How restrictive rules on extensions affect Kyle Lowry and the Raptors
In a February piece profiling Kyle Lowry, it was briefly explored how the new Collective Bargaining Agreement has made the signing of renegotiated contracts, coming as they invariably did with concurrent extensions, considerably more unlikely.
That piece was written with a view to Lowry being traded at the deadline. He was certainly a candidate to be traded, a well travelled player in the midst of a career campaign, but with an expiring contract that guaranteed nothing for Toronto going forward.
In light of that, and his continued reported clashes with head coach Dwane Casey, Lowry was said to be on the trading block, in spite of how well he was playing this season. His play certainly meant teams were inquiring.
Nevertheless, Lowry stayed and was part of why Toronto landed the No. 3 seed and its first chance at a playoff series victory since 2001. Always a bulldog, Lowry improved his skill level year on year, and without having the talent of a Chris Paul-type, he can nevertheless carry a team as a lead guard. He is the type of player Toronto thought it was getting when it traded the first round pick that later became Steven Adams for him, and he is the type of player the Raptors should surely want to keep.
Keeping him, however, will involve him hitting the open market as an unrestricted free agent. While Lowry is technically eligible for an extension, the rules regarding extensions are so restrictive that there is no likelihood of him getting one.
The renegotiation/extension combination once available to teams with cap room is now pretty much extinct. Despite there being many more teams with cap space under the new Collective Bargaining Agreement than the previous one - 12 teams had cap room in the summer of 2013, as opposed to three in 2008 - there have been no Nick Collison, Andray Blatche or Kendrick Perkins-style renegotiations and extensions under the new CBA.
The practice was never common in the first place. Those three above are not listed as merely select examples from a list of many, but as the entirety of the list under the 2005 CBA. Seemingly, it was enough for the practice to be all but outlawed. Both the renegotiation of contracts and the extension of existing ones are still allowed under the NBA, but their usage in conjunction in this fashion is now considerably more difficult to do.
The rules regarding contract renegotiations are still the same. Only teams under the salary cap can renegotiate a contract, and even then, they can only do so upwards. (Every few years, a story comes out about a player trying to look magnanimous and being willing to renegotiate their contract downwards so as to allow their team to spend more money elsewhere. Such magnanimity is wasted, however, because the process is not allowed.)
Contracts can only be renegotiated after the third anniversary of their signing, and only then if it is done prior to March 1st of that season. It is a tough set of circumstances to meet, not least of which is the criterion requiring teams to have cap room. When teams do have cap room, it is not generally the players they already have that they want to spend it on. Nevertheless, the practice is still permissible, however unlikely it is.
But it is not merely the rules regarding renegotiations that are restrictive. With the implementation of the 2011 CBA, the rules regarding extensions, already complicated, were curtailed in multiple ways. The maximum extension value possible shrunk, from 10.5% maximum compounded annual raises to 7.5%, with extensions to veteran contracts going from a maximum of five years in length to a maximum of four (including the season being extended), and rookie scale exceptions all being capped at four seasons in length except for those designated as a five-year recipient (limited to one per team).
Extend and trades in particular are more difficult to do now, having gone from being a maximum of six years in length (including the current year) with 10.5% raises to a mere three years and 4.5% raises. Most pertinently of all to the Lowry example, a further rule against being unable to extend players who recently renegotiated their contracts was brought in - now, if a player renegotiates their contract upwards with a raise of greater than 10%, they cannot be traded for six months after signing the renegotiation, thereby effectively preventing the concurrent renegotiation/extension concept in the future. And, just as was the case under the 2005 CBA, only contracts of at least four years in length can even be extended in the first place.
These rules combine with the overall shortening of new contracts brought about by the CBA, and so there now exists a circumstance whereby only those veteran players who signed contracts of at least four years in length can still sign extensions, at a time when fewer players than ever are signing contracts of at least four years in length. Extensions are not eradicated, but they are increasingly impossible and unlikely. So few players qualify for extensions now that they are never likely, and extensions now are so restricted as to not be viable.
In the case of Lowry, this certainly means no extension is forthcoming. There is no rule preventing him from signing an extension tomorrow - indeed, as has been seen, there are ones allowing it. He has just completed the fourth year of a four-year contract given to him by Cleveland (offer sheet), and as the contract technically does not end until June 30th, he can still sign an extension up to and including that day. But his market value is what prevents it.
Toronto has no cap space, and thus is not able to offer a renegotiation/extension combination. Even if it was (and we pretended it was not yet March 1st), the new rules necessitate the extension would be too small to be suitable. An extension without a renegotiation would have to start at a mere $6,675,750 with 7.5% raises for a maximum of three additional years (a total of $21,529,294) - an extension with a 10% renegotiation (thereby boosting Lowry's $6.21 million contract to $6,821,000 this season) would not be much bigger, limited to $7,343,325 with the same 7.5% raises for the same three additional years, a total of $23,682,223. Lowry, worthy of more than these figures, is thus not an extension candidate.
His situation must give us pause for thought. Why are extensions so difficult to do, exactly?
It is apparent through the continued shortening of contracts, the more restrictive measures taken against teams spending up to and over the apron, and the greater incentives offered to teams with cap space, that the league seeks to reduce spending and continue to increase roster turnover, thereby keeping the market competitive. Essentially preventing extensions ties in with this.
However, if the purpose of restricted free agency is to give teams some control over players they have developed and allow them to have some control over their future by controlling the price of the players, why is the same not allowed to those players with whom they have grown?
It is not only young players who are the future. Lowry may now be an eight-year veteran, but he has developed throughout them, and has a lot to give in the years coming. To whichever team he winds up with, he will be a significant help. He would particularly be so to Toronto, who both paid a significant price to trade for him, and forwent trading him back out for the relative certainty of acquiring assets in order to take a gamble on his future and potentially losing him for no assets.
Why, if everyone is complicit, need this future be a gamble? Why, if Lowry wants to stay, Toronto wants Lowry to stay, and they agree a price, can Lowry not tie things down tomorrow, just because he was underpaid for his work to date?
The obvious counterpoint is that if Lowry wants to stay, and Toronto wants him back, he can always still come back as a free agent this summer once the moratorium is over. Fine, yes he can. Teams also do have some control over their veteran player's future with the concept of Bird rights, allowing them equal footing on which to pay their players, if not the ability to prevent them from ever hitting the free market. Also fine, yes they do. Yet if everyone is complicit, and if no one wants to hit the uncertainty that is the market, why is an extension so hard to come by?
Without overhauling the current rules, they can be tweaked to allow a little more flexibility. Contracts of only three years in length could surely be extended - perhaps the length of the extension could be tied to the length of the deal being extended, whereby extended three year contracts could be extended for a maximum of two years (for a total of five), while four and five year contracts can be extended for a maximum of three (for totals of seven and eight). The aforementioned 10% limit on renegotiations and extensions can surely be increased to 20%, if even there need be a limit at all. And the 107.5% of the previous salary limitation on the starting salary of the extended years, while symmetrical with other 7.5% raises in other CBA provisions, seems prohibitively low.
If increasing the figure to, say, 115% is not something the league is comfortable with, then perhaps tie it in with a team's spending power elsewhere - if a team uses more than the 107.5% maximum starting salary limit, then any overage amount can be either taken out of their mid-level exception or charged as luxury tax dollars. These are just ideas, each with their own drawbacks, yet even if they do not remedy the identified problem entirely, this nevertheless does not mean the problem is negated. Extensions are extremely rare, and there does not seem to be much good reason as to why.
Toronto made the right move in getting Lowry, made the right move in keeping him, thrived with him, and now might lose him even though no one wants this. It seems as though overly restrictive rules on extensions are sufficiently flawed in their design that they offer neither the player nor the team the protection they may both mutually seek. Now, a once rocky marriage that has become ultimately quite loving, is under threat when no one wants it to be. And this feels wrong. After all, by trying to encourage teams and players to divorce, who are we helping?