22 June 2012
Utah Jazz Fan GM (Over)-Analysis
WRITTEN BY PETER J. NOVAK | 22 June 2012
In a bit of not-so-surprising news yesterday, Brian T. Smith of the Salt Lake Tribune reported that Paul Millsap was poised to ask the Jazz for a contract extension after July 1st, which also happens to be the first day of the new NBA league year. Specifically, Brian T. Smith reported:
“Once free agency starts July 1, forward Paul Millsap will attempt to negotiate a multiyear contract extension with the Jazz. If a deal can't be reached, a variety of options will be explored. The only thing that'll change this scenario is if Millsap is traded before free agency begins.”
I think this quote can be interpreted in a few ways that are both positive and negative for Jazz fans. Before we try to (over)-analyze this quote, I’m going to break down some of the mechanics of a potential new deal for Millsap.
How Does a Contract Extension Work Under the New CBA?
The NBA collective bargaining agreement (“CBA”) that was approved last December contains a few new terms that will directly impact any extension given to Millsap this offseason. First, under the new CBA, veteran extensions are limited to four seasons (including the remaining years on a player’s current contract). Millsap has 1 year remaining on his current deal for approximately $8.6 million. Accordingly, after July 1st, the Jazz will only be able to add a maximum of 3 additional years onto the end of his contract and lock him up through the 2015-16 season.
Second, as a player with 6 years experience in the NBA, the Jazz are limited to giving him a maximum salary that is no more than 25% of the total salary cap. While this number has not yet been calculated for the following league year, most prognosticators estimate the NBA salary cap will be flat for the next few upcoming seasons and end up around $58m. Thus Millsap’s maximum starting salary for an extension would be around $14.5m.
Third, the amount of raises a team can give its own “bird rights” free agents is now only 7.5% versus 10.5% under the previous CBA. Add it all up and the largest extension the Jazz could give Millsap is 3 years and $46.76m (note: this number is only an approximation based on assumptions of the upcoming salary cap and could fluctuate by a few million depending on a number of factors including league wide revenues). Add the projected 3 year salary to his current contract and the Jazz could have Millsap locked up for 4 years (through 2015-16) at $55.36m, for an average of $13.85m a year.
What is Millsap Worth on the Open Market?
The Jazz would have to question whether Millsap is worth a full maximum extension and a total of 4 years at $55.36m in salary. In order to determine what the NBA market would bear, it helps to look at some comparable players who have signed recent contracts or contract extensions.
Zach Randolph. (4 years, $66m with 4th year Player Option, signed in 2011-12). Randolph is a better player than Millsap, but probably not by as much as the consensus opinion thinks. Randolph has averaged 17 ppg and 9 rpg for his career, while Millsap has only averaged 12 ppg and 7 rpg. As a starter though Millsap has averaged 17 ppg and 8 rpg over the past 2 seasons, which is fairly comparable to Randolph. Additionally, Millsap is four years younger and does not have the “head case” reputation that Randolph carries with him.
David West. (2 years, $20m, signed in 2011-12). Last year West left New Orleans to sign as an unrestricted free agent with the Pacers. He was also coming off a significant knee injury. Many teams appeared to be concerned on whether West could return to full health in 2011-12 and whether he could return to his previous form. West’s career averages are 16 ppg and 7 rpg, which is in Millsap’s ball park. West is also considered a slightly undersized power forward (like Millsap) and is nearly 5 years older than Millsap is.
Marc Gasol. (4 years, $57m, signed in 2011-12). Gasol is not the same type of player that Millsap is, but they do put up fairly comparable stat lines. Gasol has averaged 13.1 ppg and 8.1 rpg and was coming off of a 12 ppg, 7 rpg season when he signed his contract extension last year. Gasol is almost the same exact age as Millsap is. Based on the history of the NBA overpaying centers, Gasol likely received a contract premium based on the fact that he measures 7 feet tall.
Based on these contracts and a few others, it is fair to say that Millsap will at least average $10m a season in his next contract. He has relative youth on his size and the next 4 years should be the prime of his career. Additionally, while he may not do any one thing great he is a durable and efficient player with a 2011-12 PER of 21.85. I’d suspect that if Millsap was a free agent this year he would likely command somewhere between $11m-$14m a season, for a four year contract value of approximately $44-$56m.
How Does Millsap Fit Long-term into the Jazz’s Financial Future?
Long-term, the Jazz do not have any significant contractual commitments beyond the 2012-13 season. The team’s next major financial decisions (with guys currently on the roster) will be potential contract extensions (assuming the players earn them) given to Derrick Favors and Gordon Hayward and which would kick in during the 2014-15 season. Both Enes Kanter and Alec Burks will also be due contract extensions that would begin in 2015-16. If the Jazz give Millsap a 3 year extension he will be locked up to the team through 2015-16 and his contract will overlap Favors and Hayward by two seasons and Kanter and Burks by one season. Without any significant free agent signings (or similar extensions given to Al Jefferson and Devin Harris), the Jazz would likely be able to afford a market rate contract extension to Millsap under the terms presented above.
How Does Millsap Fit Long-term into the Jazz’s On-Court Future?
Perhaps more important on whether the Jazz “can” afford Millsap, is the question on whether the Jazz should pay Millsap an extension of between $11m-$14m per year. While that money is fair compensation for a borderline all-star and starting NBA power forward, the question on whether Millsap is still a starting power forward on the Utah Jazz for the 2012-13 is legitimate.
As of right now most fans have Favors penciled in to start one frontcourt position for the Jazz next year. That leaves Millsap and Jefferson (and maybe Kanter?) to fight for the remaining starting position at either center or power forward. If the Jazz decide that they want Favors to be their starting power forward and Jefferson or Kanter to be their starting center, that likely pushes Millsap to the bench, at which point the team would have a hard time justifying Millsap’s high dollar contract extension.
What Happens if Millsap is not Given an Extension?
Now this is the real 50 million dollar question. Kevin O’Connor has gone on record a handful of times over the past year espousing the Jazz’s financial flexibility in the summer of 2013. Assuming the Jazz do not make any major transactions this year, the Jazz could have up to $30m in cap space to pursue free agents. O’Connor seems to be looking forward to this flexibility and may balk at any extension requests for Millsap (or Jefferson or Harris) in order to see what he could do with the salary cap room next offseason.
It is because of that desire by O’Connor that the following statement in Brian T. Smith’s article has me concerned: “If a deal can't be reached, a variety of options will be explored.” I am not sure where exactly Smith is getting his information. It seems likely to me that it is a quote from Millsap’s agent or perhaps just a summary of a conversation that they might have had.
In any event, Millsap’s only “real” option is to play out the final year of his contract and test free agency next offseason. However, if you are Millsap’s agent and you want to maximize your client’s value you cannot be optimistic of the chances of your client to increase his value if he is relegated to a bench role on his team during his contract year. It is for that reason that I fear that if Millsap is not given an extension we may see another NBA player issue a trade demand. While it is not the first time this has happened to the Jazz, nor will it be the last time, it certainly is not something that loyal Jazz fans would expect out of a guy like Millsap. I hope for the best that it does not get to that point.
Of course, as the Smith article indicates, all of this would be prevented if Millsap is traded prior to the commencement of the free agency period. That may be the reason we are hearing Millsap’s name pop up in trade rumors as we approach the draft. While most Jazz fans are fond of Millsap and his work ethic, it would appear to me that we may have seen the last of him in a Jazz uniform.
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