James Harden has been at the center of the NBA’s biggest in-season trade of the past two years. He and the Philadelphia 76ers now find themselves months away from a truly fascinating offseason; Harden has a lucrative player option and Daryl Morey has an opportunity to revamp the franchise around the Joel Embiid and Harden pairing. There are some notable nuances to this situation that can be confusing, so now is a great time to have a Q&A session covering some of the key points.
So what’s the deal with Harden’s player option?
It appears Harden has neither accepted nor declined his $47.4 million player option for 2022-23 as part of the trade deadline megadeal, and that opens up flexibility for both parties. It also theoretically creates the possibility of him pulling out and leaving, but that seems incredibly unlikely.
What more can Harden do, and how can it happen?
Generally, a player’s maximum salary on a new contract depends solely on their years of NBA experience and the amount of the salary cap for that season, with 25%, 30%, and 35% of the cap serving as three thresholds in the current collective. negotiation agreement. At the $122 million cap projection for 2022-23, that would mean a starting salary of $42.7 million for a player like Harden with 10 or more years of experience.
However, the ABC includes an exception to this framework for those at the very top of the pay scale; a player is allowed to get a 5% increase on his salary from the previous season, even if it puts him above the “normal” maximum line. Because Harden earned $44.3 million in 2021-22, he’s allowed to sign a new contract starting at $46.5 million, even if that’s well over the 35% max. With the 76ers, that starting salary with 8% annual raises equates to a five-year, $269.9 million contract.
Now you might be wondering, “Wait, that $46.5 million is less than Harden’s player option, isn’t it?” This is exactly the right thought. While the CBA allows this special exception to the max for free agents on huge salaries, remember that Harden doesn’t have to become a free agent this summer, and the increase per season on his current contract is more than 5%. As such, the absolute maximum Harden could secure this offseason is signing up and then extending $47.4 million instead of $46.5 million. This leads to a maximum total contact value of $274.7 million over five seasons, including the opt-in, which is about $5 million more than the other executive.
What if Harden was willing to take less than his absolute maximum? How would that work?
The ABC is pretty flexible when it comes to players making less than their richest possible deal, so a sub-max Harden contract could take many different forms. The important thing to remember is that the first season of a new contract is essential to set the parameters. Because the 76ers have the rights to Harden’s Bird, they can start him on any salary, from his minimum to that maximum of $46.5 million. From there, this contract can increase or decrease by up to 8% of that first year’s salary in each subsequent year of the contract.
Let’s say Harden and Morey agree to a $40 million salary for 2022-23 under a new contract. Eight percent of that is $3.2 million, so each season after the premiere, his salary could go up to $3.2 million from the year before, go down to $3.2 million. dollars or land anywhere in between.
The biggest limitation to this is the 8% cap on year-to-year changes, as this means the contract can have ebbs and flows, but not really huge swings. These swings can be used to achieve other goals, such as temporarily dodging the luxury tax or cutting Harden’s salary more drastically at the end of the contract when his level of play will likely be well below the current norm. That matters a lot more to the 76ers than Harden, especially because the way negotiations can go is they could set the pure financial terms (years, dollars, guarantees, etc.), but then let Morey structure the deal in whatever way makes the most sense with his vision of the team books.
Is there another way to make Harden’s next contract work?
Yeah, and it’s my absolute favorite structure if Harden is willing to take less than his max.
Above, I talked about the idea that Harden and Morey will focus their negotiation on the key things: how much money on how long, the options and whether or not the whole contract will be fully guaranteed. In a scenario where Harden is willing to take significantly less than his maximum, the CBA’s 8% limit on year-over-year raises may limit Morey’s choices more than he would like. However, a Harden opt-in opens up another ambitious possibility: a super-frontload version of Harden’s next contract where that $47.4 million option remains on the Sixers’ books, but future seasons drop significantly. As noted above, CBA gives a lot more leeway when it comes to players taking less, and that really comes into play on sets.
Theoretically, Harden’s salary could drop to any negotiated amount they wanted for 2023-24, and then the 8% year-over-year restrictions would apply to that first new salary.
Let’s say that, theoretically, Harden was willing to take $35 million per season over five years rather than his max. On a brand new contract starting in 2022-23, it might look like this:
However, using the player option, both parties could structure the same global money this way:
This second path is better for Harden because he would get more money sooner (especially considering the time value of money). It could also be better for the 76ers, as they would likely pay the tax in 2022-23, then avoid it as early as 2023-24 and walk well away from it in 2024-25 when Tobias Harris’ contract ends. pounds – just before a major contract for star Tyrese Maxey. Now, that requires Harden to be willing to take that reduced block payout, and that may not be in the cards. Still, it’s a fascinating hypothesis that could really change things for the franchise down the line.
What about extension and redemption rules?
This CBA rule only comes into play if Harden commits, as extension and trade restrictions do not affect free agents signing contracts less than six months after transferring to their new team. However, if Harden commits and both parties build an expansion out of that, they can only temporarily add up to two new seasons and do up to 5% raises on that 47 player option, $4. Again, the CBA is fine with a player earning a lower salary, but the two-season limitation likely makes any immediate extension untenable, but only for part of the offseason.
That said, given that the extension and trade restrictions last for six months after the trade, Harden and the 76ers cannot formally put pen to paper on a high-end extension built from this opt-in until as of August 10, 2022. However, both parties can absolutely understand what that contract would look like, and, in fact, they should because Harden’s player option decision comes before the end of the year of the league in July. Still, it’s a temporary inconvenience rather than a limitation.
What about the over 38 rule?
Harden can thank former teammate Chris Paul, as the CBA’s previous limited contracts for players as they approached their 36-year-old season, but the players pushed that back to 38. Since Harden is now 32 and won’t be 33 until August, the over-38 wouldn’t affect him.
What if Harden leaves this summer? How much flexibility do the 76ers have then?
If Harden steps down and signs elsewhere as a free agent, the 76ers will take his money off their books, but large obligations to Embiid and Tobias Harris mean they’re only creating a modest cap space: 15-25 million dollars according to Danny Green’s $10 million. contract not guaranteed, unless they free up additional space by trading players with guaranteed salaries. That’s enough to add someone who will help, especially if Morey can clear more space, despite being an extremely weak class of free agents. Instead, the most likely time to make a non-Harden splash would be 2023, when Harris has an expiring contract and Maxey hasn’t started his next contract.
It’s also possible that Harden will leave by sign-and-trade, creating a massive trade exception and/or sending players to Philadelphia. In this scenario, Morey presumably remains above the cap either with these new players or using the trade exception, but the problem is that you still have to find and acquire a new player with the exception, probably using assets to attract this business partner. send someone.
(Photo by James Harden: John E. Sokolowski/USA Today)