The NBA draft is right around the corner, but before I hop the Long Island RailRoad over to the Barclays Center and shut my brain off from all things not draft prospects, I want to take a moment to ruminate on impending the matter of Zach Randolph’s contract, and what it means for the rest of the offseason.
As I mentioned in my previous post, The Eye of the Tornado, the date of June 30th will be boldly circumscribed on my calendar as the deadline for which Randolph has to decide whether or not to opt into the final year of his contract, at 16.9 million bananas. To this point it has widely been reported that he will in all likelihood decline the option in favor of inking a longer-term extension with the team.
There are credits and debits to getting Randolph extended now, versus him opting-in and waiting until next summer to get something more assuring done.
Extending him sooner gives the Grizzlies a realistic potential cap savings of anywhere between $3-7 million for next season, allowing them to allocate that money towards other resources. However, it also means paying him in future years at a figure dependent upon his value in the present — a number more than likely to be greater than it would be at a prospective next summer negotiation for a 34-year-old power forward. This factor can be mitigated by crafting a de-escalating deal, but still remains dependent upon where the two parties decide that the overall value of the deal lies.
So the question mark here is what, in real terms, would a Zbo extension mean for the Grizzlies?
The Financial Basis of the Offseason
First let’s set some parameters around which to unravel this Grizzlies’ offseason. I’ll actually be referring to this section quite a bit this summer, so as Tony Allen would say, antennas up! Let me note now as well, that all salary figures for this post are drawn from the Grizzlies’ salary page at the delightfully efficient ShamSports.com.
We begin with what I’ll call the “committed roster.” The committed roster is basically what the roster would be at the start of next season if all “predictable” activity was executed (ie. Kosta Koufos having his bargain contract for next season guaranteed), and no “unpredictable” activity was to occur (ie. trading Tayshaun Prince). Since I do the lion’s share of my writing after hours, beware that I often disassociate and call this the committed payroll from time to time, but the effect remains the same.
The committed roster for 2014-15 is as follows:
- a: Kosta Koufos and Nick Calathes have unguaranteed deals, but for our intents and purposes, but barring an unsavory act of deities, I think it’s safe to say they will be picked up.
- b: So yeah, remember that the stretch provision was used on Fab Melo last year? Tangentially note that this analysis operates under the assumption that the Grizzlies do not use this on Tayshaun Prince.
- c: To keep this as conservatively speculative as possible, assume for the sake of simplicity that the Grizzlies simply sign whomever they end up taking as lucky number 22 this Thursday, and don’t pick up a second rounder. The salary listed is at the customary 120% of the 2014-15 rookie salary scale, which was obtained compliments of Basketball Insiders.
From this point forward, I will be referring to that $53.64 number as the “committed roster,” in calculations. Also, for those keeping score at home, that’s 12 players.
Next, note that I will be using the projected Salary Cap and Luxury Tax thresholds from Larry Coon, first of his name, king of the Andals and the first men, Lord of Collective Bargaining and Protector of the Agreement. For those who do not indulge in Game of Thrones, this is a long-winded and respectful way of me saying he’s the go-to-guy for all things CBA-related, and those to object his grace are to suffer terrible consequences.
As Coon notes, the following are projections, and “[t]he official numbers won’t come out until July, when the league conducts its audit.”
- Salary Cap: $62.3 million
- Luxury Tax: $77.0 million
- Mid-Level Exception: $5.3 million
The numbers above matter to us, because frankly Robert Pera, awesome as he is, is not Mikhail Prokhorov and I believe that we can rule out going over the luxury tax as a realistic scenario at this point in time. Lastly, the following are free agents for the Grizzlies: (*denotes bird rights)
Since we do not possess bird rights on any of Miller, Johnson, or Udrih, I presume that re-signing any of them going forward will be counted against this year’s Mid-Level Exception.
The “Opt-in” Scenario
While it is almost universally anticipated that Randolph will opt-out of the final year, let’s take a look at the situation an opt-in would create, in order to establish a baseline from which to evaluate the benefit of an extension. Putting the numbers together, we’ve got:
What would the implications be?
- Luxury Tax room of approximately $1 million in excess of the Mid-Level Exception. With player incentives and emergency replacement costs, I wouldn’t flirt with it any closer.
- A definitive farewell to Ed Davis, unless the perfect storm of — a) the market being terribly unkind to him and b) the Grizzlies having no intentions of making a play for any free agents, including their own (other than Ed) — occurs.
- Very limited flexibility to take on slightly extra $ in a trade if need be — and trades will likely need be.
This situation is clearly not ideal in terms of lending the front office the flexibility to improve the roster for the 2014-15 season. Basically the next step of the offseason then devolves into the conundrum of keeping Ed Davis versus signing some combination of Miller, Johnson, Udrih, and external free agents topping out at $5.3 million. And this option could be stymied as well by a team offering Davis a contract starting at somewhere north of the Mid-Level number.
On the flip side, the Grizzlies then end up with a ton of flexibility to re-evaluate their position with the core next summer. The Salary Cap and Luxury Tax thresholds are estimated to jump even further for the 2015-16 season, to “$66.5 million and $81.0 million, respectively,” per Coon.
Thus, under the assumption that this summer’s new financial commitments extend no further than the upcoming season, this fantasy-world 2015-16 “committed roster” would look something like: Conley, Lee, Allen, Pondexter, Leuer, Franklin, #22 Pick (2014), and the remnants of the Fab Melo stretch, with a ballpark cap room of just over $38 million. Even if you factor in a Marc Gasol extension at around $15 million (the merits of which we’ll debate another day), and a presumably more modest next-summer extension for Randolph, you’re left with a pretty penny to swim in the free agent pool with Thaddeus Young, the members of the 2011 draft class that don’t get extended this summer, Rudy Gay… and the like (another discussion for another day).
For the sake of confusion, I’m going to omit the breakdown of the above description, as this is becoming far more speculative than I’d imagined, but you can take a glimpse down that rabbit hole, here.
The “Extension” Scenarios
Alright, onto more realistic things.
Surely there is always the possibility of letting Zbo walk, but for a franchise that has endured the public relations disaster that was the beginning of these summer months, I do not think that simply letting one of the most popular players in franchise history depart for greener pastures is among the options being considered at the moment.
So with that, next the discussion moves into the realm of how much a Zbo extension could actually help the Grizzlies. Naturally, the immediate benefit of an extension becomes entirely contingent upon how much money he actually inks on for. Below is the spectrum of extension scenarios for Randolph to hitch his wagon with the Grizzlies. Just so I’m clear, these are not rumored figures nor are they absolute. They’re simply benchmarks I’ve constructed to provide a general idea as to the type of ranges that we are looking at.
The table is pretty self-explanatory, but since it’s what we do, let us discuss.
After expanding upon what the Grizzlies’ outlook would be in the unlikely event that Zbo does opt in, it becomes clear that the benefit of him opting out and extending at a lesser initial rate maximally manifests in its ability to facilitate one or more of the following means of “tax room” angling to improve the roster. It’s great for owners’ pockets to keep salaries down, but in reality it makes no difference on the end result to have Randolph take a discount, unless that extra wiggle room under the Tax is invested strategically.
How can it be used?
- The extension of the full Mid-Level Exception to free agents, be them internal or on the market.
- The leveraging of Ed Davis’s restricted free agency, be it to match an offer and keep him on the roster, or use him in a sign-and-trade arrangement
- Utilizing this space to take on extra money in trades. It is a bit cumbersome to do so as an over-the-cap team, however, but the Grizzlies can at most take back 150% of the outgoing salary + $100,000.
Again, all the while remaining under the Luxury Tax. So looking at the implications of each level, we have the following:
The “Big Extension”
The most pessimistic of scenarios I have listed out here (from the Grizzlies’ perspective) has Randolph taking a $14 million dollar payday in year one of the deal. While it still represents a relatively decent discount for the initial year and may be well-intentioned, it does little to achieve more than bring us one step closer to having Zach Randolph retire a Grizzly. This is not to say that is a good or a bad thing, but it does not afford the optimal flexibility to maximize the Grizzlies’ assets this summer,
Moreover, even if de-escalated from this figure in the following years, I find it subjectively difficult to get behind this type of salary for a player on the wrong side of 30, especially when the front office must worry about Gasol being due for an extension next, in December. For my money, I’d rather have Zach opt in and play out the year at $16.9 million, if this were to be the case for an extension.
“David West Money”
David West and the Indiana Pacers agreed on a new contract last summer, in what I among many others believed to be the move to set the tone for market of 30+ power forwards. The deal that was reached hums slightly above the tune of 3-years $36-million, establishing a roundabout value of $12 million annually. This level appears to be the happy-medium type level that could keep both parties engaged in discussion, but at the end of the day, this is where it becomes the call of Zach Randolph and his representation to determine what exactly is fair value.
At this level, the Grizzlies do not necessarily have to decide between Davis and the other free agents, barring some other suitor out there who is overzealous about the opportunity to add Ed to their rotation. It is entirely possible to envision them bringing back two of the 3 unrestricted free agents, and either signing or sign-and-trading Davis. Still, though, the thought of laying $12 million on a 35-year-old Randolph a few years from now is a bit tough to stomach.
The “Hometown Discount”
Also known as the “Ol’ Tim Duncan.”
Clearly, this is the most palatable situation for Grizzlies fans and the front office alike, as it enables the flexibility to keep or sign-and-trade Davis, lock up some free agents, take on an added financial burden as the kicker to a trade, and most importantly, keep Zbo on Beale Street for the indefinite future, all in one shot. Sounds great in theory, but in practice it has rarely been done. Duncan is a different breed of player and has experienced so much success in his NBA timeline that it is okay for him to put his faith in a world class organization and surrender a bit of money in the name of team building. So while I feel it to be unlikely for Randolph to stoop down to a number this low, I’d find it hard to blame him either, especially after the way he’s seen the ceiling rumble above him in the executive ranks over the past year and a half.
There are a number of different avenues for this summer to play out. Most all of which will be impacted by how the talks with Zach Randolph shake down within the coming days and weeks. Brace yourselves, #Grizznation, because the winds are about to pick up speed.
Be sure to stay tuned for the latest on Zbo, the draft, and as always you can reach me on Twitter: @StevieDanziger