the Jazz pay everybody? Yes, but not everybody can get the max, and it’s going to leave the Jazz without a lot of margin starting in 2018.