Gordon Hayward & Restricted Free Agency FAQ

Photo by Melissa Majchrzak/NBAE via Getty Images

There are WojBombs and then there are WojBombs.

Much of Jazz nation spent Halloween with one eye on the candy bowl and the other eye on Twitter, hoping news would surface on the 10 p.m. MDT deadline for the Jazz to extend Gordon Hayward’s rookie contract. Yahoo! Sports’ Adrian Wojnarowski, famous for his breaking news Tweets we lovingly refer to as WojBombs, finally broke the silence… with bad news.

The Jazz and their fourth-year wing couldn’t find mutually agreeable terms in their extension negotiations, so Hayward remains under contract until June 30, at which point he’ll be a Restricted Free Agent. At that point, Hayward is free to negotiate and even come to an agreement with any team in the NBA, but the Jazz will have the right to match any deal he’s offered to retain Hayward.

What does all that mean? Is Hayward bolting? Can the Jazz somehow keep him? The Jazz online & social communities were buzzing with questions all evening, and we’ve pulled some of the most common questions for this special edition Q&A on Hayward and next summer’s Restricted Free Agency. Answers are from Dan Clayton and Andy Larsen.

Why couldn’t Hayward and the Jazz agree to terms?

Simply put, they had different perceptions of Hayward’s value, and given that there was no open market to regulate his price via supply and demand, it got to a point where neither party wanted to accept the other’s assessment of Hayward’s value.

We don’t know the exact figures, but we can piece them together. Deadline day whispers hinted as a Jazz offer somewhere in the $40M+ area, with incentives that could get Hayward closer to his magic number if he hit certain triggers (like making an All-Star team or scoring 20 points per game). We also know from Hayward’s end that the asking price was somewhere less than Hayward’s max deal, because his agent Mark Bartelstein has told multiple sources that they weren’t discussing max deals. A max four-year deal for Hayward would have been around $61M. So that tells us Hayward’s camp was probably asking for something in the 50s. We also know that the two parties were “several million dollars apart” (Wojnarowski again).

My educated guess from absorbing all that: the Jazz were probably willing to beef up their offer but preferred to stay in the 40s, and Hayward’s team didn’t want to drop out of the 50s.

Does this mean Hayward wants out? Or that the Jazz don’t want him?

It means neither. The most likely scenario is that the two parties come together on a new contract next summer, either in direct negotiations or because Hayward secures another offer and the Jazz match it. Both sides know how the process works, and Bartelstein commented to USA Today that it was difficult to bridge the gap given that there was no open market to help establish his value. This is all part of a process that most likely ends with Hayward staying long-term.

What is the most another team can offer? Can they create a “toxic” offer the Jazz can’t match?

Other teams can offer Hayward the same starting salary (13.7M, if the salary cap stays the same next year*), but are limited to smaller raises and a 4-year deal. So the total the Jazz could offer him could go as high as $78.8M over five years or $61M over four years, but another team can only offer up to four years and $58.5M, and if the Jazz were willing to match that deal, Hayward stays.

(*Note: As @nsanba aptly points out, these numbers could be low if some early estimates of the 2014-15 cap come true. Some of those early reads have the cap going up by as much as $4 million. I think that’s an aggressive estimate, but if it happens it would take the starting salary of Hayward’s new deal up by a million, meaning the entire deal would go up by $4M or so. In any case, the Jazz can still offer more than other teams by virtue of a 7.5% raise.)

Because the Jazz have Hayward’s “Bird Rights,” there is no scenario where a team could assemble an offer the Jazz could not match. They could simply overpay to make Utah think twice — maybe they think Hayward’s worth $50M but they offer the full $58.5M to make Utah think twice — but even still, Utah can match it. They can try to front-load the actual cash payout (with signing bonuses) or front-load the cap hit (by having the salary decrease by up to 4.5% per year instead of increase), but neither is a provision the Jazz couldn’t match.

So is there any way Hayward leaves the Jazz next summer without them letting him?

Not in 2014, no. The only way he leaves for another NBA team in 2014 is if the Jazz decide not to pay whatever quantity he’s officially offered, which cannot exceed $58.5M over four years, or if the Jazz decide to rescind the right of first refusal. Basically, everything is on the Jazz’s terms right now except the dollar amount, and even that can’t get too out of hand. And if Hayward was expecting 50+ million, there’s little incentive for the Jazz to pay Hayward that amount now when the worst case scenario for them next summer is $58.5M.

There is a way he could force his way out in 2015, but it’s ballsy and almost never used. He could take the one-year offer the Jazz are required to submit in order to trigger Restricted Free Agency, and then he would be an Unrestricted Free Agent in 2015, meaning the Jazz would lose the ability to match offers. But players have to accept quite a bit of risk (not to mention forego a lucrative new contract for one more season), and they hardly ever do. The last time I can remember a first-round pick going that route was Stromile Swift in 2004 (although it might have happened since).

What are the other ramifications of dealing with Hayward as a RFA versus an extension candidate?

There are a few things, some that work in Utah’s favor and some that work in Hayward’s.

• When negotiating an extension, teams can only offer four years unless they use a special tool called the “Designated Player” to offer a five-year extension. A team can only use this card once (until the DP’s new contract runs out or he’s traded), and it must be for a max extension (like the one Paul George got from Indiana). None of that is true when they’re negotiating with an RFA on a new contract. They can sign Hayward to a 5-year deal without using up the DP, and it can be for any amount up to the max.
• Hayward is now on an expiring contract, which means he can’t be traded past the February trade deadline. Had he been extended, he could have been included in deals leading up to the NBA Draft, but now he’s off the table if the Jazz start discussing ways to move up in an effort to land a franchise-changer in the 2014 class.
• Now, instead of having to count a new extension salary on their 2014-15 books, the Jazz now get to use what’s called a “cap hold” to effectively hold Gordon’s place on the salary sheet. That means that, until Hayward signs a new contract, he will only take 8.6M of their salary cap space. This could basically add to the Jazz’s 2014 spending power, but only if they conduct their other business before Hayward gets a new deal, which would then change his cap number to whatever the actual first-year value of his new contract is.

Who might try to sign Hayward next summer?

It’s tough to say, because it has to be someone who a) likes Hayward enough to think they can outbid the Jazz, b) has the cap room to offer him an amount they think the Jazz wouldn’t match, and c) wouldn’t mind a temporary hold on their cap space that keeps them from transacting with other free agents while the Jazz decide. That last point is a deterrent for many teams, and the reason why, generally speaking, RFAs don’t get as much open-market attention as similarly skilled UFAs.

But who knows. Next year is going to be an unprecedented market, both in terms of supply and demand. On the one hands, as many as a third to a half of NBA teams have the ability to create a max (or near max) salary slot, so there are a lot of buyers/bidders. On the other hand, we’ve rarely seen a free agent class that’s this star-studded, so those bidders may be focused on LeBron, Carmelo Anthony, Kobe Bryant, etc. If marquee free agents stay where their player rights are, there’s a lot of cap room that has to go somewhere. On the other hand, if a couple of those marquee guys unexpectedly head to teams with cap room, suddenly the whole panorama is different. It’s a really hard year to predict – maybe the hardest in memory.

That said, Boston and Phoenix get mentioned a lot because of Hayward’s connections to those teams’ coaches. Boston can’t create a max slot without finding someone to take two high-paid players off their hands (one of which would have to be Rajon Rondo, Gerald Wallace or Jeff Green). Would they go to all that trouble knowing the Jazz can match any offer they make anyway? Phoenix certainly has the space, but again; do they want to use it on Hayward when they could instead try to attract UFAs they could sign outright? Portland gets mentioned because they like to mess with Jazz RFAs, but Portland’s cap situation isn’t even close to allowing them to make an offer anywhere in Hayward’s ball park.

Why were Jazz able to agree to terms with Derrick Favors but not Hayward?

Simply put, because Favors was willing to sign at the base end of the range for paint protecting big men, whereas Hayward wanted something on the high end of the scale for do-it-all wings. As a result, the savings that the Jazz could receive with Favors by extending early were substantial, but were relatively minor for Hayward. It’s just not a reflection of how the Jazz feel about the two players.

Do the Jazz have to wait until another team makes an offer, or can they still negotiate with Hayward on July 1?

No. The Jazz, like any other team, can negotiate with Hayward’s agent starting on July 1st. If any other team makes a formal offer that Hayward and his agent accept, the Jazz would have the ability to match that offer within 3 days and keep Hayward with the Jazz. On the other hand, if the Jazz make an offer that Hayward and his agent accept, the contract is simply signed, and Hayward would remain a Jazzman.

Does this mean the Jazz aren’t happy with Hayward or aren’t sure of their plan?

No. To quote Hayward’s agent Mark Bartlestein (from USA Today):

“The main thing is that the Jazz put in a tremendous amount of time and effort into wanting to get something done, and we put in a tremendous amount of time and effort to get it done,” Bartelstein said. “It was not due to a lack of trying. That’s for sure.

This is not a statement on how the Jazz feel about Hayward. Rather, it’s simply a financial decision meant to maximize the chance of getting Hayward at a reasonable average annual salary moving forward. The plan doesn’t change: the Jazz still have the ability to retain Hayward for four seasons after 2013-14 if they so choose.

I thought certain star players can earn a higher max salary. Can Hayward?

Yes, some star players can receive a higher maximum salary. It’s called the “5th Year 30% Max” (meaning that the player can represent 30% of the cap). In order to qualify, players have to meet one of these criteria:

• Named to the All-NBA First, Second or Third team at least twice
• Voted as a starter in the All-Star game at least twice
• Named the NBA Most Valuable Player at least once

In other words, Hayward will be ineligible for the higher max salary unless he wins MVP this season. That seems unlikely.

How will being an RFA affect Hayward’s market value?

Again, it’s impossible to predict for sure, but using the 2013 RFA class as an example, they had a pretty hard time getting paid. Most of them either had to wait until the unrestricted guys were gone and/or settle for the low end of their range.

• Jeff Teague and Brandon Jennings were both considered among the top available point guards, but both settled for 8M/yr and both were towards the tail end of signings among Amin Elhassan’s top 25 free agent list.
• Gary Neal was a late sign and only got 2 years, 6M (although he’s clearly in a lower talent class, too).
• Nikola Pekovic eventually (after 1.5 months) agreed to terms with his original team. He got a five-year deal, but pretty much at the base end of the big man range (12M/yr).
• Tiago Splitter also managed to sign a new contract with his original team, for the discount price of 9M/yr.
• Gerald Henderson was Charlotte’s second-leading scorer, but got hosed in Restricted Free Agency (3 years, 18M total) and was pretty much the last non-minimum level wing to sign.
• Only Tyreke Evans got an early deal at a fair value (4/44M), but that’s because he orchestrated a sign & trade that made all parties happy.

If you have any other questions about what Hayward’s lack of extension and next summer’s restricted free agency status means, ask us in the comments and we’ll either answer them in the comments or append the answer to the post.