Six weeks ago, it seemed to be a foregone conclusion that restricted free agent Tristan Thompson would re-sign a big free agent deal with the Cleveland Cavaliers. He had just come off a good NBA Finals performance, and on the first day of free agency Marc Stein and Brian Windhorst reported that Thompson and the Cavaliers were nearing a five-year, $80 million deal. And then the two sides stopped talking, and then even though LeBron James supposedly wasn’t going to re-sign until Thompson did he went ahead and did so, and then all of a sudden the two weren’t a package deal.
The same day James’s agreement with the Cavaliers was reported, Sportsnet’s Michael Grange reported that Thompson was “open-minded” about signing a short-term deal with the Cavaliers:
After that, silence. For the last month, as the moratorium period ended and everybody signed and loose ends got tied up and rosters were settled and Summer League came and went and guys decided to move on to Europe, there was no news about Thompson.
This morning, ESPN’s Cleveland-sage Brian Windhorst dropped a column explaining that there is still no deal because this is “one of the most complex free agency situations of the last decade.” The upshot of his piece is that, compared to a typical restricted free agent, Thompson feels he has additional leverage in the form of the massive jump the salary cap will take next season.
Restricted free agents are typically in a tough spot. Since their current team has the right to match any contract offer, potential suitors are leery about wasting their time (and tying up their salary cap space) by making an offer that is likely to be matched. Teams hold most of the leverage, offering their RFAs smaller contracts than they desire, and essentially daring them to convince another team to tender a compelling offer. At this point, the Portland Trail Blazers are the only possible big-money alternative for Thompson.
For Thompson to become a restricted (rather than unrestricted) free agent in the first place, the Cavaliers had to extend him a one-year qualifying offer. In Thompson’s case that qualifying offer is for $6.8 million, a 32 percent increase on his salary last year. Considering the reporting that he was nearing a five-year, $80 million contract last month, a one-year, $6.8-million contract seems paltry.
Tristan Thompson throws down a dunk during the NBA Finals
The threat to accept the one-year qualifying offer usually isn’t taken very seriously. Sure, maybe the Cavaliers offered five-years, $80 million and Thompson wanted something closer to the five-year, $94 million max. Is he really going to give up the security of $80 million and risk a career-threatening injury, or just a terrible season, to take the $6.8 million offer and hope to get a mega contract as an unrestricted free agent next season?
But according to Windhorst’s story, Thompson sees the situation differently. Depending upon where exactly next season’s salary cap ends up, the max contract for Thompson in 2016 could prove to be $5 million per year more than a max deal now. Over the life of a five-year contract, that adds up (when accounting for the built-in annual raises) to over $25 million more than Thompson could get signing this year, more than making up for a salary of just $6.8 million this season.
If you look at the list of 2016 free agents, it’s a pretty garbage bunch. The only players clearly better than Thompson are Kevin Durant and Al Horford, and I could buy arguments for Dwyane Wade, Mike Conley, and Andre Drummond (RFA) as well. With predictions that somewhere in the neighborhood of 20 teams will have enough salary cap space to offer a max contract, if Thompson has a decent-or-better season, chances are somebody is going to offer him the max.
Of course, this still carries enormous risk. Thompson could break his leg or tear his Achilles. Kevin Love could turn in a monster season, keeping Thompson on the bench and causing his value to diminish. Another season of record-breaking three-pointers could convince general managers that a power forward who can’t shoot isn’t nearly as valuable as they thought. So the question remains, is Thompson really willing to entertain the risk of accepting the one-year qualifying offer?
Thompson’s agent Rich Paul would certainly like the Cavaliers to think so, and has begun putting pressure on the team by talking to the media. This afternoon, Michael Grange tweeted “Breaking: agent Rich Paul tells @Sportsnet Tristan Thompson will sign 1yr Qualifying offer with Cavs and be a free agent in 2016 /1 [sic]” before quickly deleting and rowing back his report. Grange did go on to quote Paul directly on the topic:
Similarly, Paul told SB Nation the following:
“We are a long way from it, but it’s clear, yes,” Paul said. “If [Thompson] plays on the [qualifying offer], it will be his last year with the Cavs.”
There are a couple of things going on here. It seems that what Thompson really wants is that five-year, $94 million max deal, but the Cavaliers haven’t put that offer on the table. In theory, Thompson could sign the one-year qualifying offer and then choose to re-sign with the Cavaliers in 2016, but Paul is explicitly taking that option off the table in an attempt to get the Cavaliers to quit playing chicken and offer Thompson the max.
But in addition to all of the other reasons not to believe that Thompson would actually accept the qualifying offer, the damage of losing Thompson is mitigated by how much money it saves the team, as the Cavaliers are going to be in luxury tax hell next year. Per salary cap guru Bobby Marks, if Thompson takes the qualifying offer the Cavaliers will pay $94.8 million in salary and $16.5 million in luxury tax next year, whereas if they they sign him to a max contract they’ll pay $104.5 million in salary and $44.2 million in luxury tax. Thompson taking the qualifying offer saves the Cavaliers $37.4 million, quite the consolation prize for losing him (assuming Paul’s threat is legitimate) after next season.
The luxury tax also potentially explains why the Cavaliers are digging their heels in so hard against offering Thompson the max. The difference between giving Thompson a $94 million as opposed to $80 million contract isn’t just the roughly $3 million extra the Cavaliers would spend this year, but also the roughly $10 million extra they’d pay in luxury tax penalties. Put the monetary savings together with the evidence that Thompson is a good-but-not-great player—he’s only the third best power forward on his own team, he can’t shoot outside of the restricted area, he’s only an okay (with the potential to be good) defender—and you can see why the Cavaliers don’t think they need to offer Thompson the max.
Last season Paul client Eric Bledsoe was involved in similarly contested contract negotiations with the Suns, and he eventually signed a five-year deal deep into September despite having claimed to have signed the qualifying offer, just not sent it to the Suns. Many other players had to make a similar decision to Thompson about whether to hold off a year to sign a big deal to try and cash in under the new salary cap, and no non-LeBron James players did. Greg Monroe, who took the Pistons’ qualifying offer last season and signed a three-year max contract with the Bucks last month, is basically the only good player to have ever signed the qualifying offer.
And so despite the apparent acrimony, you should still bet on this contract impasse being resolved, and Thompson re-signing with the Cavaliers. The two sides have until Halloween to work out a deal, and everybody has enough incentive to get something done. The Cavaliers have a championship window of about two or three years, and losing Thompson shuts it much quicker, while Thompson would be taking a tremendous risk by leaving $73 million or more on the table. Expect to read sometime in September about Thompson’s new five-year contract, for somewhere between $80 and $94 million, allowing both sides to feel like they won something.