The Waive And Stretch: More Extensions, What's Next For The Warriors, AUR Update, And More
Welcome back to another edition of The Waive and Stretch Newsletter. A quick shameless plug to note that I am looking to work in basketball in any capacity and would love to connect with anyone in the industry or trying to break in. Please feel free to share this with anyone who you think might find it interesting. Let's get into it!
What Caught My Attention This Week
Two More Extensions Before The Playoffs
Usually the run up to the end of the regular season is a little dry in terms transaction activity outside of 10-days, two-way conversions, end of roster churn. But we do see veteran extensions, as guys are eligible throughout the season, especially as trade restrictions on extensions start to fall off. We got two more in April, Jrue Holiday in Boston and Grayson Allen. Ironically, both guys were involved in the Damian Lillard trade(s), causing both players to have extensions restrictions due to their trades that were recently lifted. Let’s take a look at the deals.
Grayson Allen
Deal: 4 years, $70 million
Structure:
2024/2025: $15,625,000 (~11.1% of cap)
2025/2026: $16,875,000 (~10.9%)
2026/2027: $18,125,000 (~10.6%)
2027/2028: $18,375,000 (~10.3%) Player Option
My initial reaction is that Allen might’ve left some money on the table in free agency by locking in this extension now. He even left some money on the table on this extension, as he could’ve extended up to ~$75 million over four years. My EPV model pegged Allen’s value on an extension around $77.5 million over four years. This deal is smaller from a percentage of cap perspective and gross amount perspective than all those shooting guard deals that came in the summer of 2021 for guys like Norman Powell, Tim Hardaway Jr, and Evan Fournier. I thought that the way he shot the ball this season (46% from three, first among players with >150 3PA), he could’ve been looking at a deal in the $80-$90 million range over four years from a cap space team looking for shooting like the Detroit Pistons, or even a big money, short-term deal potentially from the shooting-starved Orlando Magic (think 2 for $45-$50). These teams could have at least been used as leverage to get these deals out of Phoenix, who would have had no way of replacing Allen, and has an owner who is on record willing to spend big.
Regardless, this is still a solid payday for Allen. Locking it in before the playoffs probably wasn’t a bad idea, given the uncertainty on how he’d perform in the postseason. He also has a player option in the fourth year where he can hit the market again at age 31 after the cap has gone up pretty extensively from a new deal.
Jrue Holiday
Deal: 4 years, $134.4 million
Structure:
2024/2025: $30,000,000 (~21.3% of cap) Replaces the $37.3 million base player option
2025/2026: $32,400,000 (~20.9%)
2026/2027: $34,800,000 (~20.4%)
2027/2028: $37,200,000 (~19.8%) Player Option
Holiday’s extension is, I believe, the first example of the new rule in the CBA where a player can turn down a player option and sign an extension that starts at a lower amount than the player option in the first year. This deal saves the Celtics around $7 million in salary and roughly $36 million in luxury tax towards next year, and also wipes out the incentives from his prior deal, which also counted towards the apron lines. They currently sit about $2.5 million above the second apron. Being able to drive down Holiday’s cap hit next year is probably the driving factor behind the Celtics giving a player in their mid 30’s a fully guaranteed four year deal, not something we see too often (e.g. Chris Paul).
As for Holiday, locking in another 9 figure payday at age 33 is an absolute no-brainer. While it looks like a pretty big number now, it projects to only be about ~20% of the cap over the life of the deal. Fairly similar to recent deals for DeMar Derozan, Khris Middleton, and Jerami Grant. This deal will put Holiday over $380 million in career earnings.
Where Does Golden State Go From Here
The Golden State Warriors are coming off a season where they spent $384 million in payroll/luxury tax only to finish 10th in the West. Yikes. It would seem that their exorbitant spending days are likely over, as Joe Lacob as publicly stated the goal is to #DuckTheTax completely next year. The below is what Lacob told Tim Kawakami of The Athletic.
“Our Plan 1, or 1A, is actually we’d like to be out of the tax, and we think that we have a way to do that,” Lacob said. “That kind of is the plan, not just under the second apron. I’ll tell you why that’s important, because the truth is that we need to be out of the tax two years out of the next four, below the tax line, in order to get this repeater thing off our books. We don’t want to be a repeater. It’s just so prohibitive, not to say we wouldn’t do it if we had to, but you’ve gotta look at what the downside is to doing that.”
A completely reasonable goal for any team coming off a missed playoffs, but just sounds funny coming from the Golden State Warriors. Regardless, the team has a pretty clear pathway to not being a tax team next year. As things sit, they currently are about~$2.9 million over the tax line. That includes Chris Paul’s full $30 million non-guaranteed deal. The cleanest path is just waiving Paul and Gui Santos non-guarantees, and either moving Looney’s $8 million cap hit completely or just waiving him and incurring the $3 million partial cap hit (which could also be stretched to free up $2 million more). This would get you about $34-$36 million below the tax line to fill out at least 6 roster spots.
Maybe the biggest question of the Warriors’ offseason is what (and where?) does Klay Thompson next contract look like. EPV pegs his value around $19 million for next year, a far cry from the max contracts he’s enjoyed in the past. He’s coming off a bit of a down season for his standards at the age of 34. The Warriors just gave a 33 year old Draymond Green a fully guaranteed 4 year $100 million deal. Would they do that for Klay? They could and still stay under the luxury tax, but would leave them essentially just minimum contracts to fill out the roster. Would Klay entertain bigger money, shorter term deals from a non-Warriors team? The shooting-starved Orlando Magic and Detroit Pistons could be serious suitors this summer. What the decision is between Golden State and Thompson seems to be a huge inflection point this summer for the Warriors.
Should the Warriors decide to once again enter into the luxury tax line, they have the tools to add to the roster. Chris Paul’s aforementioned contract is essentially one huge trade exception, as they can guarantee any amount up to the $30 million to facilitate a trade. They will likely be able to move two future first round picks, assuming they convey this year’s first to Portland. They could make a big swing and make one last gasp to surround their aging stars with some quality talent. If they wanted to dip their toe into the tax but stay under the first apron, they could in theory bring back Klay Thompson on a deal under $20 million and still use the full non-taxpayer MLE, where they could target someone like Jonas Valanciunas.
Some tough decisions remain ahead for the Warriors front office. Do they want to double down on a team that ended up 10th in the West? Could they really let Klay Thompson walk? Should they try to cash in all their chips to get Steph Curry more help? We will see how they answer those questions.
Assets Under Representation (AUR) Updates
With Klutch Sports’ addition of One Legacy Sports Management, an agency that represents a number of high profile Canadian players, that pushed Klutch up over $2.4 billion in AUR. As we head into the offseason, look for more movement and acquisitions between agencies.