Word broke yesterday that the Pacers and Paul George are putting the finishing touches on a five-year, max extension for the rising star, a deal that should be done well before the regular season gets underway. Adrian Wojnarowski and Marc J. Spears of Yahoo! Sports reported that George's new contract is expected to be worth more than $90MM, a figure that's noteworthy for a couple reasons.
First, given the fact that the small-market Pacers were willing to work out an extension rather than taking their chances in restricted free agency, where they'd still have a final say in the process, I assumed George would take a modest discount, and sign for slightly less than the max. When I posed the question in a poll last week, I predicted that he'd land a five-year contract worth in the neighborhood of $70MM, while most of you correctly predicted he'd get a five-year max instead.
There doesn't seem to be much incentive for the Pacers to get a deal done so early if they're willing to commit the most possible money to George. The team could do that at any point, and it would be a safer bet to do so next summer. Then, if George were to suffer a serious injury or a dip in production during the 2013/14, Indiana wouldn't already be on the hook for that five-year max.
Still, by finalizing a deal early, the team is sending a signal to George that he'll be the centerpiece in Indiana for the next several years. That emotional factor is one that Mark Deeks of SBNation.com wrote about last week, and it shouldn't be understated.
However, there's likely a more significant factor in play in extension negotiations between the two sides. As Chuck Myron of Hoops Rumors wrote when he examined George as an extension candidate, it behooves the 23-year-old to ink a max extension before Halloween because it makes him eligible for the Derrick Rose Rule, a wrinkle in the CBA that allows players with less than seven years of experience to receive a salary worth 30% of the cap instead of 25%.
In order to qualify for that 30% max, a player signing a rookie-scale extension must achieve one of the following during his first four NBA seasons:
- Win the MVP award.
- Make an All-NBA team twice.
- Make the All-Star Game as a starter via fan balloting twice.
George has yet to be voted an All-Star starter, so unlike Blake Griffin a year ago, he can't qualify for the Rose Rule max that way. And unlike Rose himself, George seems unlikely to win the MVP award while on his rookie contract. But George has a realistic route to the 30% max by making another All-NBA team, after being named a Third Team All-NBA player in 2012/13.
Griffin's and James Harden's new contracts, which will take effect in 2013/14, show that the difference between the 25% max and 30% max becomes significant over the course of an extension. Here's how those max deals break down:
The NBA's maximum salaries will increase next season, meaning that even if George only receives the 25% max, his overall salary will still be higher than Harden's; if he earns the 30% max, he'll earn more than Griffin. But the $90MM+ figure reported by Wojnarowski and Spears appears to assume that George will qualify for the Rose max. After all, in order for a player to make $90MM+ on the 25% max, the league's max salaries would have to increase by nearly 15%, which seems like an unrealistic jump, considering they only increased by about 1% this past year.
So when you hear George's extension being reported as a $90MM+ deal over the next few days, take that figure with a grain of salt. We won't know the exact numbers until next July, and George's ability to repeat his All-NBA 2012/13 season figures to dictate whether he actually qualifies for the sort of max extension that would take the overall value beyond $90MM.
