Time to rework some numbers.
A Tuesday BonnellBomb1 told us that restricted free agent Gordon Hayward is getting paid by somebody, and that we need to update our spreadsheets.
By now, you know the basics. The Charlotte Horcats2 committed to a $63 million offer sheet with Hayward. Once signed tomorrow, Utah will have until 7/13 to decide whether to sign the checks themselves or let Charlotte do the honors3. Multiple outlets are reporting that Bailey’s Moving & Storage will not be needed at the Hayward home, as Utah is expected to match.
But what does this mean to the Jazz’s financial position? Here’s the new math on the dollarific details behind Hayward’s offer sheet and what it could mean to the Jazz, starting with the most obvious.
Are the Jazz going to match the offer?
Should the Jazz match the offer?
Yes. (Wow, we’re really cruising here.)
I’ve written and spoken already about how Hayward is probably underappreciated when you look at his skill set relative to other young wings around the league. Even in what was admittedly a rough year for him, he still put up 16-5-5. With a better cast, a more spread system and a quicker pace (meaning more possessions on both ends), it’s not a stretch to imagine him getting to 18-6-6 pretty quickly, which would put him in pretty elite company. Granted, a max offer to Hayward today is based on the hope of him filling out the top of his projected range as a prospect, but I like the chances. As Zach Lowe opined, “[T]he brains and skills are there, and they’re developing.”
And there are broader reasons to bite the bullet, too. First, it would set the whole rebuilding project back, which I think costs the Jazz more capital — literally and figuratively — than just signing on the dotted line. Plus, there’s something to be said for showing people the Jazz will pay for talent. Think about it: in the past 4 years, the Jazz have let nearly all their key players walk: Carlos Boozer, Mehmet Okur, Andrei Kirilenko, Deron Williams, Paul Millsap and Al Jefferson.
I don’t want to rehash those individual decisions, but how does it look if once again, the first time that one of the Utah’s young core approaches an opportunity to get paid or walk, the guy they’ve made the franchise face is gone? To rebuild, you eventually have to decide to, you know, build on some of the pieces. Continuing to usher talent away would send a bad message to potential free agents — not to mention the rest of Utah’s young core. Want Dante Exum to believe in what he’s building in Utah? Show him that the team is willing to reward good players and move forward.
But you came here for a cap breakdown, so let’s move on…
If the Jazz match, are they done spending?
No. Depending on exactly where the cap falls, the Jazz will have about $9 million left under the cap, with another $4M or so they could free up by waiving non-guaranteed contracts. They could use that to sign players, absorb salary in trades, or make lopsided deals where they package smaller-salaried players for an impact player another team wants to clear from their cap. Or, they could opt to operate as an over-the-cap team, retaining the free agent rights to their own guys, and then using exceptions such as the MLE to fill out the rotation.
I heard Hayward’s cap hold is just $8.6M. Can we use that lower figure to fit in some signings during the 72-hour waiting period and then match the $14.8M offer sheet?
Turns out I was wrong on this, even falsely correcting the hard-working David Locke. For the RFA’s original team, the cap hold amount until the match notice is sent is the greater of the RFA’s cap hold or his QO – in Hayward’s case, that’s his $8.6M cap hold. For the team submitting the offer sheet, the new salary amount counts right away.
So yes, the Jazz have an extra $6.2M of cap space up until they match the offer. My apologies to those I steered wrong before double checking the CBA document5.
Does the player option or trade bonus make Utah less likely to match?
I don’t think so. The trade kicker slightly dings the value of Hayward-the-trade-asset6, but I think they like Hayward-the-basketball-player enough that it’s not really about that. The player option is discouraging because it means he could be an unrestricted free agent as early as 2017, but I don’t think it changes their math. They’ll either get him for 4 years and $63M or for 3 years and $46M. Either way, I think they want him back.
Did the Jazz mess up by not extending Hayward last fall?
It certainly cost them some money, sure. But I don’t know if they “messed up,” and it’s hard to say without knowing exactly what was on the table in October. You could also make the argument that the Jazz simply wanted more of a sample size on Hayward — particularly as a team leader and core guy — before making the decision. If that’s true, then maybe they’re more comfortable investing $63M based on what they know today, versus investing mid-50s based on what they knew 9 months ago. If that was their logic and they made a conscious decision to pay for some extra evidence, it’s hard to say they made a mistake. But the extra data points definitely came at a price.
Will the contract hurt Utah’s flexibility later?
It could, but it’s important to remember that the cap and tax threshold are both expected to climb sharply in the next few years. Gordon’s 4th year salary ($16M) sounds like a lot in today’s salary construct: about a quarter of the cap. But if the cap has done what it’s supposed to by then, that may only be on fifth of the cap, or the equivalent to a 12M salary in today’s NBA economy. Either way, this shouldn’t be a huge issue as long as Hayward earns this salary by being one the top three players on a good Jazz team during this contract. Look at the salary construct of good teams: you can afford to pay eight-figure salaries to your best 3-4 guys, especially when you still have a lot of rookie-scale salaries on your roster.
But can they still extend or keep Enes Kanter, Alec Burks, Trey Burke and Dante Exum?
Two-part answer. First: yes, they can. The Jazz will have Bird Rights to all of those players, as well as the ability to secure matching rights with a qualifying offer. I’m also not sure that any of those guys outside of Exum7 will command the type of price range Hayward did. Most in the NBA are project Kanter, Burks and Burke as really good rotation players or part-time starters, but the Jazz won’t be in a position where they have to pay all six guys (plus Rudy Gobert, Rodney Hood, Jeremy Evans when his contract expires, etc.) eight-figure salaries.
Second: no fan likes to hear this, but the reality is that not every one of these players is going to be a part of Utah’s indefinite future. If the Jazz are contending any time in the next 5 years, it’s going to be because they’re figured out which 3-4 of these guys are truly the core, and then they’ve cashed in assets to surround that core with complementary impact players. I actually keep thinking we’re close to the point where “asset accumulation” turns into spending mode, and somebody gets parlayed into the right kind of impact glue guy. Wouldn’t surprised me if that trade is coming sometime in the next 12 months. Having a dozen good players is nice; to compete, though, you need 2-3 guys who are at least in the All-NBA conversation, as well as a really strong top 6-7.
Is Hayward really a “max” guy?
I’ll concede that this contract has a lot more to do with potential than where he’s at today, but Hayward really is undervalued for the unique skill set he brings to the table. Also, remember that there are many levels of “max,” so him getting $63M isn’t tantamount to saying he’s as good as LeBron James. There are certainly some things Hayward needs to improve upon, and he knows that. His defense, his rebounding and of course the perceived engagement issues from last season come to mind. But again, the tools are there.
What if the Jazz don’t match?
Then they’ll be sitting on about $38.7M in salary, more than $24M under the cap and about $18M below an amount they’re going to be forced to pay anyway. Not sure what they’d do with that $24M given the realistic free agent targets out there. They’d probably get filler guys, or maybe perform some more cap-dump trades for assets. But one thing’s for sure: they’d have a big hole to fill on the basketball floor, too.
Don’t the Jazz have to spend a certain amount anyway? What happens if they don’t?
Every team is guaranteed to spend $56.76M in salaries, one way or another. If they don’t reach that level, the NBA adjusts its players’ salaries upward proportionally. So there’s really nothing wrong with falling short — but the Jazz are going to pay at least that much no matter what happens. Even with a Hayward match, they’re not quite at the floor.