Month: June 2013

Guaranteed Contracts

• Roy Hibbert ($14,283,844)
• Danny Granger ($14,021,788)
• George Hill ($8,000,000)
• Ian Mahinmi ($4,000,000)
• Gerald Green ($3,500,000)
• Paul George ($3,282,003)
• Miles Plumlee ($1,121,520)
• Orlando Johnson ($788,872)

Options

• None

Non-Guaranteed Contracts

• Lance Stephenson ($930,000)¹

Free Agents / Cap Holds

• David West ($13,000,000)
• Tyler Hansbrough ($7,638,148)²
• D.J. Augustin ($4,200,000)
• Jeff Pendergraph ($1,950,000)³
• No. 23 pick ($1,038,900)
• Ben Hansbrough ($988,872 – QO)
• Sam Young ($884,293)

Draft Picks

• 1st Round (23rd overall)
• 2nd Round (53rd overall)

Cap Outlook

• Guaranteed Salary: $48,998,027
• Options: $0
• Non-Guaranteed Salary: $930,000
• Cap Holds: $29,700,213
• Total: $79,628,240

It may take a while for many in Indiana to get over the disappointment of a Game Seven loss in the Eastern Conference Finals, but there's no denying that this past season was a rousing success for the Pacers. The team went a step farther than it did last year in the playoffs even though Danny Granger, its top scorer from each of the previous five seasons, was injured and missed all but five games. Paul George blossomed in Granger's stead, making his first All-Star Game, winning the Most Improved Player of the Year award, and vaulting into superstar status as he went mano-a-mano with LeBron James in the playoffs. Roy Hibbert bounced back from an offensive slump in the first half of the season and continued to establish himself as an elite interior defender, especially against the Heat, proving the value of the four-year, $58.4MM contract the Pacers gave him last summer.

Now the Pacers must decide if their success this season justifies moving on from Granger, a 30-year-old former All-Star entering the final season of his contract. The Pacers are reportedly leaning toward keeping him, but there would be no shortage of teams interested in Granger if the Pacers want to put him on the market. Whether the Pacers decide to pull the trigger on a deal could come down to the strength of the trade proposals they receive. Indiana could clearly use some bench production, and Granger could be a potent sixth man if the team opts to use him in that role. He'd be an overpaid reserve, but his contract expires after this coming season, just when the Pacers will need to have more money available for George's next deal. It would be difficult for another team to put together a package of players who could equal Granger's production and whose contracts are up after one season like his is. So, unless there are some enticing first-round picks involved to sweeten the pot, the Pacers may be content to keep Granger for themselves.

The Pacers most assuredly want to hang on to David West, too, and team president Donnie Walsh has deemed re-signing the unrestricted free agent as priority No. 1. There's little reason to expect they won't get a deal done, particularly given West's repeated comments about his desire to return. Executives around the league reportedly expect West to draw offers for three or four years with an annual salary of $11-13MM, and that's just the range the Pacers were hoping to sign him for. I wouldn't be surprised if a team enamored with his toughness and consistent scoring ability floated an offer that exceeds that range, but many front offices will be wary of overpaying a 32-year-old with a torn ACL on his medical history. Barring the unlikely event of a max offer for West from another team, which would be four years starting at around $20MM, I expect him back with the Pacers.

West isn't the only Pacer who could wind up with a lucrative long-term deal this offseason. The Pacers have from July until the end of October to negotiate an extension for Paul George and keep him from restricted free agency in 2014. Indiana would still have plenty of leverage if it got to that point, but George appears to be a rare talent, particularly in such a small market. Walsh and GM Kevin Pritchard would do well to show George that they want him around for the long haul.

The most significant question may not be whether they'll give George an extension, but how long that extension will be for. They could make the deal for five years, but any extension that stretches beyond a fourth season would make him the team's designated player. That distinction would preclude the Pacers from signing anyone else coming off a rookie contract to a five-year extension, but no one else on the roster is likely to warrant that. The maximum George can get wouldn't be known until after he signs the extension. At the moment, he'd be eligible for a max with a starting salary worth 25% of the salary cap in 2014/15, which would mean a five-year deal would be worth around $80MM. If he wins the MVP or, more likely, makes an All-NBA Team again, he would be eligible for 30% of the cap, pushing a five-year extension to a total of about $100MM. I wouldn't be surprised to see the Pacers push to work out an arrangement similar to the one the Thunder had with Russell Westbrook, in which Westbrook agreed to stay at the 25% max even if he became eligible for the 30% max. 

Either way, George is in line for a significant raise, yet an extension wouldn't kick in until 2014/15, meaning he'll remain a bargain on his rookie contract for the upcoming season. Tyler Hansbrough's rookie deal is up this summer, but even though he entered the league as a No. 13 pick with about as much fanfare as George, who was taken 10th overall, Hansbrough's current situation is drastically different. He's been more efficient than most bench players, having put up a 15.3 PER this year that nearly mirrors his 15.4 career number, but he saw fewer minutes per game this season than ever before. The Pacers tried to find takers for Hansbrough, along with D.J. Augustin and Gerald Green, a pair of underwhelming bench pieces, at the trade deadline, but had no luck. Now, Hansbrough is eligible for restricted free agency, and his $4.1MM qualifying offer amount is about the same as the annual salary the Pacers are paying Ian Mahinmi, the other bench big man in their rotation. Keeping two bigs on the floor as often as possible is part of the team's ethos, but presuming West re-signs for $12MM a year and the team brings back Hansbrough for an amount equivalent to his qualifying offer, the Pacers would be paying $34.5MM to four bigs next season. That's a figure that takes the team nearly halfway to luxury tax territory, and only two of the four bigs can be in the lineup at the same time. Indiana may prefer a cheaper option — perhaps Jeff Pendergraph, another restricted free agent who performed capably in limited minutes for the Pacers this season.

Augustin seems even less likely to return than Hansbrough, unless the point guard takes a significant paycut from his $3.5MM salary this past season. The five-year veteran put up career lows across the board, and while much of that had to do with his reduced playing time, he didn't play efficiently in the minutes he did see, since this season's 11.0 PER was a low watermark as well. Walsh and Pritchard could look to the draft to find a replacement for Augustin. The Pacers aren't likely to land a starting-caliber player with the No. 23 pick, but they might come across a backup point guard capable of stepping into that role immediately.

The free agent reserve the Pacers might be most interested in retaining is the same one they waived in January and re-signed three weeks later. Sam Young showed his worth in the playoffs as a defender who could make LeBron sweat, and he should be able to command a seven-figure salary for the first time in his career. The Pacers can use his Non-Bird rights to ink him to a four-year deal worth as much as $4.866MM, and while I don't think he'll get a contract that lengthy, a two- or three-year deal with annual salaries in the $1.2MM range sounds about right.

Perhaps the easiest decision that Walsh and Pritchard have will be to fully guarantee the contract of starting shooting guard Lance Stephenson, who's set to make slightly more than the minimum. Next season is the last on the four-year deal to which the Pacers shrewdly signed Stephenson after they drafted him in the second round in 2010, so he's eligible for an extension. The front office will probably wait to see how much West, and perhaps George, wind up making before entering such talks with Stephenson, but the matter isn't pressing. Stephenson and the team can negotiate an extension all the way until June 30th of next year, unlike with George, a former first-round pick whose rookie-scale contract falls under a different set of rules that call for an October 31st extension deadline.

The Pacers are faced with many decisions this offseason, but the growth of George, as well as Stephenson, has given them enticing options. Granger has become expendable, but there's still one more season before keeping him together with West and George becomes financially unfeasible. Indiana can dangle Granger in exchange for future upgrades, or bank on his recovery from injury and make a strong push for the title next season. That's the storyline that may truly define the team's summer. 

Cap footnotes:

1. Stephenson's contract becomes fully guaranteed if he's not waived on or before July 15th.
2. The qualifying offer for Hansbrough is $4,135,391, which is less than 250% of his salary in 2012/13. The cap hold for a former first-rounder who made less than the league average salary in the fourth season of his rookie-scale contract is always the greater of those two amounts in the summer after his rookie deal expires. Hansbrough's QO would have been $4,225,423, but it was reduced because he failed to meet the league's starter criteria.
3. The qualifying offer for Pendergraph is $1,875,000, which is slightly less than 130% of his salary in 2012/13. The cap hold for an Early Bird free agent who isn't coming off the second year of a rookie-scale contract is always the greater of those two amounts.

Storytellers Contracts and Sham Sports were used in the creation of this post.