The Waive And Stretch: Takeaways From Free Agency So Far, Second Round Pick Guarantees
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What Caught My Attention This Week
Free Agency So Far
We are five days into free agency, and a lot of the big dominoes have fallen. So, I thought it’d be a good time to give my thoughts on the free agency process so far. Here are a couple of the things that stood out to me.
The Era Of The Apron
Not sure if you’ve noticed but the new CBA, specifically the new rules around the two aprons, have dominated the offseason discussion. We’ve seen two teams essentially let players walk in free agency solely due to the constraints and challenges that come with the new CBA (Los Angeles Clippers and Paul George, Denver Nuggets and Kentavious Caldwell Pope). The Clippers even put out a statement before George signed with the Sixers essentially stating that he was going to do so, and mentioned the “new CBA” multiple times. While there are some onerous penalties that come with the new second apron, I’m not sure any of them merit essentially punting on these guys? The bigger culprit of all these teams might be the more punitive luxury tax system that is coming in 2025/2026, hiding under the guise of the “new CBA”.
Regardless, we’ve entered the Apron Era, this summer is the first time teams have really had to start navigating around all the financial and strategic intricacies that come with it.
One thing that I think teams might start trying to do is keeping a healthy amount of non-guaranteed money on the books. This is because of the difficulty it is trying to trade with teams that are in apron land. Because these teams cannot take back more money than they are sending out, this has proven to be a bit thorny trying to make deals happen. Say a team can guarantee a player’s contract up to a certain amount, that could be huge for salary matching purposes, especially when two apron teams are trying to trade together. Now, getting players to agree to a sizeable non-guarantee amount and a pushed back guarantee date is easier said than done, but we did see the Wizards do this with Richaun Holmes.
Another possible apron solution for hard-capped teams could reside in the veteran extend-and-trade rules. Fair warning this would probably require a good amount of tampering. But hypothetically lets say the Bucks and Luke Kennard had mutual interest, but Kennard didn’t want to take a minimum deal. The Grizzlies didn’t have interest in bringing him back either due to luxury tax concerns, as they turned down his team option. Well, Kennard and Memphis could have agreed to a veteran extension starting at $9.5 million (a number that is presumably agreeable with the Bucks) before June 30 and that keeps him trade eligible, and the Bucks could then trade Pat Connaughton into Detroits cap space and bring back Kennard in a three team deal, with Memphis bagging a TPE in the process. A little twist on a sign-and-trade, but one that an apron team could still do. Now, I don’t know how the League would react to a deal like this, but to my knowledge it would be legal with regards to the apron rules.
I also expect teams to covet cap space as a means to signing players in future years. Just this year we saw the aprons push Paul George and KCP from high spending, second apron teams to teams who preserved cap space and were rewarded. And with the coming max raises, we could see difference-making players hitting the open market more frequently.
Orlando Magic And Oklahoma City Thunder Planning For The Future
The Orlando Magic and Oklahoma City Thunder had a lot in common coming into this offseason. They both had the ability to create a large chunk of cap space. They both have about a two year window until their young stars are up for new deals and the rosters will start to get real expensive. Finally, they both navigated their offseasons with that coming financial tidal wave in mind. They both made a significant addition to their roster via cap space (Orlando signing KCP, OKC signing Isaiah Hartenstein) while still not over-burdening their future cap books with future extensions in mind.
While both could’ve been in the Paul George sweepstakes, had either given him the deal the 76ers did, they would’ve essentially lit their futures on fire. Instead, they focused on one solid addition to the rotation and rewarding their own guys. The Magic’s re-negotiation and extension with 26 year old Jonathan Isaac could look brilliant come extension time for Wagner, Suggs, and Banchero, as he will only cost single-digit %s of the cap once those kick in. Ditto with the Thunder rewarding Isaiah Joe and Aaron Wiggins with new deals, turning down their team options and pulling earnings forward for them, getting them on below market long term contracts by doing so. They are now on ++ contracts that run through the start of new deals for Chet Holmgren and Jalen Williams. In the new “Apron Era”, this kind of smart, long-term thinking could make the difference down the line.
Rookie Scale Extension Player Option Watch
As rookie scale extensions and restricted free agency deals start to roll in, I will be watching to see just how many go out five years and how many have player options, especially for the max and near-max guys. As these younger players generally have the opportunity to be much better towards the end of their new deals than they are now, coupled with the max-raising cap environment we are about to enter, a player option could be immensely valuable to players and agents.
I’ve discussed it prior, but I expect teams to avoid player options at all cost, something that we have seen play out in recent rookie scale extensions for Anthony Edwards, Tyrese Haliburton, Scottie Barnes, and (presumably, though not confirmed) Franz Wagner. Even Tyrese Maxey, who had to wait until restricted free agency to get his max deal, signed for five years without a player option.
Second Round Picks By Pick Range
I spent the last couple of days looking at the breakdown of the first contract signed by second round picks immediately after being drafted. So i charted out each second round picks’ type of contract signed (roster spot, two way, stash). Then if they were signed to a roster spot contract, I broke down the number of years, total amount, total guarantee, and guarantee percentage. Finally, I bucketed the second round picks into groups of five, and broke down the results in the table below.
So for example, in the last five years for picks 31-35, players were stashed overseas 3 times and signed to a roster spot 22 times. Of those 22 players, the average length of contract was 3.4 years, the average total amount on the deal was $5.3 million and average guarantee amount was $4.2 million, or an average guarantee percentage of 79%. The 56-60 range doesn’t add up to the full 25 players due to picks being forfeited.
One noticeable trend is over the last five years, the last five picks of the draft have actually been higher across the board in terms of roster spots and contract numbers. This is due to the fact that a lot of the teams drafting in those spots have been the better teams/bigger spenders in the league, and them rostering these players is due to the fact that their contracts are a lot cheaper than a veteran minimum, saving the team luxury tax money.
It will be interesting to see how the second round pick exception impacts these numbers going forward, and if the second round being on a separate day impacts how teams/players negotiate the roster spot/two way discussion, guarantee amounts, etc like it reportedly did this year.