What should the New Orleans Pelicans do next after hiring Stan Van Gundy as their new coach, as reported by ESPN's Adrian Wojnarowski and Andrew Lopez?
A little more than a year ago, the Pelicans drafted Zion Williamson and finalized a mammoth trade of Anthony Davis to the Los Angeles Lakers that provided the Pelicans with multiple starters and draft picks.
Now, after a playoff push fell short in Orlando, comes the next phase -- focusing on how to keep All-Star Brandon Ingram and whether to trade former All-Star Jrue Holiday. There are also big decisions to make about Lonzo Ball and Josh Hart.
Let's examine where the Pels go from here.
Note: The financials in here are based on the salary cap and luxury tax holding at the 2019-20 levels, as expected.
MORE: Biggest trade, free agency and draft decisions for every eliminated NBA team
The free agency of Brandon Ingram
Last year, with Ingram overcoming health issues that had sidelined him, he and the Pelicans did not move forward at the time with a long-term extension. That was the right call at that time.
But with Ingram proving healthy this season and being named to his first All-Star team, his status is a priority for the Pelicans.
The Pelicans can take one of two approaches to negotiations:
Play the waiting game
Because he is a restricted free agent and the Pelicans have the right to match on an offer sheet, they can let Ingram shop for an offer from another team.
Right now only two teams -- Atlanta and New York (if the Knicks waive their non-guaranteed players) -- project to have max cap room. That's subject to change when we see what the salary cap is. Miami, one potential competitor for Ingram, has prioritized having cap space for the summer of 2021.
For New Orleans, the major downside of the conservative approach is that the offer sheet could have such undesirable facets as fewer years, a trade bonus and a salary advance. So, for instance, instead of having Ingram under contract for five seasons, the Pelicans could lose him in three years.
Get aggressive about extending Ingram
Ingram is still 22 (turning 23 in September) and one of the 10 best young players according to our most recent 25-under-25 rankings. As a young All-Star with All-NBA potential, he checks the boxes for a max or near-max contract.
An Ingram contract starting at $27.3 million (25% of a $109.1 million cap) would still have the Pelicans $13 million (which could increase to $20 million if Darius Miller were waived) below the tax line. That would be enough to bring Derrick Favors back on a one-year contract or sign a player to the midlevel.
Because there are important financial decisions on the horizon (as discussed below), the Pelicans could create financial savings if they leave the contract flat (without an 8% increase) at $27.3 million in Years 2 to 5. In that case, Ingram would get a max salary in Year 1 and the Pelicans would save $20 million spread out over the remaining four seasons. The total guaranteed money would be $136.5 million.
One option available to Ingram, but not recommended, is to sign the one-year, $9.5 million qualifying offer. That amounts to a worst-case scenario if New Orleans plays hardball and no other team steps up with an offer to his liking.
History shows that only one player (Greg Monroe) has signed the QO and benefited with a lucrative contract the following year.
The Jrue Holiday contract
A year ago I noted that Holiday's tenure with the Pelicans would likely be foreshortened after the trade of Davis. In other words, as a veteran who represented the top trade asset on a very young team, with the possibility of becoming a free agent in 2021, it seemed likely that Holiday would be moved before his contract ended.
Now, a year later, Holiday remains potentially a valuable trade piece. But the trade of Davis, along with drafting Williamson, also boosted the Pelicans into immediate playoff contention. So what does that mean for the 30-year-old Holiday?
Holiday has two years remaining (at $25.1 and $26.0 million), with a player option in 2021. Before the NBA's financial situation took a downturn this year, it appeared likely he would exercise that option to become an unrestricted free agent.
Given the uncertainty ahead, Holiday might want to reconsider. If the projected $125 million salary cap declines in 2021, Holiday might not be able to replace that salary as a free agent.
As of this offseason, the Pelicans can offer the guard a new contract for an additional three or four seasons. A new extension might benefit both sides.
For instance, the Pelicans could offer $117 million for four seasons, with the extension starting in 2021-22. The salary would start at $30 million, a raise on what Holiday has coming. The final season, when Holiday would be 34 years old, would include $15 million guaranteed, with incentives for games played that could take it to as much as $27 million. That would allow New Orleans the flexibility to move on before that season, if necessary.
That would be comparable to the three-year, $93 million deal that Kyle Lowry signed in 2017, which likewise took the Toronto point guard to age 34.
The alternative, of course, is to go ahead and trade him. If New Orleans and Holiday cannot agree on an extension that works for both sides, the Pelicans should not risk letting him walk for nothing.
Their plentiful draft capital
The Pelicans need to determine the value of their draft assets and how to deploy them.
Including their own and two from the Lakers, the Pelicans have nine first-round draft picks (and a potential pick swap) in the next seven years -- including a lottery pick this year. That's not to mention 10 second-round draft picks in the next four years.
They have two basic options:
Draft and develop
How patient will they be?
Remember that four-year rookie contracts are below market value and will allow the Pelicans to keep the payroll in check as their young stars get more expensive. Ingram will be paid soon, and after that, Lonzo Ball and Josh Hart. A new Zion Williamson contract would start in 2023-24. That might encourage them to keep more of their picks.
The Pelicans can structure the contracts of their second-round picks to resemble a rookie-scale salary of a first-round selection, which can also help with cost control.
Explore the trade market
Of course, with the Pelicans already a playoff contender, they'll be tempted to shop for the next disgruntled All-Star to ask out. Could that be a player like Bradley Beal or Victor Oladipo?
A trade like that would require some of the Pelicans' trade assets. That would reverse the Pelicans' role, putting them on the opposite side of the table from when Davis forced his way out of New Orleans.
The hybrid approach would see New Orleans holding onto some draft assets but making a strategic trade when the opportunity arises.
Offseason cap breakdown
Removing all the free-agent cap holds except for Brandon Ingram's ($22 million) leaves the Pelicans above the projected salary cap of $109.1 million.
If Ingram is signed to a contract that starts at $27.2 million, the Pelicans would be $18 million below the luxury tax. They can create additional flexibility by waiving the $7 million non-guaranteed contract of Darius Miller.
Expect New Orleans to have the $9.3 million midlevel and $3.6 million biannual exception.
Resources available to build the roster
The draft: Lottery pick and three second-round selections
Future draft assets
Own free agents: Brandon Ingram, Derrick Favors and E'Twaun Moore
Internal player development: Five players on rookie contracts
$9.3 million midlevel and $3.6 million biannual exception
$5.6 million to send and $3.5 million to receive in a trade
Dates to watch
• Tagging Ingram as a restricted free agent is merely paperwork. By start of free agency, the Pelicans will give the forward a one-year, $9.5 million qualifying offer as a prelude to a potential long-term extension.
• Frank Jackson ($2.0 million) and Kenrich Williams ($1.9 million) are also eligible to receive qualifying offers by Oct. 17. Jackson is only 22 and has contributed at times this season, including putting in 13 points in 20 minutes in a win against Washington during the seeding games.
• New Orleans has until six days after free agency begins to guarantee the $7.0 million contract for Darius Miller. The forward suffered a torn right Achilles last August and missed the entire 2019-20 season.
Restrictions
• Miller's outgoing salary counts as zero -- the amount of salary protected in his contract.
• From two prior trades (with the Lakers and Wizards), New Orleans received $2.1 million, and is now restricted from receiving more than $3.5 million before free agency starts.
Extension candidates
Other than Ingram and Holiday (discussed above), the big decisions here involve Ball and Hart. If the Pelicans can sign both to team-friendly deals that provide salary-cap flexibility for 2021-22 and future years, they should. If not, they can wait and let things play out for another year.
Ball and Hart can be extended until prior to the first day of the regular season and for a maximum of four additional seasons starting in 2021-22.
After two injury-plagued seasons, Ball has been relatively healthy, missing only eight games this season. From mid-January to the season postponement in March, Ball played his best ball, often alongside Williamson, averaging 13 points, 8 assists, 7 rebounds and almost 2 steals. He was especially productive just before the season was stopped. He's struggled offensively in the restart, but that isn't likely to affect how the Pelicans view his long-term future.
Hart is valuable because of his versatility on both ends of the court. He's an excellent rebounder for a guard and an adequate 3-point shooter.
New Orleans can take an aggressive approach since only Holiday and Ingram (if he signs a new contract) are on the books for more than $20 million. In other words, they will have flexibility next year if they can't reach a deal now.
Players who can't demand a max contract often find a point of compromise. For instance, last year the Nets signed Caris LeVert to a three-year, $52.5 million extension, while Dejounte Murray got four years from the Spurs for a total of $64 million.
We should expect New Orleans to offer Ball about the same amount that Murray got -- which Ball, as a former No. 2 overall pick, might decline, expecting a offer closer to the one Buddy Hield signed in Sacramento (four years, $86 million).
The compromise for Hart would likely be in the four-year, $50 million range.
Without extensions reached, Ball and Hart would become restricted free agents in 2021, allowing New Orleans to sign them or match an offer sheet on either player.
The draft assets
Here's how ESPN's Jonathan Givony and Mike Schmitz have New Orleans selecting in November:
No. 13 (own): Patrick Williams | PF | Florida State
No. 39 (via WAS): Grant Riller | PG/SG | Charleston
No. 42 (own): Tyrell Terry | PG | Stanford
No. 60 (via MIL): Karim Mane | SG | Vanier Prep
The Pelicans own all their future first-round picks.
New Orleans has a first-round pick from the Lakers in 2021 (if it falls in the top seven) that becomes unprotected in 2022 if not conveyed. The Pelicans also have the right to swap firsts with the Lakers in 2023 and an unprotected first in 2024 (which can be deferred to 2025).