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Offseason moves for the Denver Nuggets: Decisions to make on contract extensions

A year after the Denver Nuggets reached the conference finals, the team took a step back, losing to the Phoenix Suns in the second round at home Sunday. However, that should not be seen as a disappointment. In fact, when it comes to the postseason, Denver could be seen as an overachiever, because the Nuggets managed to win a first-round series against a full strength Portland Trail Blazers team despite losing Jamal Murray to a season-ending ACL tear.

While MVP Nikola Jokic and his depleted supporting cast were able to win against Portland, doing so against the Chris Paul-led Suns was too much to ask. Now, with their season over, the Nuggets shift into offseason mode, turning their attention to potential contract extensions for Michael Porter Jr. and Aaron Gordon.


Nikola Jokic

By earning MVP honors, Jokic has qualified for a supermax extension, which would be the largest in NBA history. However, because Jokic has only six years of service, the center will need to wait until the 2022 offseason to sign the five-year, $241 million extension. The rules of the supermax stipulate that only players with seven or eight years of service are eligible to sign the extension.

Here is a breakdown of what the max extension projects to be based on a $121.5 million salary cap.

  • 2023-24: $42.6M

  • 2024-25: $44.9M

  • 2025-26: $48.2M

  • 2026-27: $51.5M

  • 2027-28: $54.8M

Because Jokic was named MVP, he is eligible to sign the supermax in 2022, when he'll have one year left on his existing deal, or in 2023, when he becomes an unrestricted free agent.


Michael Porter Jr.

Three years ago, Porter had the talent to be a top-five pick in the 2018 NBA draft, but he slid to the last pick of the lottery because of concerns about the back injury that limited him to three games at Missouri.

After sitting out his first NBA season to rehab his back, Porter's two seasons of action have had just as much range. He has shown flashes of that top-five potential but has also at times been unplayable because of his lapses on defense and effort.

In the 34 games between March 4 to May 11, Porter played at an All-Star level, averaging 23.2 points and 7.8 rebounds, while shooting 57.5% from the field and 47.6% from 3. The forward was a +8.0 when he was on the court, and the Nuggets had a record of 25-9.

As Zach Lowe wrote in his annual awards column, besides Julius Randle, Porter improved the most out of any player this past season: "It's one thing to score efficiently in limited minutes against backups -- as Porter did [in 2019-20]. It is quite another to score even more efficiently -- 45% on 3s, 63% on 2s -- in huge minutes against starters. Porter is a flat-out star on offense."

In the playoffs, Porter averaged 26 points and 6 rebounds in the wins in Game 5 and 6 against Portland in the first round, making 6 of his 12 3-point attempts in Game 6.

However, like any 22-year-old who has only played two seasons in the NBA, the good on offense has been met with inconsistent play on the defensive end. Take for example what coach Michael Malone said after the April 1 win against the LA Clippers.

"He had a possession in front of our bench where Kawhi [Leonard] really tried to go at him -- like a six- or seven-dribble isolation -- and [Porter] was able to stay with him," Malone told the Denver Post. "No one here is saying that Michael Porter is a Kawhi stopper, he's a great player. But [Porter] has grown up. Michael cares, and if you are about that end of the floor, you're going to grow."

Then there is this from Malone after the Game 1 loss to the Trail Blazers.

"They started putting Michael in every pick-and-roll and trying to isolate and attack him," he said. "Michael has to be better and we need to find ways we can help him."

This is important because the Nuggets face a decision on whether to extend Porter this offseason or let him become a restricted free agent in 2022. There are multiple options the Nuggets can take:

1. The full max

If the Nuggets give Porter a five-year, $168 million max extension, the 22-year-old would join an exclusive club of only 11 players who have received a max contract since 2015.

However, this is unlikely to happen because the contract would be uninsurable against any future back injury Porter might suffer. This leaves the two sides with two additional options to pursue with regards to an extension this offseason.

2. The max contract but with restrictions

Four years ago, the Philadelphia 76ers' front office got creative with Joel Embiid's five-year, $147 million max rookie extension, after injuries limited Embiid to just 31 games in his first three seasons. The structure of the extension protected Philadelphia in Years 2-5 in case Embiid suffered an injury to his feet or back that caused him to miss significant time. The Nuggets could do the same with Porter's contract, putting in any one of the following restrictions:

• The Prior Injury Exclusion: Known as an Exhibit 3, the language would eliminate future compensation if Porter hurt his back again. The language is comparable to what is included in Zach LaVine's contract with the Chicago Bulls.

• Minutes criteria: Porter would need to play 1,650 minutes in two out of the first three seasons (2021-22, 2022-23 or 2023-24) for the final two years of the contract to become guaranteed.

• Games played: Comparable to the minutes criteria, Porter would need to play a minimum of 55 games in 2024-25 (Year 3) or 2025-26 (Year 4) for the final season (2026-27) to become guaranteed.

3. A non-max contract

We are going to call this the Jaylen Brown section. Two years ago, the Celtics guard signed a four-year, $107 million extension. Although the contract was for less than the max (22% of the cap compared to 25%), it contained an additional $12 million in obtainable bonuses. More important, the contract was fully guaranteed and did not contain an option year.

For Porter, ProFitX projects a starting salary of $26.7 million, $2 million less than the max.

The Nuggets could start Porter's deal at $25 million in the first year and include an additional $3 million in bonuses, which would take Porter's total compensation (if he hits the bonuses) right at the max. As a trade-off for giving Porter less than the max, the Nuggets could remove any prior injury exclusion or language that protects the team with regards to his back.

Porter Jr. would need to weigh taking $120 million in guaranteed money now or bet on himself when he becomes a free agent in 2022.

4. Wait until the 2022 offseason

The Nuggets could wait until Porter becomes a restricted free agent next summer to work out his next contract, but that comes at significant risk. Barring a setback with his back, Porter will receive an offer sheet from an opposing team. Unlike this August, when only five teams are projected to have the kind of cap space needed to sign Porter, half the teams in the NBA will have the necessary room next offseason.

Although the Nuggets would have the right to match an offer sheet, a deal Porter negotiates with another team could contain a trade bonus, an advance payment and, most importantly, a player option in the third or fourth year. In that case, instead of having Porter Jr. on a five-year contract, the Nuggets would run the risk of losing him to free agency after only two seasons.

The lone positive of waiting is that the Nuggets could sign Porter Jr. to a five-year contract even if the starting salary is not a max.

One other factor to keep in mind is that this roster is going to be expensive to keep together. Before signing him to an extension, would ownership consider entertaining trade offers for Porter? The window to win is now, especially with Jokic in the prime of his career. Unless trading Porter can bring back an All-Star such as Bradley Beal in return, the answer should be no.

Note: ProFitX is a dynamic financial and performance index powered by Artificial Intelligence with front-office optics displaying 17 visual and time-series models for 480+ NBA Athletes. The Athledex models historical, dynamic & future performance data to monitor and project insights on contracts, performance, injuries, team fit, development, and potential.


Aaron Gordon

The addition of Gordon at the trade deadline was thought to be the missing piece to this roster.

"I think there's a lot of teams that have the ability to go win it all, and I like to think we're one of them," president of basketball operations Tim Connelly said at the time of the trade.

Gordon gave the Nuggets an upgrade at power forward, especially after the departure of Jerami Grant via trade. It also gave Malone a player who can guard multiple positions.

"I think he's one of the most underrated defenders in the league," Connelly said. "I think he has a chance to be an all-league defender. Extremely competitive guy with a big-time work ethic. ... I don't think there's many guys in the league that have his defensive upside."

That positional versatility was on display against Portland, when the Nuggets had him defend Damian Lillard in the second half of Game 2.

"That's one of the reasons we brought AG here is that defensive versatility," Malone said. "And obviously, he embraced it, he wanted it. That's the best part about it: This is something Aaron Gordon has been wanting to do."

Like Porter, Gordon is set to enter the last season of his contract and could leave as a free agent next summer, a risk the Nuggets knew when they acquired him for Gary Harris, RJ Hampton and a future first-round pick. When the Magic structured the four-year, $76 million contract that Gordon signed in 2018, they did so with the salary declining in each year. As a result, the maximum extension that Gordon can sign for is four years, $88 million. The $19.7 million cap hit in year one is a 120% raise off his $16.4 million salary in 2021-22.


Future finances

While the Nuggets will receive a reprieve this coming season when it comes to the luxury tax, they'll almost certainly need to break out the calculator -- and break the bank -- when it comes to their payroll in 2022-23. Below is a breakdown of the salaries Denver could have on their books starting with the 2022-23 season.

The Nuggets have not been in the luxury tax since 2009-10 but could become taxpayers for three consecutive seasons starting in 2022-23.


Offseason cap breakdown

The good news is that Denver has 12 players under contract for next season with Paul Millsap and JaVale McGee as the lone free agents, not including player options. The downside is that the Nuggets have $127 million in salary (factoring in their first-round pick) and are pushed up against the $136 million luxury tax threshold.

If both Will Barton and JaMychal Green opt out of their contracts, Denver will be right at the salary cap and have access to the full $9.5 million midlevel exception.

Team needs

  • Health

  • Consistency at shooting guard and depth

Resources to build the roster

  • The draft: first-round pick

  • Continuity with 12 players under contract

  • Exceptions: $9.5 million midlevel or $5.9 midlevel and $4.3 million trade

  • Cash: $5.8 million to send or receive in a trade


Dates to watch

• Barton has until July 17 to exercise his player option for 2021-22, and it would be hard for him to justify turning it down to become a free agent. Despite coming off a season in which he shot a career-high 38.1% from 3 and averaged double-digit points for a sixth straight year, Barton has been bit by the injury bug the past three seasons. In total, Barton has missed 91 games (hip, knee and hamstring) and played only three of Denver's 29 postseason games over the past two years.

• Green has until July 26 to pick up his $7.6 million player option or become a free agent. Last offseason he declined a $5 million option with the Clippers and received a $2.1 million pay increase when signing with Denver. According to ProFitX, a Green contract for 2021-22 is comparable to his salary on the option for next season.

• The $1.8 million contract of Vlatko Cancar becomes guaranteed on August 3. Cancar averaged 5.2 points and 2.3 rebounds in the six games this season in which he averaged more than 15 minutes.

PJ Dozier has an Aug. 16 guarantee date that will see his protection increase from $0 to $200,000. Before suffering a right hip injury that resulted in him missing the playoffs, Dozier was averaging 7.7 points and 3.6 rebounds in 21.8 minutes. Because he has outplayed his contract, Denver should guarantee the full $1.6 million.


Restrictions

• The Nuggets are restricted from trading a first-round pick except for their own 2021 first.

• Dozier and Cancar are on non-guaranteed contracts and have no trade value as outgoing salary.

• Barton cannot be traded until he exercises the player option in his contract.


Extension candidates

• In addition to Porter and Gordon, Barton and Cancar are extension eligible. If Barton opts in to his contract, Denver can extend him for an additional four years and up to $78.8 million.


The draft

The Nuggets have their first-round pick in 2021 and 2022. They traded their 2023 first-round pick to the Oklahoma City Thunder in the four-team trade that sent Jrue Holiday to the Milwaukee Bucks (Denver got Hampton in the deal). That pick is top-14 protected in 2023, 2024 and 2025, and if it doesn't convey by then, it becomes two second-round picks.

In the trade that brought Gordon to Denver (which coincidentally sent Hampton to Orlando), the Nuggets sent the Magic a first-round pick, which will convey two years after the pick that is owed to the Thunder conveys. For example, if OKC gets Denver's pick in 2023, Orlando gets Denver's 2025 pick (the Nuggets would have their 2024 pick in that scenario but would not be allowed to trade it). The pick owed to Orlando does have top-five protection.

Here's how ESPN's Jonathan Givony and Mike Schmitz have Denver selecting in July:

No. 26 (own): Chris Duarte | SG | Oregon

The Nuggets front office has been part of two draft night transactions the past two seasons. Last year they agreed to the Hampton trade on draft night (though it wasn't completed until a week later, as it eventually became part of that massive four-team deal). A year earlier, the Nuggets sent $1.2 million and their own 2022 second-round pick to the Miami Heat for the rights to Bol Bol.