Training Camp has begun. The Pre-Season follows. And on October 27th, the Atlanta Hawks will tip-off against the Detroit Pistons for the first official game of the NBA Season. Things are getting exciting around the Hawks as it is undoubtedly better to watch basketball than talk about it. But let's take a few minutes to look over a few looming issues surrounding the Hawks as we enter the new season and take a quick glance at the 2016 offseason.
Will Al Horford be Extended?
Nope. And he's currently the only Hawks player currently eligible for one as well.
This has already been discussed, but I wanted to take a second to give the nuts of bolts of why Al Horford will not and should not sign an extension.
As it relates to the Collective Bargaining Agreement (CBA) for the NBA, an extension is an event where an NBA team takes an existing contract and amends it so that the end date is extended to at most four seasons into the future (current season counting). Practically speaking this implies that a contract cannot be extended for more than 3 additional seasons. To qualify for an extension, the third anniversary of the signing of the original contract must have passed. This implies that only contracts of 4 or 5 years (6 year contracts are not possible under the current CBA) may be extended. If a player does qualify for an extension, then their starting salary of the extension cannot exceed 107.5% of the last salary on their contract. After this, the extension can have 7.5% raises based off of the extension's starting salary.
So only contracts of at least 4 seasons in length can be extended and they cannot be extended for more than 3 additional seasons. The short of it is that Al Horford will make $12 million this Season which limits his potential extension's starting salary to be $12.9 million in the 2016--17 Season. He could then make $13,867,500 in 2017--18 and $14,835,000 in 2018--19. A total maximum value of $41,602,500 across three seasons.
To compare, if Al was a free agent this offseason, then his maximum salary would have been $19,689,000. Financially, an extension does not make sense for Al because of the reduced starting salary and limited number of guaranteed years he can secure.
Rookie extensions operate differently, but since the Hawks declined John Jenkins' option year they are left with no one currently eligible for a rookie extension.
What about the 2016 Offseason?
When the NBA Calendar flips at the end of June, the Hawks will potentially have five players that can entertain an extension: Tiago Splitter, Jeff Teague, Kyle Korver, Dennis Schroder, and Tim Hardaway Junior.
We do not know for sure about Tim and Dennis because the Hawks have yet to pick up either of their Team Option for the 2016--17 Season. The Hawks have until November 2nd of this year to do so, so we will figure this out soon enough and provide an update. But what I want to focus on is Tiago, Jeff, and Kyle. (Dennis and Tim are not subjected to the unique situation that follows)
Tiago Splitter signed 4-year $36 million contract in the 2013 offseason (although his trade kicker pushed the value slightly higher). So in July of 2016, the three year anniversary of signing this contract will pass and Tiago will become eligible for an extension. His salary for the 2016--17 season is $8,550,000 which would put the starting salary for an extension at $9,191,250 and also implies a maximum of $29,641,781 across 3 years.
For Jeff, he signed in the 2013 offseason for a 4-year $32 million contract which is a constant $8 million for each season. His maximum extension could start at $8.6 million for $27,735,000 across 3 years.
And for Kyle, he signed in 2013 for a 4-year $24 million contract which declines each year. In 2016--17, he will make $5,239,437 and this would make his maximum extension be worth $18,164,474 across 3 years starting at $5,632,395.
Being a realist for a second, these extensions are not likely to happen. However, that does not mean that an extension for Tiago, Jeff, or Kyle will not happen. This is because of the interesting cap gymnastics of renegotiation of a contract which can increase the salary in 2016--17 for Tiago, Jeff, or Kyle and thus give them a larger value for an extension.
Renegotiate and Extend
The preceding scenario is exactly what happened this offseason for Danillo Galinari and Wilson Chandler of the Denver Nuggets. I urge you to read Nate Duncan's articles over at Nylon Calculus which detail the Nuggets situation and his other article on potential renegotiate-and-extend candidates for the next offseason.
Let me give my cliff's notes version of this scenario for the Hawks.
For the upcoming 2016 offseason, the Hawks are currently slated to have $46,727,166 in guaranteed contracts committed to the 2016--17 Season ($58,499,717 if we include Mike Scott, Shelvin Mack, Dennis Schroder, Tim Hardaway Jr., and Mike Muscala). Al Horford has a cap hold of $18 million and Kent Bazemore has one of $2,600,000. All of this adds up to $79,099,717 in cap holds with approximately $90 million as the projected salary cap.
This means the Hawks will have cap space. This cap space could potentially be used to increase the salaries of Tiago, Jeff, and/or Kyle up to the salary cap. And if the Hawks do this, they can simultaneously give an extension to Tiago, Jeff, and/or Kyle which will be based off of the increased salary for 2016--17.
As a concrete example, suppose the Hawks have $11 million in cap space and they decide to dump it all onto Jeff in a renegotiation-and-extension. The result to this would be that Jeff's salary for 2016--17 increases to $19 million. His extension would hypothetically start at $20,425,000 and increase by $1,531,875 for the next two seasons (2018--19 and 2019--20). The extension would total $65,870,625 across 3 years, but the Hawks would effectively be offering Jeff $76,870,625 over 4 years (he'd already be getting a guaranteed $8 million for 2016--17).
You could play around with different numbers and scenarios, but the Hawks will have the option to open up renegotiate-and-extend scenarios with Jeff, Tiago, and Kyle this upcoming offseason. It's something to keep in the back of your mind as this season rolls along.