NBA free agency is winding down. Obviously, LeBron made the most headlines, and the situation with Kevin Love will drive the rumor mill for the foreseeable future. The East looks less top heavy and the West remains as tough as ever. Those are perhaps the biggest takeaways. But what this past free agency did was give us a glimpse into how the market has shifted. And that's something that impacts the Spurs directly, especially when it comes to figuring out how to proceed with Kawhi Leonard's impending restricted free agency.
Gordon Hayward rejected a contract extension offer from the Jazz and entered restricted free agency, hoping to get a better deal. The Jazz didn't feel any pressure because they knew they could match any offer he could receive. Hayward reportedly held out on those initial talks because he had seen Paul George get the max and thought he could get a similar or slightly smaller contract. And sure enough, he did. The Hornets needed wing talent and signed him to an offer sheet worth the maximum they could offer.
Kawhi Leonard will enter free agency next season if the Spurs don't extend his contract. He will be attractive to any team with cap space and a hole at the wing, just as Hayward was this past season and Eric Gordon in 2012. And because so many teams have cap space, now that contracts are shorter, there won't be a shortage of suitors. So it's really not a question of whether he can get the max as a restricted free agent or not. He will get it if he's in that position. But that's not necessarily a bad thing.
If the Spurs offer Leonard a five-year max extension, exactly like the one Kyrie Irving just signed, that would pay him roughly $90 million over five years. The most any other team can offer him is the type of offer sheet Hayward signed: a little under $70 million for four years. Because they have his Bird rights and because the new CBA tried to make it easier to retain young players, the Spurs are the only team that can offer that fifth year and 7.5% annual increase as opposed to the 4.5% bumps Kawhi would get with any other team.
So the Spurs don't seem to have a clear motivation to extend him and should just wait for restricted free agency unless they can convince Leonard and his agent to take less than the max now. Kawhi has little leverage so he might decide to sign a four year extension for slightly below the max with the Spurs and simply get the same amount he would have gotten by signing a max offer sheet from another team. That way, he doesn't have to worry about seeing his stock drop after getting hurt (not that it stopped the Suns from maxing out an injured Gordon) or having a down year.
Letting him enter restricted free agency and matching an offer sheet would help the Spurs secure Leonard's services more cheaply than offering him an extension. The problem is that by not securing the five-year max extension right off the bat, the Spurs are opening themselves up to uncertainty.
Let's assume for a second that Leonard wants the full five-year max that only the Spurs can offer. And let's assume the Spurs are not ready to make that commitment because they know they have the tools to get him back on a cheaper contract. So we head into restricted free agency. Now, once Leonard becomes a free agent, the rules about extensions stop being in effect, which means the Spurs can then offer him a five-year contract that isn't required to be for the max. That's the best case scenario for the Spurs and is not an option until he becomes a free agent.
Here's where Leonard gets leverage. The Spurs surely want to lock down Leonard for as long as possible. They don't want to have a Kevin Love situation on their hands and they know that the cap is projected to go up, so a sub-max five-year deal will become an absolute bargain for a player of Kawhi's talent. But Leonard also knows that the cap is projected to go up, or at least his agent does. He knows someone will give him the four year max and the difference between that and a Spurs' four year max is not that big. He pretty much has nothing to lose once a five-year max extension is off the table. So what he could do is only agree to sign a four year max extension with an opt out in the final year, like Love did with the Wolves, or simply enter restricted free agency and sign an offer sheet under those terms. That way, he gets money and control.
The motivation for Leonard would be that if he doesn't get the five-year max now, he might as well have an early out to sign for more money under a bigger salary cap and have the opportunity to leave the Spurs in three years, when Duncan, Ginobili and maybe even Parker and Pop are gone. And if he truly reaches superstar status, he could get a bigger max contract reserved for players that have been in the league for more than six years.
Now is this a likely scenario? It doesn't seem that way, at least for now. We've heard reports about how Leonard's camp is confident an extension will happen. Both the team and the player seem motivated to get it done, especially after winning a title. And the Spurs could genuinely see him as a five-year max guy, in which case all of this is moot.
And yet it's impossible to assert for sure that Leonard will be locked down before restricted free agency, simply because the Spurs haven't had to deal with a situation like this for years, arguably since Duncan signed his first max extension. San Antonio always tries to get players to settle for less money, even refusing to pay the allowed 120% of the rookie scale to some of their draft picks. Duncan in his latter years and Ginobili and Parker throughout their careers have left money on the table, so the front office might expect Leonard to do so as well. But this situation is different.
The current market climate seems to pretty much ensure a max contract for players like Leonard, unlike what happened when Parker and Ginobili reached free agent status. And any potential star that has seen James, Wade, Bosh and Love sign a mini-max might be interested in re-entering free agency sooner rather than later. The five-year max extension is supposed to stop that, but a team has to be willing to make that commitment for it to work. Do the Spurs see Leonard as a true five-year max player? And if not, will Leonard be willing to sign for five years at a sub-max rate to stay with the team? Or would he prefer to secure a shorter max deal that would pay him enough to create a financial safety net while enabling the option to leave the Spurs once the core is gone, or re-sign for more money under a higher cap and a potentially more player-friendly CBA?
It will be fascinating to see how the Spurs navigate these unfamiliar waters. So far, San Antonio has been able to secure hometown discounts, but it seems that's about to change. Will they take the plunge and offer Leonard the full five-year max to avoid any surprises? Will they, against all odds, be able to convince Kawhi to take less? Will they take their chances on restricted free agency? Leonard will be back and that's what matters. But how that happens will inform us of the way the Spurs are planning to adapt to a rapidly changing landscape.