Portland Trail Blazers shooting guard CJ McCollum has only one season left on his rookie scale contract and is thus eligible to sign an extension during the 2016 offseason.
Blazers fans are familiar with this scenario: under similar circumstances last summer the team signed Damian Lillard to a maximum contract extension, with a 2.5 percent "Derrick Rose" performance bonus, but could not come to terms with Meyers Leonard. With no pre-signed contract extension, Leonard will now enter restricted free agency on July 1.
The question the Blazers face in 2016 is whether or not McCollum and GM Neil Olshey will take the "Lillard-path" and sign the Blazers starting shooting guard to an extension, or whether McCollum will opt to "bet on himself" a la Leonard.
Following are some frequently asked questions regarding McCollum's pending extension:
Can McCollum sign a five-year contract for 27.5 percent of the Blazers' $92 million salary cap, like Lillard did in 2015?
Each NBA team is allowed to offer a five-year contract extension to only one player at a time - also referred to as the team's "designated player." Because Olshey offered Lillard a five-year extension last summer, McCollum will only be eligible for a four-year extension this summer, unless Lillard leaves the team before McCollum's contract is signed (seems unlikely). Interestingly, this means that McCollum and Lillard's contracts will expire simultaneously in five years.
Note that league rules do allow teams to trade for one additional designated player, so Portland could still acquire another player who has already signed a five-year extension with another team (insert "Trade for Anthony Davis?" joke here), even though they can't offer five years to McCollum.
As a player with under six seasons of experience, McCollum will be limited to an annual salary of 25 percent of the team's salary cap. Lillard's contract is worth 27.5 percent of the cap because he triggered the "Derrick Rose Bonus" by making two all-NBA teams while on his rookie scale contract, allowing him to earn additional salary beyond the standard 25 percent limit. McCollum will not meet that criteria and will not be eligible for a bonus.
So McCollum is guaranteed to make significantly less money than Damian Lillard?
Not necessarily. The first year of Lillard's contract will be set at 27.5 percent of the team's estimated $92 million salary cap for the 2016-2017 season (it will actually be slightly less than 27.5 percent of $92 million - details here). He will receive annual non-compounding 7.5 percent raises for the rest of his contract. In short, Lillard's future salary is inextricably tied to this summer's $92 million salary cap.
But McCollum's hypothetical extension will kick in next summer when the cap is raised to an estimated $107 million, so his first year salary and subsequent raises will be tied to that higher figure. We won't know the exact figures until the league sets the 2016-17 cap in July of this year and the 2017-18 cap next July, but if the numbers do not change significantly then a maximum contract for McCollum would place his annual salary very close to, or possibly in excess, of Lillard's.
What happens if they don't agree to an extension?
If McCollum and the Blazers do not reach terms on an extension then the Blazers will have the option to tender a $4.4 million qualifying offer to McCollum. If McCollum accepts that offer he will become an unrestricted free agent after the 2017-18 season.
If McCollum rejects the qualifying offer, he will become a restricted free agent after next season, which means the Blazers have the option to match any salary offered to McCollum by another team and McCollum must accept the Blazers' deal.
It is exceedingly unlikely that McCollum will accept the qualifying offer next season. Players of his caliber only accept that offer when they desperately want to become a free agent so they can expedite departure from their current team - Greg Monroe being a recent example.
EDIT: It's worth noting that the collective bargaining agreement (CBA) between the players and the NBA expires before free agency begins next summer, so if McCollum does not extend this summer his future contract will be subject to the terms of the new CBA. It is possible, although unlikely, that changes will be made to the league's rookie scale contract rules and that McCollum will become an unrestricted free agent instead of a restricted free agent. The uncertainty of whether or not free agency will look the same in 2017 as it does now may be enough to motivate the Blazers to push to sign a deal this summer.
More generally, if either McCollum or the team are concerned that the new CBA will be disadvantageous they may make a stronger than usual push to get a deal done this summer.
Why would the Blazers want to extend McCollum?
From a team chemistry standpoint, agreeing to an extension this summer will send a message that the front office is all-in on the McLillard tandem. Locking in their two best players for five years guarantees that they have a cohesive core and gives them a foundation around which to continue building the franchise. The bottom line is that teams need two All-Star caliber players to be contenders in the NBA - guaranteeing that you have those two players for the next five seasons would automatically put the Blazers ahead of several other rebuilding franchises.
In perverse contrast to the chemistry argument, signing McCollum to an extension also affords the Blazers increased roster flexibility. With only one season remaining on his rookie deal, McCollum is essentially untradeable, but if he signs an extension he immediately becomes a high-value trade chip. Opposing teams will not be willing to give up a major asset to acquire McCollum if there is a chance he could leave after only one season, but if McCollum is locked in for four more years then he becomes desirable. If Olshey has any concern that the McLillard backcourt is not viable in the long-term, then it may be wise to get McCollum on a long-term deal as soon as possible so as to open up additional transaction opportunities.
There's also the possibility that the Blazers could sign McCollum to a less than maximum contract this summer. He has a track record of only one season and has yet to make an All-Star game, so the team could argue that he does not yet merit a contract equivalent to Lillard's and convince him to sign for less than the maximum. If Olshey is completely convinced that McCollum will continue to improve next season, then it would behoove him to at least consider this option so as to lock in a player at a below-market salary.
Why would McCollum want to agree to an extension?
Long-term security. As noted above, if McCollum plays well next season without an extension he will almost certainly get a maximum contract offer from the Blazers or from some other team. But he does take the risk of playing an entire season with no long-term financial stability. Another injury this season, an off-court mishap, or a down season would have a significant negative effect on his value. Unlike Lillard, McCollum does not have a long-term big money shoe contract to his name, so there is substantial financial risk to playing the next season without a future contract. He may decide that it is worth signing for "only" 89 or so percent of the maximum to guarantee his financial future into the next decade.
Why would either side wait?
The arguments for waiting are the inverse of the arguments for signing. If McCollum is completely convinced that his 2015-16 season was not a fluke and he can continue to improve next year, and he is not worried about injury risk, then he is guaranteed to get a maximum contract in 2017. He may find it undesirable to compromise for anything less this summer.
On the other hand, if the Blazers are worried about McCollum's injury track record, or concerned that his development will stall, then they may want to wait to commit big money to their shooting guard. They will still have the option to match any contract from another team next summer, so the only risk in this scenario is the highly unlikely scenario that McCollum signs the qualifying offer.
What are the salary cap implications?
Waiting to extend McCollum could theoretically help the Blazers' cap situation next summer. If he sign this year he will carry a cap hit of 25 percent of the cap on July 1, 2017. But if McCollum does not extend his cap hit is reduced to $8 million. Assuming that an extension signed this summer would be worth roughly $22 million, it's possible that the team could "gain" about $14 million in cap space by waiting on McCollum's extension.
But in actuality those extra $14 million may not matter, depending on how this summer goes for the Blazers. The team already has $41 million in salary guaranteed for 2017-18 and the following likely contract obligations:
- Noah Vonleh's team option
- Mason Plumlee's cap hold
- McCollum's non-extension cap hold,
- Roughly $16 million and $15 million contracts for Leonard and Allen Crabbe, respectively (this assumes a 7.5 percent bonus from possible contracts they sign this summer)
- A first round draft pick cap hold
- Minimum salary "place holders" for the remaining roster spots
This hypothetical situation puts the Blazers at about $93 million in salary - about $14 million below the cap. Importantly, that figure does NOT include any free agents added this summer, and assumes both Gerald Henderson and Maurice Harkless leave.
Thus, under the fairly conservative scenario that the Blazers spend roughly $14 million or more on outside free agents and also let two rotation players leave in free agency, the difference between McCollum's $8 million cap hold and a $22 million contarct is irrelevant. The Blazers will be at or above the cap under either scenario.
So for McCollum's extension to have an effect on the team's cap space next summer, the Blazers will need to let at least two of their free agents walk this summer and they also need to fail to sign any outside players of note.
Is there a deadline for the extension?
(Credit to Blazerfan72 for pointing out this question in the comments below.)
McCollum and the Blazers will have until Oct. 31 to negotiate an extension. If they do not agree to terms by then they cannot sign a new agreement until July, 2017. Since McCollum is currently a Blazer, Olshey and McCollum's agent could continue negotiations during the season, but the deal will not become officially until the summer.
Generally, GMs will wait until the free agency and trade frenzy of July has settled down and future cap obligations are more transparent before opening extension talks. Given the large number of unknowns surrounding the Blazers, and the long term impact McCollum's contract could have on the team, Olshey will almost certainly follow a protracted timeline and may not begin negotiating with McCollum until September.
Eric Griffith | @DeeringTornado | GoBlazers87@gmail.com