Derrick Favors & Gordon Hayward: Do They Get Extensions, and For How Much?

The Jazz have just under three months to complete what would be their most important transactions of this off-season (no offense, Richard Jefferson). The extension deadline for Gordon Hayward and Derrick Favors looms in late October, meaning that the most substantive questions between now and then revolve around the value of those two to the future of the organization and the market conditions that will set their asking price.

They’re loaded questions, ones on which not everybody agrees. One salary cap expert with whom I have already had some spirited debates on this topic is Peter Novak. Peter and I went a few rounds on this on Twitter last week, and decided to air it out here for your entertainment.

For a great primer on extension rules before you dive in, check out today’s companion post, also by Peter and me.

 

Dan: OK, Peter, let’s start at the most basic question, which I’m sure will lead us into all the little nooks and crannies where we have divergent views. How much do you think Hayward & Favors should get as extensions and how likely do you think it is that the Jazz lock them up by October 31?

 

Peter: I think we both agree that at this point in time it is difficult to see a scenario where the Jazz offer a full 4 year, $62.3mm maximum extension to either player. When I consider how much either player is worth, I look for recent comparable players/contracts. In Favors’ case I think the Serge Ibaka extension (4 years, $49.3mm) signed last year is rather indicative of what Favors is worth.  Both Favors and Ibaka are raw, defensive-focused PFs with room to grow on offense. For Hayward, I look at DeMar DeRozan’s extension (4 years, $38mm).  While Hayward is a better shooter and more efficient overall, DeRozan has a superior athletic profile which balances out their future NBA prospects. Will either player agree to those type of numbers?

Considering how conservative the Jazz franchise is historically, I tend to think the Jazz won’t offer that type of money now.  Further, I think both players are looking at their anticipated roles this year and could anticipate a work load that will allow them to put up better production than their Ibaka and DeRozan comparisons did.  For this reason the players may similarly be hesitant to sign a deal in that range. So what do you think, are we in the same ball park?  And will the Jazz ink them at those prices before this fall?

Dan: The extension prices you quoted probably aren’t way off, although that’s not where the Jazz will start the conversations. The players’ agents might, but I don’t think the Ibaka-Favors comparison will get Favors’ negotiating team very far. Serge was coming off all-defensive first team and a trip to the NBA Finals, the culmination of a run in which he netted an 18.9 Playoff PER. Even still, he got an extension that averaged a little more than 12M/yr with an extra couple million in incentives. I just don’t think Favors is in Ibaka’s league yet, in overall terms, to say nothing of a much different economic market than when Ibaka extended.

Hayward-Derozan, on the other hand, might be in the ballpark. A 4/38M deal is honestly a better deal on the Jazz end than I thought, so if that’s on the table, they might have to take it. But in either case, I think it points back to the salient question about the risk calculation on the part of the players. On one hand, you could take the money now, knowing it might be lower than you could get after a year of number-padding. On the other, you could wait for the chance of a slightly more lucrative payday but risk getting screwed by: the structure of restricted free agency, a market with loads of marquee guys, injury, or just the fact that any shortcomings are going to be magnified when you’re the #1 or #2 option.

 

Peter: Since we are further apart on Favors, let’s look at 2 additional comps. Joakim Noah and Al Horford. Both signed rookie extensions at 5 years, $60mm. Both of these guys, similar to Ibaka, had established starting roles in year 3, but Favors’ production in his limited minutes isn’t so far off and if you look at per-36 numbers, it is mostly superior. While the Jazz may try to argue that Favors hasn’t met the production levels of any of these guys, his agent can easily point at the team for holding Favors’ minutes down.

In a league where Roy Hibbert and Brook Lopez received maximum contracts as RFA’s, I have hard time seeing Favors having to settle for much lower than $12mm/year.  Similarly, Gordon Hayward can look at Nic Batum (4 years, $46mm) and to some extent Eric Gordon (4 years, $58mm) as his potential upside if he plays to Jazz fans’ lofty expectations.  Dan, assume for a minute that Favors and Hayward pass on extensions, assuming they remain relatively healthy but only put up average production, what do you think their salary floors are as restricted free agents next year?

Dan: First off, I again think your comps are aggressive. Those guys were already core guys on mostly good teams by the end of year three. I think any extension that is based on that group is one made on the faith of what Favors could become as he takes on more minutes and consistently plays against starter-caliber competition. If the Jazz want to show that kind of faith, they can do so, but I don’t think they’re obligated to based on a comp list of guys who were already doing that at this point in their careers. The reality is that at this point, Favors is not a sure bet to be as good as any of those dudes.

Onto your floor question, I’m just not sure I grant the premise that there IS a floor, at least not once you remove all the conditions you placed on it (relatively healthy, average production). Bad health or subpar production are real risks for either player, so security is the real carrot at the end of the extension stick. You can’t base their extension values on a bunch of hypotheticals that remove the risks inherent in playing 2013-14 without that long-term guarantee, because the whole reward for players signing an extension is foregoing that risk.

What you probably are trying to get at is their RFA value if we took Hayward/Favors now and took them in a time machine to 2014. The answer there, I’m afraid, is just as volatile because there’s really no precedent for the market conditions we’ll have next summer. In a vacuum, I’d say something like 4/32-38M for Hayward and maybe a bit more for Favors (who is less polished all around but gets a big man premium), but we’re not in a vacuum. 2014 free agency will be different from anything we’ve experienced.

 

Peter: I 100% agree that those are aggressive comparisons for Favors. The Jazz certainly aren’t obligated to pay Favors on those comps, which is ultimately why I think no deal happens this summer.  If I’m Favors I’m comfortable that I can merit a similar contract based on the role I am inheriting in 2013-14.

Favors could easily average 15 and 10 on 43% shooting and still get a big contract offer from a big man needy team.  In both cases either player could argue below average production was a result of being the 1st year thrust into their role and they are young enough to argue they still have upside.

As an RFA, DeAndre Jordan got 4 years, $43mm coming off a season averaging 7 PPG and 8 RPG. Favors already does that in fewer minutes. JaVale McGee got 4 & $44mm after averaging 11 and 7.  Neither of those guys were considered the prospect that Favors is.  I have a hard time seeing Favors getting less than $11mm/year next offseason, even if he only adds 4-5 MPG and puts up similar numbers.  So is there strong enough motivation for Favors to sign for $11mm/year or less now?

I think we agree that $8mm/year is a reasonable RFA floor for Hayward. We saw way too many average wing players sign for something similar this offseason.  Which begs the question, if $8mm/year is the floor, why sign a deal averaging $9.5mm/year now if he has potential to earn $12mm-$15mm year on a 5 year contract if he waits until after the season?

I am curious by what you mean that 2014 free agency will be different from anything we’ve experienced?

 

Dan:  I just think we’ve never seen the confluence of market factors we’ll have next year. Potential free agents include LeBron, Kobe, Melo, Tim, Dwyane, Dirk, Granger and Gay, and joining our guys in the potential RFA class are Paul George, Greg Monroe, Eric Bledsoe, DeMarcus Cousins. As much as half the league has the opportunity to create a near-max salary cap slot, but at the same time the repeater tax kicks in and revenue sharing will have fully kicked in, changing the way big & small market teams spend.

I don’t have any idea how the market will shake out next year; nobody does. So an agent telling his client to pass on, say, 4/38M guaranteed could wind up looking awfully smart… or the bottom could fall out. That’s why I think measuring guaranteed money now against a hypothetical floor in one of the most unprecedentedly weird markets is dangerous for the players; just as measuring against a hypothetical ceiling is usually bad practice for teams.

Let’s say the agents show up with the script you just provided around per-minute numbers and favorable comps, and the Jazz show up expecting a discount for rolling the dice and giving the players the security now without seeing them as alpha dogs first. How likely is it that the parties can’t bridge the gap at all and wind up waiting until next summer just as a result of a negotiating impasse?

 

Peter: I think there is a very small chance that a Favors deal gets done. As a big man there will almost always be money for him, thus unless the Jazz want to break the bank now (and I don’t think they necessarily should), I’d give it only a 10% chance that he signs.  Hayward is probably closer to 30-40%.  He has more room to get exposed if he isn’t able to play as efficiently in his new #1 role.

 

Dan: I think you’re underestimating the motivation to forego restricted free agency based on how hard it is to get paid as RFA. Tiago Splitter – a pretty good comp for present-day Favors, actually – got 4/36M. Jeff Teague, a promising young point guard, got 4/32M. Nik Pekovic was one of the game’s most efficient centers last year and he’s not even signed yet. And all three of those guys were ESPN top 16 free agents; in next year’s star-studded class, neither Favors nor Hayward figures to be ranked that high.

Let’s not forget the ceiling, either. It’s hard for a 22-year-old kid to turn down, for example, $40 million guaranteed for the possibility of Ibaka money or the dream (because, frankly, it’s a dream) of Hibbert money. In other words, I think there’s a middle ground here and I’d put the odds a bit higher than 10-40% for either guy.

 

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Your turn: What do you think? Will deals get done with Favors & Hayward? If so, for how much? What’s the right amount? Chime in in the comments section to join the conversation.