Keeping the Band Together: Can the Jazz Pay Everyone?

June 7th, 2016 | by Dan Clayton
AP Photo/Rick Bowmer

AP Photo/Rick Bowmer

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

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.

Different GH contract scenarios starting at the max

Different GH contract scenarios, all starting at the max

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

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?

Source: http://bkref.com/tiny/eADHi

Contract year (3rd season) performance of promising young bigs. Source: http://bkref.com/tiny/eADHi

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.

Favors

The renegotiate-and-extend option we first talked about last year is getting a lot of traction since it was covered nationally by Basketball Insiders and subsequently discussed on this very site.

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.

Max money, advanced via R&E tool

Sample scenarios: max money, advanced via R&E tool

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.

A fairly wishful look at how the salary sheet might look in '18 and beyond

A fairly wishful look at how the salary sheet might look in ’18 and beyond

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.

 

Dan Clayton

Dan Clayton

Dan covered Utah Jazz basketball for more than 10 years, including as a radio analyst for the team’s Spanish-language broadcasts from 2010 to 2014. He now lives and works in New York City, but contributes regularly to Salt City Hoops and BBALLBreakdown.
Dan Clayton

16 Comments

  1. UtahsMrSports says:

    This new structure is going to take some time to get used to. I mean, 30+ for Hayward?

    I am watching to see what happens with Favors, Burks, and Exum. If Exum is mostly what we hope for, we may be looking to build around Rudy, Gordon, and Exum. Favors and Burks could be salary cap casualties.

  2. UtahsMrSports says:

    This new structure is going to take some time to get used to. I mean, 30+ for Hayward?

    I am watching to see what happens with Favors, Burks, and Exum. If Exum is mostly what we hope for, we may be looking to build around Rudy, Gordon, Hood, and Exum. Favors and Burks could be salary cap casualties.

  3. Paul Johnson says:

    Most teams will figure out the normal parameters for the new cap fairly quickly, and things should normalize without teams having to give less-than-star players too big of deals for the most part. However, there is always a boneheaded team or two who offers way to much for a mediocre free agent (DeMarre Carroll’s contract last season is a good example) and mucks things up. Hopefully that won’t happen to one of Utah’s free agents, either forcing Utah to let the player go or to pay an amount that will hamstring the team for several years into the future.

  4. Matt says:

    “Would you take a 10% paycut at your work to make it easier for your company to pay your colleagues?”

    If it meant they wouldn’t be laid-off? Hellyeah! And I’m not already a multi-millionaire who stands to sign a $120M contract! I’d like to think each of Hayward, Favors, and Gobert will give a team discount. To my way of thinking, All-NBA dudes are the ones who “deserve” max contracts. Fringe All-Stars? Not so much. Hayward is hella-good but not good enough to lead his team to the playoffs, never mind playoff success. Is that really the person you want to sink $30m/yr into? A 4 year deal on the order of $100M would make him CRAZY rich *and* help the team pay these other dudes. We’ll find out if, in Hayward’s world, there’s an I in “team”.

  5. cw says:

    Hayward max as percentage of cap = 30%
    Gobert ” ” 25%
    Favors ” ” 30%

    That’s 85% of the cap.

    Say Hayward gets max 30%
    Gobert gets sub-max 20%
    Favors takes a discount 25%

    Thats 75% of the cap.

    Hood and Exum will both be eligible for 25% of the cap at the same time as Favors. Then there are the other 7 guys who need to be paid, which is why, I think, the Jazz are holding all these workouts. They are trying to find undrafted role players they can sign to cheap contracts.

    The Miller’s are going have some big scary expensive decisions to make. Best case scenario (If you want to keep this core together): next year Jazz are a 5-6th seed, make it into the second round. Miller’s pay max for Hayward and 80% of max for Gobert. Then 2017-18 the Jazz lose in the Western conference finals and the Millers go all in and end up about 30-40% over the max–which is what they will have to pay if Favors, Exum, and Hood are good enough for the team to make it to the WCF.

    I don’t think that is a likely scenario because there are too many good teams in the West and the current jazz have zero experience in the playoffs, which is really important.

    I think instead of figuring out ways to keep all these guys they drafted together–Gobert, Favors, and Hayward are not Durant, Westbrook, and Ibaka–it would be better to start cashing in assets and build a team with a more sustainable long-term salary structure.

    I used to think that the definition of a successful rebuild meant a 5 year upward climb into contention, each year the team getting better and better. But then I thought, what’s the rush? As long as the team is interesting and progressing the owner will make money. Instead of some mad leap for the title, depending on luck for all these pieces falling perfectly into place, why not take more time and build a good sustainable team and wait for your moment?

  6. GAM says:

    I’ve been a devoted Jazz fan since they played their first game at the Salt Palace. Although I like Hayward and Favors, let’s be honest. Neither has the personality or drive to consistently take over games. Neither has what it takes to lead the team into the playoffs, let alone to a championship. They just don’t. Compare their drive to that of Stockton and Malone, or even Deron Williams (who I can’t stand, but who has drive). There is no comparison. The Jazz need to bring in players with those qualities. We may ultimately break into playoffs again with Hayward and Favors, but it won’t be because of them. It will be because someone else stepped up and took over the role as leader. It scares me to think that the Jazz will continue to spend a big chunk of their cap space on those two.

  7. uber_snotling says:

    If you want to have a contender, you have to be willing to hit the tax level. Best teams in the league right now are all tax teams. Cleveland, Golden State, Clippers and Thunder all pay the tax, and also happen to be 4 of the top 6 teams in the league.

    • Matt says:

      Sure, but overpaying players who don’t deserve it makes you the Nyets. CLE, GSW, OKC all have players who are All-NBA, true elite players that make their teams great. The Millers would be crazy to pay the tax with our current roster. But maybe each of Exum, Hood, and Lyles become bona-fide players? If the Millers are gonna pay huge contracts, they should expect to their team to make deep playoff runs and have at least one All-Star, if not All-NBA.

  8. gerald headrick says:

    think that you have to figure that 2-3 of burks, favors, hayward, hood, exum, lyles and gobert won’t be on the roster in 2+ years. all of the above aspirations for the team are predicated on exum being a good nba point guard which isn’t a given. think exum becomes a 3 and d wing when its all said and done.

    gobert will get a max offer, but you want it to come from another team so the jazz can match it with lower % increases. favors probably should be renegotiated to get him a bit more money now and into an extension. hayward worth a super max? that is the big question, and to me the answer is no. that said, he may get it elsewhere. think jazz need to really watch hood this season, because if he steps up another level its leverage with hayward~~as they are somewhat similar players with hood more potential on offense.

    its a tough time to be jazz management! we need a real point guard!!

  9. mykroberts says:

    My slightly different take on possible salaries.
    https://docs.google.com/spreadsheets/d/1P2VxF0RZwIGVfpnV3lMPxrnIIVKoDIOBgC77AI01ieg/edit?usp=sharing

    The amount Exum/Hood will cost is also a big question mark still, but I have them starting at a combined $32 during the tax year. Basically the only chance the Jazz have to avoid the tax (without dumping players) is for all of the “maxish” Jazz players to take the maximum decrease in 2017/2018. With my guestimated salaries, the Jazz are only under the tax by $6 – just enough to sign minimum players.

    Player Averages for New Deals
    Derrick Favors $24,915,000
    Gordon Hayward $29,912,461
    Rudy Gobert $23,929,969
    Exum $17,240,500
    Hood $17,240,500

    • cw says:

      I appreciate the effort, but I don’t think this is likely. You have Hayward, Gobert, are more than 10% under the max. Their new contacts are signed after next year in the season 2017/18. The year after that, 2018/19, the cap goes up (IF the collective bargaining agreement is not renegotiated, if it is the cap will go up even more) which means that any contract Hayward and Gobert sign is suddenly 15% under the max, which means that Hayward and Gobert are both getting full max. They would be stupid not to insist on that, and Haywards agents, at least, are not stupid.

      Then, in 2018/19, Favors, Exum, and Hood all get new contracts. It’s a catch 22. If they play good enough for them to get large contracts, the jazz can’t afford them. If they don’t play good enough, the whole rebuilding project is failed. You have Favors getting 10% less than max, Hood and Exum getting 40% less than max. Again, if those are the numbers they deserve, then the jazz have failed to get past the first round and the whole contract salary cap thing is moot.

      The will have to be trades. It makes sense. A viable NBA team has to have a wide range of salaries. There have to be bargains amongst the main contributors. The way the Jazz are set up, there are no bargains. They have to trade some expensive contributors for cheap ones.

  10. Diggin' It says:

    I would love this offseason to acquire Omri Cassipi in a trade, and sign FA Ian Mahimi. Probably won’t happen, but I think the Jazz need to add a veteran and shore up some wing and backup center depth. Dennis Lindsey said at locker clean outs he regretted not adding a veteran to the group. This will help the team grow stronger in late game situations, free throw and outside shooting, and if there are injuries they won’t be in a crunch to make up ground for playoffs.

    The Jazz are ready to win 53-somewhat games next year, adding Exum and Favors and Gobert at 100% will be huge.

  11. Steve Phelps says:

    Teams who are patient over the next two years and do not reach to overpay FA’s will have a nice window after the two cap expansion. I truly believe prices will be driven up for FAs. We can see some of the rumblings of this already. Whiteside is looking for max money this next year. Other players who are not max guys are going to get big contracts in this market. TO think other wise is ludicrous. A few teams ever year will make poor signing decision and overpay FAs. Difference this offseason is that teams will have to pay to keep or get players because even the poorly ran teams are going to have cash to over pay several players.

  12. Pingback: Could Pleiss Deal Clear the Way for Extensions? | Salt City Hoops

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