It’s a good time to be an NBA player — or an NBA owner, for that matter.
The league was set ablaze with speculation and excitement on Sunday evening following reports that the announcement of a nine-year, $24 billion television deal with ESPN and Turner was imminent. The NBA confirmed the deal this morning.
The reported agreement would nearly triple the league’s annual haul — from $930 million to $2.66 billion, beginning with the 2016-2017 season. While a big increase in the value of the NBA’s TV package didn’t necessarily surprise anyone — with the value of sports TV rights ballooning over the past few years, the league was widely expected to see a significant bump in any new deal — the sheer grandiosity of the figures raised the most eyebrows.
Twenty-four billion dollars. That’s a lot of money. A lot.
Of course, all that money has to go somewhere, and the owners will take their fair share — but under the league’s current collective bargaining agreement, 50 percent of all such basketball-related income is promised to the players. That portion will be delivered via increased salaries, which means that the NBA’s salary cap will likely increase exponentially over the next couple seasons.
Many details still need to emerge before we can get a clear picture of just how that will happen. For example, will the league attempt to ensure a smooth transition by gradually ramping up the cap over the next two years before the new deal goes into effect, or will it simply jump astronomically once all that money starts flowing in 2016?
Those questions will be answered in due time, and the details of those answers are important because of how they will affect every team in the league. But with Sunday’s unveiling of the size and scope of the new TV deal, it’s already become very clear that the NBA is about to enter a brave new world. Player salaries are going to skyrocket. In a few years’ time, every max deal signed this past offseason will look downright affordable. For better or for worse, yesterday’s max is tomorrow’s mid-level exception.
There may be no team impacted by this change more than the Thunder. With at least four marquee players entering free agency between next summer and 2017, the landscape certainly seems to have shifted under their feet at a crucial juncture.
So what does this brave new world mean for the future in Oklahoma City? Based on what we know now, here are a few initial insights:
Clay Bennett will have to open his wallet even wider
The Thunder have been notoriously careful about how much and for whom they crack open the piggy bank. It’s been a topic of considerable contention — just think back to everything you’ve ever read about the James Harden trade. People get upset about this.
But contrary to popular belief, Clay Bennett and company have always been willing to open their collective wallet when it made sense. They paid Kevin Durant. They paid Russell Westbrook. They paid Serge Ibaka. They were even willing to pay James Harden a whole bunch of money, if he was willing to take just a little less than the max. Obviously he wasn’t and he was subsequently traded to Houston, but the Thunder were prepared to dip fairly deep into the luxury tax (but not too far) to keep Harden around. [quote]
So the Thunder have shown a willingness to spend on their stars — but the current contracts for Durant, Westbrook and Ibaka pale in comparison to what’s on deck in the next few years. All three players will become free agents between now and the summer of 2017, and with the expected jump in the salary cap (and, as a result, the value of maximum contracts), the cost of re-signing all three will be astronomical.
To be sure, this isn’t too much different than what smart observers were expecting. We knew the cap was likely going up no matter what. It was clear that Oklahoma City was going to have plenty of company in the Kevin Durant sweepstakes in 2016, and that they were going to have to shell out some serious cash to keep him. Those dynamics haven’t changed. He was always going to get the max — the size of that max has just grown. And now every team has a lot more TV money to throw around.
The bright side of this equation is that, no matter how much the cap grows or how big max contracts get, the Thunder still hold a valuable trump card with Durant (and Westbrook and Ibaka). As owners of his Bird rights, they will be able to offer him an extra year’s worth of guaranteed money and higher annual raises that no other team can — and while that may or may not be enough to ultimately convince him to stay put in OKC, it’s not nothing.
So the Thunder will still have to pay big time for Durant. That’s not new. They’ll just have to pay more. This gets slightly thornier when you consider that both Westbrook and Ibaka are up for new contracts in the summer of 2017. Both will undoubtedly command max contracts as well, with many suitors willing to back up a Brinks truck to secure their services. Things are undoubtedly going to get expensive.
The long and short of it? In two successive summers, Bennett is going to have to open up his wallet to the tune of several hundred million dollars to keep the team’s core in tact. That’s a virtual certainty. If they want to keep Durant, Westbrook and Ibaka, they will have to pay — big time. They’ve been willing to do so in the past, but those old contracts will look like pennies next to what’s coming down the pike.
Will the Thunder pony up the cash again? Or will Bennett get alligator arms when all those zeroes start adding up? That’s an open question for 2017.
Sam Presti’s “build from within” strategy is about to become even more essential
If the Thunder successfully throw obscene amounts of money at Durant, Westbrook and Ibaka, there probably won’t be much cap space left over to fill out the other 12 spots on the roster. That kind of constriction puts a premium on draft picks, less expensive rookie contracts and internal development of young players on those rookie contracts — or in other words, exactly the kind of things Oklahoma City excels in.
Sam Presti and his front office team, to their credit, have already been operating this way for several years now. This is the Thunder model — prioritize younger, cheaper talent over older, more expensive talent and rely on your coaching staff to develop the kids at such a rate that they can perform as successful role players. With maximum contracts set to take a hike, we can expect to see that approach become even more widespread throughout the league — especially for teams with an established core of highly paid stars.
Good players on rookie-scale deals will become an even more highly sought-after (but increasingly time-limited) commodity. With drastically more money available on the market once they finally hit restricted free agency, there’s little incentive for the Thunder’s attractive young players to take less than market value for their talents just so they can stick around and play fourth fiddle to Durant, Westbrook and Ibaka. Because of their sizable commitments to those core players, it is unlikely OKC will be unable to compete financially with other teams (those without established stars taking up huge chunks of their cap space) who are willing and able to fork out extravagant contracts in hopes of landing themselves a key piece early in his career.
This will likely create a never-ending carousel of short-term rookie deals (with perhaps a few minimum-level veteran ones sprinkled here and there) for the Thunder. Young players will come in through the draft, be relied on heavily to produce early in their careers, then move on to much greener pastures once their initial contract expires and they can hit the open market — only to hopefully have their production replaced in OKC by another young player on a rookie-scale deal. That dynamic puts added pressure on Presti to draft well and on Scott Brooks to develop talent quickly. If they can’t get rookies to perform on the cheap, the Thunder’s Big Three might not have much help.
Say goodbye to Reggie Jackson (probably)
Don’t worry. I didn’t forget about the Reggie Jackson situation. Nowhere does the never-ending carousel of rookie deals come more into play than with Jackson. He is the physical embodiment of the shifted landscape. Or in more simple terms: Reggie Jackson is about to get paid.
Here’s the long version: Jackson’s rookie contract expires next summer, making him a restricted free agent. The Thunder have an opportunity to sign him to an extension by October 31, but given the latest developments, that’s exceptionally unlikely to happen. No doubt emboldened by the promise of rising contract values under the new TV deal, Jackson has absolutely zero incentive to take anything less than a max extension before testing the open market — and with Durant, Westbrook and Ibaka’s own expensive free agency periods looming in the not-so-distant future, the Thunder aren’t prepared to offer him that. And even if they did, he probably wouldn’t take it — there could potentially be a lot more money floating around next summer if the cap gets raised prior to the TV deal going into effect.
So Jackson will undoubtedly opt to test the waters next summer and will almost certainly receive a max offer from some owner flushed with a bunch of new TV cash and looking for a starting point guard. This offer could realistically come under a newly expanded cap, which would make Jackson’s contract worth much more than players who signed max deals this year. As he will be a restricted free agent, Oklahoma City will have a chance to match any offer Reggie receives — but again, given the looming payouts to the Thunder’s core, Presti would likely opt against doing so, clearing Jackson to continue his career elsewhere and leaving OKC with a gaping hole in their roster.
To be sure, I could be wrong about this. For all I know, Clay Bennett could now decide he doesn’t care about making obscene luxury tax payments anymore, and that he’s willing to throw insane money at Jackson, Durant, Westbrook and Ibaka and fork out hundreds of millions of dollars in taxes to the league office every year. However, I highly doubt that’s the case. It would be a complete break with the organization’s entire philosophy. All of which is to say that choices need to be made, and those choices are likely going to prioritize re-signing the team’s core over keeping Reggie Jackson, who now looks like he’s already halfway out the door — which brings us to…
Sam Presti has a really tough decision to make
If Reggie Jackson really is headed out the door for nothing next summer (which, again, I think he probably is now), does Presti trade him before the October 31 extension deadline? Should he get something for him while his trade value is at an all-time high, rather than almost assuredly losing him for nothing after the season? It’s essentially the James Harden question all over again — and we all know how this played out last time.
But for all its similarities, it’s not quite the same. You see, the pressure is on in Oklahoma City. We all feel it. Durant is two years away from free agency, and he’s made no secret of the fact that his primary motivation is winning titles. What better way to show him that he’ll be able to do that with the Thunder than to bring the Larry O’Brien trophy home in one of the next two seasons, before KD even reaches his decision point? That would put a lot of hearts slightly more at ease, would it not?
There’s no way around it: Having Reggie Jackson on the team for this season increases the Thunder’s title chances exponentially. No package of picks and young players that Presti can realistically receive in a trade will make this team better in the ultra-short-term. Furthermore, trading him now will undoubtedly raise the controversial specter of the Harden decision and mark the beginning of open season for talking heads to criticize OKC for lacking sufficient commitment to winning — dramatically increasing the volume of the national media drumbeat for a Durant exit in the process.
But Presti has never made decisions based on short-term interests. He has repeatedly defied the conventional wisdom of the “Win Now” mentality in favor of maintaining the organization’s model for sustained, long-term growth and improvement. Those decisions aren’t sexy — and based on how the next few years may or may not play out, they might not even end up being right — but they are admirable. Presti has always had a plan, and he has always stuck to it, even in the face of considerable external pressure and vocal criticism. History would tell us that we have no reason to expect anything different now.
And yet, the pressures have never been quite so heavy nor has the potential for criticism been quite so great as it is now. The stakes are exceptionally high for the Thunder. Everything — including the future that Presti is always planning for — hinges on Durant’s decision, and the day of reckoning is now less than two years away. KD needs to believe he can win titles in Oklahoma City, and there may not be a better way of proving that to him than actually doing it. And given that reality, is this the first time that short-term considerations might actually overwhelm Presti’s logical, long-term plan?
I don’t have answers for those questions. Truthfully, only one man does. But we’re going to know a lot more about what Sam Presti is thinking — and about the Thunder’s future in this brave new world — by the time October 31 rolls around.
Steve Pierce is a contributor to Daily Thunder. He has previously written about the NBA for The Classical and The Cauldron. You can follow him on Twitter at @StevePierceNBA.