Marc J. Spears of Yahoo! Sports reported last night that the Raptors will likely offer Rudy Gay a contract extension when he becomes eligible for one in July. As Chuck Myron of Hoops Rumors noted, Toronto wouldn't be able to make Gay a truly long-term offer, since veteran extensions can't exceed four total years, which includes the time left on the existing deal. With two years still remaining on his contract, Gay wouldn't be eligible for more than a two-year extension.
We typically don't see veteran stars accept contract extensions, since they have the ability to sign for more years and more money in free agency. If Chris Paul were to sign an in-season extension with the Clippers, for instance, he could only add three years to his current contract instead of the five he'll be able to re-sign for this summer. However, Gay's case may be different.
With a player option worth $19.32MM for 2014/15, Gay will have the opportunity to opt out and hit free agency in the summer of 2014 if he doesn't agree to an extension with the Raptors. It's possible that Gay, like Amare Stoudemire, Carlos Boozer, and other free agents back in 2010, could benefit from the fact that many teams are clearing cap space for the '14 free agent class. Clubs that miss out on top options like LeBron James and Dwyane Wade (assuming both players opt out of their respective contracts with the Heat) may get desperate and make Gay a huge offer. Still, given the financial restraint many teams have shown since the new CBA took effect, I'd guess that Gay will be unlikely to land as lucrative a deal as one the Raptors appear willing to offer him this summer.
Now, plenty could change between today and July. It's not a lock that Bryan Colangelo will even still be the Raptors' general manager by that point, so there's no guarantee that the team will make an extension offer to Gay. Spears also didn't indicate whether Toronto intends to make Gay a max offer, or whether the team will offer a little less than that. But let's assume the Raps do offer Gay as much as they can for a two-year extension.
CBA rules dictate that a veteran can receive a raise of 7.5% in an extension if that amount doesn't exceed his maximum allowable salary. Gay's $19.32MM 2014/15 salary will almost certainly be above the max, so he'll be eligible to earn 105% of that amount in 2015/16, with a 7.5% raise for 2016/17. Here's what Gay's new contract would look like if he finalized a max extension:
As our chart shows, Gay's two new seasons would add another $42MM+ to his contract, which would be an awfully significant investment for a player who has never been an All-Star. Again, it's not a certainty that the Raptors will make this exact offer, but their apparent eagerness to lock Gay up long-term suggests that they probably won't be asking him to take a pay cut.
As Tom Ziller of SBNation.com wrote this morning, chasing so-called "star power" may adversely affect the Raptors' chances of building a balanced roster capable of legitimate contention. In an NBA era where contract offers are looking saner and more reasonable, I'd be surprised if there are many other teams willing to commit the sort of annual salary to Gay that the Raptors appear ready to pay him. Given how infrequently we see veterans sign contract extensions, Gay may end up rolling the dice in free agency anyway, but if the Raptors put a max offer on the table in July, you can certainly make a strong case that Gay should accept it.