The impending free agency period is shaping up to be one of the most interesting in recent memory. This is due to the worst kept secret that the NBA salary cap is set to explode starting next offseason (i.e., 2016-2017), and then go atomic during the following offseason (i.e., 2017-2018).
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Specifically, while the anticipated cap for this summer is anticipated to be approximately $67 million, it is expected to jump to $89 million and then $108 million, respectively, in the following offseasons.
As a direct result of these expected dramatic salary cap increases, the Lakers should not seriously pursue (or have any realistic hope of obtaining) any impact restricted free agents this offseason like Jimmy Butler, rumored to be interested in coming to the Lakers. Why you might ask? Let me explain.
I should first note that by “impact” free agents, I’m referring to the upper echelon of players set to be restricted free agents this offseason. This list includes, in no particular order: Kawhi Leonard, Jimmy Butler, Draymond Green, Brandon Knight, Reggie Jackson, Khris Middleton, and Tobias Harris.
So why shouldn’t the Lakers pursue any of these players? Well, first its important to understand what the maximum salary possible is for each of these guys. Players with 0-6 years of experience, which is necessarily all restricted free agents, are eligible for max contracts starting at 25% of the salary cap. So, since the cap is going to be approximately $67 million, the year 1 salary would be $16,750,000. And this salary can only increase 4.5% (as opposed to 7.5% for restricted free agents who resign with their own teams) each year thereafter, since these players are being signed by other teams. So the year 2 salary would be $17,503,750, year 3 would be $18,291,418, etc.
Now, a contract at $17-18 million a year may seem like a lot when you’re dealing with a salary cap of $67 million. But what about when its $89 million? Or $108 million? See what I am getting at? Indeed, a starting salary of $18 million in 2017-2018 season would only account for 16% of the $108 million salary cap for that year. As mentioned above, a restricted free agent signed to a max deal this offseason would account for 25% of the salary cap for the 2015-2016 season. That’s a big difference.
So, assuming the Lakers, or any other team, throws a max deal at any of the restricted free agents listed above, why wouldn’t their respective teams immediately match it? It would make no sense for those teams to let promising young players walk for nothing, since it will only be one season (and the rise of the salary cap) before those max deals look like bargains.
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Furthermore, even if the teams weren’t completely sold on their own restricted free agents, it would be prudent for them to match and then simply look to trade them later given how reasonable their contracts will look down the road.
So if the Lakers are holding out any hope that, for example, a max offer sheet signed by a less heralded restricted free agent (e.g., Knight, Jackson, Middleton, and Harris), I think they will be sorely disappointed. Even a max offer sheet signed by Tristan freakin’ Thompson would likely be matched.
Now, this isn’t to say that the Lakers couldn’t obtain even lesser heralded restricted free agents (e.g, Patrick Beverley, Enes Kanter, Iman Shumpert, etc.) by throwing big money at them. But, because of what I explained above, it would likely require SERIOUSLY overpaying guys that are, at best role players and, at worst, bench guys.
Further, restricted free agents cannot be signed until July 10, and then their teams have 3 days to decide whether to match. So essentially, the Lakers cap space would be in limbo for upwards of 13 days (since free agency begins on July 1), with most of the available, quality unrestricted free agents likely signed during that time period. With how bad these past two seasons have been, it is imperative that the Lakers use their approximately $23 million in cap space this offseason on as many impact free agents as possible.
So while this article may seem like doom and gloom, there is a potential silver lining. If it is truly believed that teams will simply match any offer sheets signed by their own restricted free agents, then other teams will wisely avoid extending any offers. As a result, the restricted free agents will lose all leverage because all they can do is negotiate with their current teams.
And that is what actually played out last offseason with Greg Monroe and Eric Bledsoe. While Bledsoe ultimately signed a 5 year $70 million deal to say with the Suns, Monroe held out and is now an unrestricted agree agent this offseason, free to sign with whomever he wants.
So, what if some of the restricted free agents this offseason decide to take a similar gamble so that they can become unrestricted next year? They would even have more of an incentive then Monroe because they would obviously make more money over the lifetime of a max deal signed next offseason because their salary would start at $22,500,000 (i.e., 25% of $89 million).
Put differently, if say Butler decides to go the Monroe route, he would stand to make more money over the next four years by taking the qualifying offer of approximately $4 million for next season, and then signing a max deal next year as opposed to simply signing a max deal offer sheet for four years this offseason (which, as discussed above, the Bulls would absolutely match). And, importantly, as an unrestricted free agent, Butler would be able to decide where he plays.
In sum, if the Lakers really are really set on any of the top restricted free agents this offseason, they should hope they pull a Monroe, and then just sign them next offseason where Lakers will have tons more money to spend due to the rising salary cap.