Despite having made some changes to the Collective Bargaining Agreement (CBA) in regards to veteran extension rule, NBA teams are still having a tough time extending their own veteran players.
In recent years, several players have outperformed their initial rookie extensions, to a degree where their incumbent teams are struggling to retain them due to a 140% limit on veteran extensions.
The limit, which before this season sat at 120%, has proved to simply be too modest for teams to be able to make competitive offers for their own players.
The Toronto Raptors were forced to trade forward OG Anunoby, as to way to avoid the risk of losing him for nothing in free agency. The organization wanted to extend him, but given that they signed him to an extension worth $72 million over four years back in 2020, the most they could offer him this season was 140% of his last salaried year.
That year is this season, where he's earning $18.6 million. As such, the Raptors could only offer him an extension that would start at around $26 million - a number competitive teams would dwarf on the open market.
Therefore, the Raptors knew they had to go into unrestricted free agency with Anunoby - where they wouldn't have matching rights - or trade his contract as to get a return.
Toronto decided to opt for the trade option, as they feared Anunoby would walk this summer, and they'd be left with nothing to show for it.
The Utah Jazz are finding themselves in a similar situation with star forward Lauri Markkanen, who signed a contract with the Cleveland Cavaliers in 2021 worth around $67 million over four years.
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He was moved to Utah in the Donovan Mitchell trade, and will step into the final year of his contract next season at $18 million. The Jazz could offer him an extension, but that would be capped at a starting salary of $25.2 million, an equally ridiculous amount for a player of that quality.
(The Jazz, however, can opt to renegotiate Markkanen's contract using cap space, allowing them to pay him market value, while adding years to his deal.)
For teams without cap space, however, renegotiation is not a solution as that door is firmly closed. Teams can only give a player a renegotiated raise by utilizing available cap space.
This brings us to the Chicago Bulls who are finding themselves in not one, but two extension situations.
Coby White, signed to a three-year deal worth around $36 million, is limited to an extension offer that starts him at $18 million, far below his value.
His backcourt teammate, Ayo Dosunmu, signed a three-year deal worth $21 million. His extension would start at $10.5 million, which is a number also easily beaten on the open market.
The underlining theme with all these examples (and there are far more out there) is that teams are forced to enter the unpredictable world of unrestricted free agency to keep their guys. That alone is a risk, given that players are thus entirely free to sign elsewhere, leaving teams with a major talent loss.
Do note that when players reach unrestricted free agency, teams are able to spend in the same manner as other franchises, assuming they have Full Bird Rights on a player.
Should the Bulls enter unrestricted free agency with White, for example, they can even offer him more money than other interested parties.
The problem lies with the fact that teams have to even test those waters to begin with.
Let's take the Memphis Grizzlies as an example. They signed Jaren Jackson Jr to a rookie extension worth $104.7 million over four years back in 2021.
They decided to frontload his contract, meaning he'd get more money to start his contract, and less money to end his contract.
For salary cap optimization purposes, that was an enormously clever way to structure their cap sheet. Yet, Jackson Jr's final season - worth $23.4 million - has made it difficult for Memphis to sign him to an extension.
Jackson Jr's first-year salary under a veteran extension, would start at $32.7 million in the year 2026, where the cap is expected to land in the area of $170 million. Jackson Jr's starting salary would account for just 19%, or thereabouts, when he could sign for 30% of the cap (meaning a starting salary of roughly $51 million).
Basically, the Grizzlies are indirectly being punished for doing a good job handling Jackson Jr's rookie extension.
The Bulls, who signed both White and Dosunmu to exceptionally cheap deals, are also being punished for simply making shrewd business moves.
What's even more odd is how nobody seems to benefit under the current arrangement.
Teams are struggling to retain their players, even if they're willing to provide them with significant pay increases, and players are forced into a situation where they have to either accept a deal under market value, or wait - and risk injury - until they reach unrestricted free agency.
Whatever change the NBA and NBPA thought they made when raising the veteran extension limit from 120% to 140%, it was at best a modest one that had limited to no effect for teams that want to keep their player long-term.
NBA salary cap expert, Keith Smith of Spotrac, has also noted the challenges.
"The hope with the 140% is that it would make it more enticing for players to extend vs the former 120%. The former amount had gotten outpaced by cap growth fuelling larger max salaries, so it needed to be adjusted. In my opinion, they didn't go far enough. Players with descending contracts, which look great at the time of signing, or players with deals of $25 million or less, are still working off too low of a salary to extend, even at 140%," he tells Forbes.com.
So, what can be done to change this issue?
In short, the league and NBPA can get together to fix it, without having to go through a whole new CBA debacle. Though, it isn't likely to happen before that regardless.
"The NBA and the NBPA can agree to amend the CBA at any time. They do what is called a 'side letter' process, where they make a change. These can be temporary changes - as we saw several of during the COVID-impacted seasons - or permanent changes. However, unless necessary, both sides prefer to table big changes until they are doing a full round of collective bargaining. No one wants to give up any leveraged of 'this for that' by giving in on a potential deal point too early," Smith explains.
Essentially, we may all have to wait years for this issue to get resolved.
Unless noted otherwise, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball-Reference. All salary information via Spotrac. All odds courtesy of FanDuel Sportsbook.
