What does Rudy Gobert's extension mean for the Utah Jazz and the rest of the league?
A day before the deadline for eligible players to sign a supermax extension this offseason, Gobert joined Giannis Antetokounmpo of the Milwaukee Bucks in putting pen to paper on a deal.
Unlike Giannis, however, Gobert agreed to a contract that will pay him less than the full $228 million possible under the supermax provision. My ESPN colleague Tim MacMahon reports the deal will pay Gobert $205 million, giving the Jazz more flexibility as they build their roster around Gobert and fellow All-Star Donovan Mitchell, who signed an extension last month.
Gobert's decision has important implications for Utah and any team hoping to sign Gobert as an unrestricted free agent next summer. It also could show a path forward for the much-maligned supermax contract.
Let's take a look at what this deal means for the Jazz and the NBA.
Jazz still likely to pay luxury tax in 2021-22
Even with Gobert taking a discount from the full supermax, Utah is still looking at a likely luxury-tax bill next season. As my colleague Bobby Marks noted on Twitter, the Jazz have some flexibility in terms of how they structure Gobert's extension. They could start it at $35.3 million with standard 8% raises, minimizing their 2021-22 payroll, or start it higher (up to $39.3 million) with smaller raises.
Assuming Utah goes with standard 8% raises, that would mean a minimum of $130 million in guaranteed contracts for nine players: Gobert, Mitchell (who can increase his 2021-22 salary from a projected $28.1 million to $33.7 million if Mitchell makes an All-NBA team this season), Bojan Bogdanovic, Jordan Clarkson, Derrick Favors, Joe Ingles, Royce O'Neale and 2020 draft picks Udoka Azubuike and Elijah Hughes.
Add in the Jazz's first-round pick (if they make the playoffs or land a pick in the top seven, either of which would prevent it from going to the Memphis Grizzlies) and minimum-salary contracts to fill out the roster, and Utah would likely be into the luxury tax before attempting to re-sign or replace starting point guard Mike Conley.
The Jazz's budget crunch will ease somewhat in future seasons, when contracts for veterans Favors and Ingles expire, but the luxury tax will remain an issue as long as Gobert and Mitchell are combining to make upwards of $70 million per season. That's where Utah's new ownership group approved by the NBA on Saturday, led by majority owners Ryan and Ashley Smith, is key. They're clearly willing to commit to the challenge of paying the tax in a small market.
Getting under the tax line this season could make life slightly easier for the Jazz by forestalling the possibility of being luxury tax repeaters until at least 2024-25, the last season before player options for Gobert and Mitchell. Utah is currently $2 million into the tax, but that's with non-guaranteed contracts for Shaquille Harrison, Juwan Morgan and Miye Oni. The Jazz could trade two of those players before contracts guarantee at midseason, then manage the back end of the roster with 10-day contracts for a period of time and potentially duck the tax pending incentives for Gobert and Ingles.
Repeater issues aside, this year's Utah team looks well worth paying into the tax. The Jazz have the third-best average win total in the Western Conference behind the Los Angeles Lakers and LA Clippers in my projections based on ESPN's real plus-minus. Whether Utah can stay at that level the next couple of seasons will depend on a couple of factors in particular: Mitchell's continued development and who starts at point guard.
Despite a disappointing first season with the Jazz, Conley, 33, remains an important factor in the team's success. With potentially only the taxpayer midlevel exception available to replace him next summer, Utah will want to re-sign Conley to a short-term deal that doesn't break the bank.
Summer 2021 looking increasingly dusty
Gobert's extension continues to cut into the once-ballyhooed 2021 class of unrestricted free agents. New deals for Gobert, Giannis, Finals MVP LeBron James and Paul George of the LA Clippers have taken several of the biggest names off the board. We're down to just three 2020 All-Stars who can become free agents next summer: Kawhi Leonard (who is likely to decline a $36.0 million player option), Kyle Lowry and Chris Paul (who holds a 2021-22 player option worth $44.2 million).
With Gobert off the board, there's even more reason for teams that were saving cap space for the summer of 2021 to become more aggressive taking back long-term salaries via trade. The Dallas Mavericks, Miami Heat and Toronto Raptors are three teams that could pursue that route.
Each additional extension is also great news for the remaining 2021 free agents, who could be looking at a market with more teams having max cap space than max players available. That could be a boon for Victor Oladipo of the Indiana Pacers if he can regain his All-Star form and also puts more pressure on the Milwaukee Bucks to extend newly acquired Jrue Holiday before his potential free agency. (Holiday too has a player option for 2021-22 for a more modest $27.4 million.)
Unless the Clippers disappoint and Kawhi decides to consider changing teams, it increasingly looks like 2021 free agency won't affect the balance of power in the NBA. Instead, that will more likely have to happen via trades.
Good month for supermax provision
As we look ahead to negotiations on the NBA's next collective bargaining agreement, which could begin as soon as 2022 ahead of a possible opt-out for either side after the 2022-23 season, the past month figures to loom large in the future of designated veteran contracts.
The designated veteran rule, introduced in the last CBA in 2017, allows teams to pay qualifying free agents up to 35% of the salary cap in an extension or new contract, more than the typical 30% max for players with their experience. Up through this month, those deals had mostly been regrettable.
Several stars the so-called "supermax" was intended to keep with their original teams, like Leonard, George and Anthony Davis, sought trades instead. The lesser lights who agreed to extensions, including John Wall, often saw those contracts age poorly due to injuries. When Wall was swapped for Russell Westbrook in a deal of two players on supermax contracts with limited trade markets, it looked like a nadir for the rule.
A few weeks later, the supermax seems to be working more closely to what owners intended when they introduced the rule. Giannis took a supermax extension rather than testing free agency. Still, I'd expect tweaks to the rule in the next CBA, possibly along the lines of the contract Gobert signed.
Right now, the supermax provision is all or nothing: all qualifying players are eligible for 35% of the cap, no matter whether they get there by winning MVP (like Giannis) or as All-NBA Third Team picks (like Wall, whose All-NBA selection was the only one of his career). Gobert was the first player to sign a supermax deal (i.e. a deal for more than the usual max contract) for less than the full 35%. Assuming it's structured with standard 8% year-to-year raises, Gobert's deal will start between 31% and 32% of the projected 2021-22 salary cap.
Already, we've seen a de facto gradation in designated rookie extensions where players who become eligible by making the All-NBA Third Team the season after extending often agree to take 26% of the cap, with 27-28% for All-NBA Second Team picks and the full 30% available only when players make All-NBA First Team. (Notably, Mitchell's contract is not structured like this, though a similar extension signed last month by De'Aaron Fox with the Sacramento Kings is.)
I'd expect the league to push for a similar structure with the supermax going forward. That would still allow teams to pay All-NBA Third Team picks slightly more than their typical max and offer them an extra year in an extension but prevent them from offering the full supermax extensions that have often proven max mistakes.