Klay Thompson Contract Extension Primer

Klay Thompson and the Golden State Warriors are drawing closer to the contract extension deadline. This after an early summer filled with trade speculation followed by a very impressive performance with Team USA as well as in preseason — including accolades from Kobe Bryant — that seemed to justify Thompson not being dealt.

Teams around the NBA have until October 31st to extend the contract of any first-round draft pick who is entering their fourth season. For some teams, those contracts could be a very minimal salary cap hit, depending on who the player they want to re-sign is. There are some players however, including Thompson, that may require a bigger pay day if their respective teams want them to hang around longer than just this season.

Kawhi Leonard and the San Antonio Spurs are facing a similar dilemma. Fresh off an NBA Finals MVP performance, the two sides, as Yahoo’s Adrian Wojnarowski reports, seem to be at a stalemate. Leonard, who was selected just four picks behind Thompson in the 2011 NBA Draft, is also looking for a max contract offer.

With Thompson and the Warriors still unable to strike a deal, it is important to look at the long-term effects this contract situation could have on the Warriors.

At this point, the Warriors are strapped for extra cash. With the way the roster currently stands, if a max extension does get signed, the Warriors would be about $22 million over the cap next season. On top of that, both Draymond Green and Harrison Barnes will be in similar situations this time next year.

Signing Klay to a max contract now could also set a precedent that could hurt the Warriors’ chances of building a championship caliber team down the road. If Thompson does get the contract he desires, what does that mean for Green, Barnes, or anyone else down the line?

It isn’t all bad for the Warriors, however. Within the past four months alone, Thompson has shown that he can be a top player in the league. He led Team USA in scoring during this summer’s 2014 FIBA World Cup. He was also the league’s second leading scorer during the preseason, where he averaged 21.7 points in 26.7 minutes per game.

Locking Thompson up long-term ensures that the #SplashBrothers stay together for the foreseeable future, with both stars having not reached their potential yet.

There is no doubt that Klay is looking for long-term stability, and he would like it to be with the Warriors. He has already said that he loves playing here.

So the Warriors love him and he loves the Warriors. What’s the problem?

The pros and cons of the Warriors waiting until next summer to sign him have been tossed around in the NBA Twitter-verse and blogosphere, but the cons don’t seem to outweigh the pros:

• The Warriors can match any offer that other NBA teams can present to Thompson, plus add an additional year to it.
• Thompson’s value could decrease should he suffer an injury during this season.
• If Thompson increases his value with his performance during the season, he cannot be paid more than the maximum, anyways.
• Because the Warriors love Thompson, the Chandler Parsons deal that the Dallas Mavericks used in prying him away from the Houston Rockets becomes irrelevant. Basically, the Mavericks included a “trade bonus” in Parsons’s extension that made him “untrade-able”. Because the Warriors plan to keep Thompson for the long-term, they are immune to such a tactic.
• The NBA’s new TV deal is projected to be worth approximately $24 billion, however, it does not kick in until the 2016-17 season. Therefore, whether or not the Warriors sign Thompson now or next summer, the contract will still come before the impending explosion of contracts set to the forthcoming new salary cap rules.

Nate Duncan of BasketballInsiders writes:

…maintaining flexibility for next summer is another motive to wait on an extension. Unless Thompson is willing to move off his demand for a maximum salary, the only real incentive the Warriors have to acquiesce now is the threat of a Parsons-style offer sheet that may not actually be forthcoming from another team. It remains to be seen whether that will be enough.

So if the Warriors do sign Thompson, expect it to include a discount by Thompson on the maximum in exchange for that security, although from hearing about the Thompson camp’s frustration via Marc Spears of Yahoo Sports, circumstances do not seem to indicate that will happen. According to Monte Poole of CSN Bay Area, the two sides are likely $2 or $3 million apart, which is a lot, considering how close the Warriors are to the luxury tax.

J.A. Adande spoke to Thompson during the summer in Las Vegas:

As for Thompson, he says, “I’m confident. I think both sides know I want to stay with this organization. I really love the Bay, I love the organization, the front office, my teammates. I’m confident we can get it done.”

Klay Thompson and the Warriors will kick off the season in Sacramento for the season opener on October 29th against the Sacramento Kings. The game can be seen on CSN Bay Area, and as always will be livetweeted at @LetsGoWarriors twitter page.

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