Renegotiations and extensions are very rare in the NBA. The loosened veteran extension rules in the 2017 CBA also make a renegotiation and extension as less attractive option for teams, but the most important thing about renegotiations and extensions is how strict the rules are surrounding them in the first place: a team has to have cap space in the current league year, the player must be at least three years out from the last time he signed a contract or extension, it can’t happen in the last four months of the league year, and teams can only use it on veteran contracts, not rookie scale contracts. In particular, those first two items prevent a lot of players from even being eligible for a renegotiation and extension in the first place.
Under the 2017 CBA, which is in effect for its third season this year, we’ve seen just one renegotiation and extension: Robert Covington in November 2017. Covington agreed to terms with the Philadelphia 76ers on a long-term extension as one of the crown jewels of Sam Hinkie’s “Trust the Process” years with the Sixers; the club cycled through many second-round picks and undrafted free agents in those years and Covington turned out to be the best of the lot by a pretty decent margin, though Jerami Grant is giving him a run for his money. In 2017, the team held back more than $15 million in cap space they could have used on the open market to sign Covington to a renegotiation and extension. This particular agreement gave him a huge raise for the 2017-18 season, when he was slated to make the minimum, and subsequently brought his salary down to about $11 million for the three years after that. Today, Covington is playing out one of the best bargain contracts in the league in Minnesota, where he was traded as the key return for Jimmy Butler last year.
The renegotiation and extension rules aren’t significantly different in the 2017 CBA than they were under the 2011 CBA, when teams were more open to these agreements, but the veteran extension rules have opened up a lot more opportunities for teams to extend their own players, whether they’re second-round picks making the minimum or more established veterans. The new veteran extension rules have tampered down the interest in renegotiations and extensions for teams, but there could be some opportunities for a few to use them in the next few years.
This year, there are no renegotiation and extension opportunities, as the only team with any remaining cap space is the Atlanta Hawks, and they only have $3.7 million left after claiming Ty Wallace off waivers at the beginning of the season. The Hawks also don’t have any players on their current roster who are eligible for a renegotiation and extension. However, there are players for whom a renegotiation and extension would make some sense as we move into 2020 and beyond.
The next Robert Covington may be playing in the same division as the Sixers. In 2018, Mitchell Robinson signed essentially the same contract Covington signed in 2014: in exchange for more guaranteed money up front, the Knicks have Robinson on a four-year contract with a team option on the final year. Should he continue his strong upward trajectory, the club will have the opportunity in July 2021 to renegotiate and extend their center of the future. The renegotiation and extension rules give them more flexibility with future salary than simply opting out and retaining his services in restricted free agency, and he can lock in more money up front than he would under a normal free agent contract.
Free agent contracts are limited in how large raises and declines can be, but renegotiations and extensions are far more flexible, particularly in the decline department. Should the Knicks have cap space in 2021 that goes unused, they could renegotiate Robinson up to a number well beyond what he would have made on the open market, then drop him down by as much as 40 percent of his new 2021-22 salary for the remainder of the extension, much like the Sixers did with Covington.
New York has grand plans for 2021, as they do nearly every summer. The 2021 free agent market is overflowing with huge names whom the Knicks will chase to the bitter end. The history speaks for itself with respect to their success rate, particularly in recent seasons, but maybe 2021 will be their year. The issue with a potential renegotiation and extension for Robinson is that they’d have to have a pretty good idea of whether they’re going to land a big fish or two in free agency ahead of time, as Robinson’s team option decision is due in late June. If they opt out, he’ll be a restricted free agent with a tiny cap hold that they can use to re-sign him with full Bird rights after they use the rest of their space on outside free agents or trades. If they opt in, then he’d become an unrestricted free agent in 2022, which they could cut off with an extension or renegotiation and extension, but the latter requires them to retain enough cap space to pay him that lump sum up front.
Robinson also has to play well enough to warrant the renegotiation and extension, which could be difficult in a league that already devalues centers as much as it does. Robinson has a lot of defensive versatility, but hasn’t shown anything in the way of offensive versatility to take his game outside of the paint. He’s hyper-efficient around the rim, but brings basically nothing else to the table; he’s not a good passer and is nearly entirely dependent on his teammates to create shots for him in halfcourt offense. The only way in which he creates shots for himself is on the offensive glass, which is certainly one of his best skills.
He has some improvements to make, but Robinson has a chance to become a strong option for the Knicks long-term at the center position, even if he never truly improves his versatility offensively and remains the hyper-efficient finisher and offensive rebounder he is today. The majority of his value lies on the defensive end and if he could quit fouling so much and jumping at every pump fake to try to get a blocked shot, he could be the anchor of a top-tier defense in New York for a long time.
Should he turn into the sort of player who is too good for the standard veteran extension, which starts at 120 percent of the estimated average player salary and goes up from there, the club could agree to a renegotiation and extension with him that starts in the high teens before dropping down to about $12 million per season. Considering the Knicks’ continued hopes of hitting the jackpot in 2021 free agency, it’s not a likely path if Robinson is still under contract in New York, but if they were to move him in a trade before that summer, then another team might opt to use a renegotiation and extension to lock Robinson in for the long haul.
There are a few members of the 2019 rookie class who might be interesting renegotiation and extension candidates down the line. Carsen Edwards, Daniel Gafford, Isaiah Roby, Alen Smailagic, Terance Mann, Jaylen Nowell, Naz Reid, and Jalen Lecque all signed four-year deals this summer and will be eligible for a renegotiation and extension in 2022. Of these, Edwards looks the best early in the 2019-20 campaign, but it’s far, far too early to be projecting which of these players will be worth a Covington-like renegotiation and extension three years from now.
Back in Philadelphia, Shake Milton is an interesting case. Because he spent last year on a two-way contract before signing a four-year deal with the Sixers this past summer, the team option on the end of Milton’s contract can’t be used to make him a restricted free agent, like it can with Robinson and the 2019 rookies who have team options. The Sixers went through a similar thing with Covington, who earned a year of service with the Houston Rockets prior to signing with Philadelphia on the four-year deal that was eventually renegotiated and extended. Without the incentive to opt out and retain Milton in restricted free agency, the Sixers may want to look at a renegotiation and extension with him in 2022.
The problem for the Sixers is that things would have to drastically change in order for that to be possible – they’re not projected to have any cap space that year, with Tobias Harris, Al Horford, Joel Embiid, and Ben Simmons all still under contract. Milton would also have to break out in the same way Covington did in order for any team to entertain a renegotiation and extension for him.
The loosened veteran extension rules have been good for established veterans on their second contracts and beyond to lock up additional money, but those extension rules have also made things more difficult for renegotiations and extensions like the one James Harden signed in 2016. Harden and the Rockets took full advantage of the 2016 cap spike and the team used the last bit of their remaining space to extend Harden long-term. The next summer, he signed another extension, this one of the Designated Veteran Player variety, which added four years and more than $171 million to his deal and kicked in this season.
The cap spike created that particular set of circumstances for Harden and the Rockets, and we’re not likely to see another one of those any time soon. Still, there are a few players who could sign renegotiations and extensions, starting back in Minnesota with Covington again. Covington will reach the third anniversary of his previous renegotiation and extension in 2020, though the Wolves don’t project to have cap space next summer to renegotiate and extend him again. In 2021, however, Covington will be in the last year of his contract and the team could agree to use a bit of their projected $22.3 million in cap space to give him a significant raise, before dropping him back down to a lower, more team-friendly number.
A final renegotiation and extension candidate could be Justise Winslow in Miami. The Heat haven’t had cap space since their disastrous summer of 2017, but once those deals are off their books, they’ll have some money to spend in 2021. Winslow has a team option on the final year of his three-year rookie scale extension for the 2021-22 season for $13 million, but since he signed that deal as an extension in October 2018, he’d be eligible in October 2021 for a renegotiation and extension with the Heat.
For now, Winslow’s play is straddling the line as to whether he’s a positive-value contract at $13 million per season – he’s a poor offensive player unless he has the ball in his hands, but isn’t good enough as a creator to be the lead ball handler for a high-end offense. His work on the other end of the floor is his calling card. For a Miami team that wants to compete for titles in the next several years, Winslow’s versatility on that end of the floor feeds perfectly into what they want to do.
Should his play continue on the same trajectory for the next two years, the Heat may want to use some of their 2021 cap space to renegotiate and extend Winslow on a deal that looks similar to Covington’s in 2017. Doing so wouldn’t cost them much cap space, since Winslow is already on their books for $13 million that year, so they could opt in, use $4 or $5 million to give him a raise in 2021-22, then drop his salary down to the low teens for the remainder of his contract. Opting out and retaining him in free agency would cost them $6.5 million in cap space, as his 2021 cap hold would be $19.5 million, and would limit how much they could decline his salary in future seasons.
Let’s say the Heat wanted to extend Winslow for four more years after the 2021-22 season at an average value of $15 million per year. They could do so using a normal veteran extension, which would start in 2022-23, or they could use a bit more space to give him a raise to $21.4 million in 2021-22, then drop him down to an average of $12.84 million over the next three years. This would pay Winslow more up front than he was slated to make in that option year or likely would have gotten in free agency from the Heat or any other team, but only really hits the Heat’s books in a negative way for that one season. After that, he’s making less than he did before and would be a value contract if the team were to want to bolster their roster in a trade going forward.
Renegotiations and extensions are rare in the NBA for multiple reasons and it remains unlikely that we’ll see another one in the near future. There are only a handful of players who qualify for a renegotiation and extension and are on a team that would consider offering it, and even those situations are tenuous in most circumstances. The loosened veteran extension rules have created a situation in which renegotiations and extensions are only useful in very, very specific circumstances, as teams have to withhold cap space to sign them and may rather simply sign a normal veteran extension. For players, it also can make more sense to sign a regular extension or hit free agency; signing a renegotiation and extension gives the player more money up front but a lot less control over their future, as a player on a bargain contract is more likely to be traded than a player who is properly paid.
The renegotiation and extension isn’t dead, but changes in the rules surrounding veteran extensions and the arms race for 2021 free agency may leave it somewhat dormant for the next couple of years. Barring some sort of unforeseen cap spike (perhaps with new gambling revenue?), teams are going to be hoarding cap space for 2021 and beyond, as contracts are shorter and star players are moving teams with a much greater frequency than in earlier eras. Holding back between $5 and $20 million in cap space to renegotiate and extend a player already on a team’s roster when the two sides can come to an agreement on a lucrative veteran extension might not make sense for a lot of teams who have their eyes on the prize(s) in 2021.