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Jul 9, 2017
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Today’s NBA has accomplished something the league hasn’t seen in its long and storied history. It’s become, for all intents and purposes, a 12-month league. Sure, there’s still this thing called an “off-season,” but between the draft, free agency, summer league, and training camp, that four-month dog days window after the NBA Finals and before the start of the next season doesn’t exist anymore.

Free agency, in particular, has been turned into a frenzy of player movement that has left all our heads spinning. Chris Paul is now in Houston. Paul George is in Oklahoma City. Jimmy Butler is up there in Minnesota. Gordon Hayward is now in Boston. Paul Millsap is in Denver. Different circumstances presented different opportunities for teams to acquire these superstars in what can only be described as a basketball arms race. We’re not going to dive through all the deals that have been struck since free agency opened. Instead, we’re going to try to make it easier for everyone to understand all the free agency jargon that’s being thrown around these days. Consider this then NBA Free Agency 101.


What’s the difference between a restricted free agent and an unrestricted free agent?

An unrestricted free agent is a player who can switch teams on his own. Gordon Hayward was an unrestricted free agent when he chose to sign with the Celtics. A restricted free agent is a player who can sign offer sheets from other teams—think Otto Porter signing a max offer sheet from the Brooklyn Nets—but his current team has the “right of first refusal,” which means that they can match the other team’s offer sheet. These teams are given three days to match the offer sheet or they lose the player to the team that signed him to an offer sheet.

So a player becomes an unrestricted free agent when his previous contract expires. That’s easy to understand. How does he come a restricted free agent though?

The circumstances that allow players to become restricted free agents vary. For first round picks, they become restricted free agents after the team that drafts them exercises its option for a fourth year in their rookie contracts and then makes a one-year qualifying offer after the fourth season is completed. If a player accepts the one-year qualifying offer, he foregoes becoming a restricted free agent in the current off-season and becomes an unrestricted free agent for the next season. For players who are not first-round draft picks, they need to complete at least three NBA seasons for them to become restricted free agents and the team they’re in extends them a qualifying offer.

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If Otto Porter signed the Washington Wizards’ qualifying offer, does he become an unrestricted free agency next season?

Yes, he does. On top of that, Porter also has the right to veto any trade he could potentially be involved in for the duration of the coming season.


What are team options and player options?

Options basically empower a player or a team to opt out on the last year of a player’s contract. Player options give that power to the player while team options give that power to the team. Players at the peak of their of their prime usually opt out of their contracts if they have player options with the hope of securing a bigger long-term contract. Key example this off-season: Kevin Durant. He opted out of his two-year deal with the Golden Warriors to sign another two-year contract with the second year being another player option.

Conversely, players who are on the decline or are facing the looming possibility of getting smaller offers usually “opt-in” to their current contracts. Dwayne Wade is a good example of someone who opted in to his $23 million contract because of the belief that he may get far less than that number if he had opted out.

A team option, on the other hand, gives the power to opt-out to a team. This happens far less frequently because teams usually acquiesce to player demands of having player options included in their contracts. One good example though of a team option is the three-year, $90 million deal Milsap signed with the Nuggets. The third year of that contract is a team option, which means that if Denver thinks that Milsap isn’t worth the money he’s being paid three years from now, they can opt out of the contract and make Milsap an unrestricted free agent.

What’s an early termination option and how different is it from a player option?

We already described what a player option is. An early termination option is different in such a way that a player can terminate a contract if he has two more seasons remaining under his current contract. Another difference between a PO and an ETO is that the former can be included in any multi-year contract whereas in the latter, it’s only allowed on five- or six-year contracts.

One player who exercised his early termination option this off-season is Blake Griffin. He technically became an unrestricted free agent for a while, but he quickly signed a five-year, $137 million extension with the Los Angeles Clippers.

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So Griffin stays a Clipper. What happened to Chris Paul then?

Chris Paul was actually planning to exercise his own ETO this off-season so he could sign as a free agent with the Houston Rockets. Ultimately, he decided to decline his ETO as a parting gift to the Clippers because exercising it would’ve allowed him to sign with the Rockets without the Clips getting anything in return. But because he declined his ETO, he technically gave up his right to become an unrestricted free agency. That meant that the Rockets had to trade for him instead of signing him outright. Given the circumstances, the Clippers got a pretty decent haul with the trade that sent CP3 to Houston. For its part, Houston was able to shed some contracts because of the trade, clearing enough salary cap space to extend Paul next season. And as for Paul, he becomes eligible to sign a five-year max extension next season with Houston instead of having to settle for just a four-year max contract this year had he signed there as a free agent. Given the alternative, this is the rare instance where all parties involved got something for whatever they ended up losing.


Is there a difference between the Paul George and Jimmy Butler trades?

Yes, and a big one at that. Basically, George told Indiana that he’ll play out the final year of his contract this season before moving elsewhere next season. Knowing that they’d eventually lose him for nothing, the Pacers cut the cord on the George era in Indy, trading him to Oklahoma City for Victor Oladipo and Domantas Sabonis. Given the alternative of losing him for nothing, Indy did well here by getting some returns for their departed superstar. Whether they should have waited until the trade deadline to get a better package is another thing entirely, but it’s likely that the Pacers just didn’t want to go through the George drama once the 2017-2018 season started. For his part, George’s contract status remains the same. He’s still going to be an unrestricted free agent next season and the pressure is now on the Thunder to convince him to sign an extension. The good news is that Oklahoma City received the right to offer George a five-year max contract whereas other teams, including the Los Angeles Lakers, can only offer him a four-year max contract.

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The Jimmy Butler trade, on the other hand, is really all about the Chicago Bulls wanting to blow up their team and start from scratch as soon as possible. Unlike George, Butler’s contract actually lasts until 2020 when he has a player option. So Minnesota now has Buckets under contract for the next two seasons.


Gordon Hayward is going to Boston, but is his move far more complicated than just signing as a free agent?

Yes, and we have the lower-than-expected salary cap to blame for this. The cap this coming off-season has ben set at $99 million, three million less than what teams expected. Actually, blame the Golden State Warriors’ dominant championship run for this because the lack of playoff games meant the NBA actually left a lot of TV, advertising, and gate revenue money on the table. Houston Rockets GM Daryl Morey confirmed as much in his conversation with American sportswriter Bill Simmons.

The Celtics got screwed by the lower cap because under the expected $102 million cap, they’d have enough space to sign Hayward outright away from the Utah Jazz. But because the cap came in at $99 million, a max contract for Hayward would leave the Celtics slightly over the cap, which means that Hayward would have to accept less than the max to go to Boston.

In response to this, the Celtics and the Jazz have engaged in sign-and-trade talks wherein Hayward technically signs a max contract with the Jazz and then gets shipped off to the Celtics for a package that would give Boston enough salary cap room to absorb Hayward’s max contract and give Utah something in return. Jay Crowder has been thrown in as a possible trade chip but nothing as amounted from those talks. Boston could also trade any of its players to other teams to clear up that requisite space to make room for Hayward’s max contract.

 

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