The Toronto Raptors clearly want Giannis Antetokounmpo. So do other teams. But what does Giannis want? That’s impossible to say for sure, but I thought it would be worthwhile to explore his options.
As has been well publicized, the Milwaukee Bucks have offered Giannis the supermax. In case anyone doesn’t know, the supermax is a term used to describe the maximum salary for a player with at least 10 years experience in the NBA.
Maximum salaries in the NBA are tied to both the player’s experience level and the salary cap in the first year of their contract. For a young player with six or fewer years of experience, the maximum any team can offer the player is 25 percent of the salary cap. A player with 7-9 years experience is eligible for 30 percent of the cap. And a player with 10 or more years can earn 35 percent.
In a bid to help teams keep their homegrown talent, the NBA decided to complicate that a bit, allowing teams to offer players higher salary tiers than they had the experience for if they are considered star players — that is, if they accomplish things stars are associated with, like being named to All-NBA teams, winning MVP, Defensive Player of the Year, and so on.
If a player is coming off his rookie scale contract, for example, his team can re-sign or extend that player to 30 percent of the cap instead of 25 percent if he has earned some of the above honours.
You may recall Pascal Siakam earned a bump up from 25 up to 28 percent of the cap (middle steps like that below the full 30% can be negotiated) when he made the All-NBA Second Team last season.
A similar rule is in place for players with eight or nine years of experience, so long as they are with the same team they finished their rookie scale contract with. Star level players can sign what has become commonly known as the supermax extension — the full 35 percent maximum salary. They can sign it a year early as an extension instead of waiting for free agency when they have as little as seven years experience.
This is the situation Giannis is in right now. He has his seven years experience and his two MVP awards more than qualify him for the supermax extension.
And that’s what Milwaukee has offered him. A long term contract starting at 35 percent of the salary cap next season, which is projected at $112.4 million — meaning a starting salary of $39.3 million.
Since Giannis has Bird Rights in Milwaukee (meaning he has spent three years without changing teams in free agency), they can also offer him larger raises (eight percent of his starting salary per year vs. five percent) and an additional year compared to any other team. With those higher raises, that 5-year supermax extension comes to $228 million.
And If He Leaves?
Giannis would make a lot less.
The obvious comparison is to ask what another team could offer him. Well, signing a new contract in free agency would mean he does not get that 35 percent max, he would be stuck with the usual 30 percent max salary for a player of his experience.
On top of that, he’d only be able to sign for four years, and signing as a free agent limits him to the lower raises mentioned above. That would work out to a starting salary of $33.7 million and a total of $145 million over four years. That’s $80 million in guaranteed money left on the table.
But that comparison is a little too on the nose — in reality, stars who sign elsewhere instead of signing their supermax early have an alternative option. Raptors fans don’t need to look very far for an example: Kawhi Leonard was supermax eligible in San Antonio. Now, he may or may not have ever really been offered it there, but in any case he forced a trade, and in doing so disqualified himself from that early extension. When he hit free agency one (glorious) year later, did he sign a 4-year contract with the team he wanted to go to?
He did not. He signed a 3-year contract with the LA Clippers, and the third year was a player option, meaning he could opt out and become a free agent after two years.
Because after two years, he would have 10 years experience to his name. And with that comes that supermax salary eligibility. So after two years, he has the option to opt out and re-sign with the Clippers at 35 percent of the cap.
That example is useful here as well, because wherever Giannis lands (again, assuming he doesn’t stay with the Bucks) he will likely pursue the same approach — a two-year contract plus one year player option (commonly referred to as a 2+1 deal), so he can re-up at a higher salary when eligible.
So, although the supermax extension now is indeed the most locked in money he can secure, the drop-off from not taking it is not as extreme as it looked above. Let’s break it down by year (assumes the minimum projected increase in the cap year to year).
Year | Supermax | Signing Elsewhere
Year 1: $39.3M, $33.7M
Year 2: $42.5M, $35.4M
Year 3: $45.6M, $41.7M (opts out and signs supermax)
Year 4: $48.8M, $45.0M
Year 5: $51.9M, $48.4M
That works out to the aforementioned $228 million over those five years versus $204 million over those five years. Not as crazy a drop. Worth noting that if the player opting out is signing a 4- or 5-year contract at that point, they also have that high salary locked in later in their career — signing a star to huge money long term right as they hit 10 years experience is a no-brainer, but teams could hesitate if the player is getting up to 12 years experience, meaning the contract would finish about 16 or 17 years into their career. That’s a less sure market.
Speaking of that opting out and re-signing scenario, the star player would obviously like to lock in as many years as possible at that huge salary. So having Bird Rights would be of great value to them. Unfortunately, they would have changed teams in free agency before year one in the scenario above, meaning when they opted out they would have only two years without changing teams.
Two years gets a player something called Early Bird Rights. That allows a team to give up to a 75 percent raise on the previous year’s salary (up to their max salary), so the team would have no issue offering that maximum salary. They can even offer the higher raises. But unlike full Bird Rights, the team can’t offer the fifth year. They are stuck signing the player to only four years.
So in an ideal world, if Giannis signs somewhere else, he’d love to be able to find a way to bring his Bird Rights with him, to maximize that payday when it finally comes, given that he is delaying it in the name of switching teams.
The Sign-and-Trade Option
The obvious segue here is to tell you that using a sign-and-trade prevents a player from losing his Bird Rights, and that’s why Giannis might push for one. That would help teams like the Miami Heat acquire him since they abandoned their ability to clear enough cap room to sign him.
But wait — a sign and trade doesn’t save Bird Rights.
Actually, I guess it kind of does. But not in the way you would like. Let me explain.
Sign-and-trades have limitations to them. For example, the most common misconception is that since a player is technically signing with their previous team, they can get those maximum raises and longer term. That even used to be true, but a couple CBA negotiations ago the league changed the rule. Now players in a sign-and-trade are limited to the lower raises and 4-year term that come with just signing with a new team.
But more importantly, there is actually a minimum term for a sign-and-trade as well, to prevent teams from signing and trading players that neither side really wants just to make salaries match in a trade. So players being signed and then traded have to receive contracts at least three years in length.
OK, no problem, you say. That’s what Giannis will want anyway, he wants one of those 2+1 deals. Ah, but another problem: in a sign-and-trade, you need that three-year term excluding any option years. So that ideal 2+1 deal that Giannis would want is not possible in a sign-and-trade, he’d have to sign a 3+1.
Now the good news is he would then have Bird Rights after the three years are up. But it’s all another delay on that major pay day.
Now, in a sign-and-trade, the main benefit to the team acquiring the player is that instead of having to cut their roster down and renounce the rights to many of their free agents to clear cap room, they can send matching salary back in the sign and trade and then keep a lot more of their team together. In the Raptors’ case, that might mean keeping Kyle Lowry, for example, which is no small thing.
And the more complicating factor is actually making a sign-and-trade work.
Base Year Compensation (BYC)
We recently had a whole article on the concept of base year compensation. The short of it is this: if a player is being signed and traded and is getting a significant raise, there are limitations on their trade value. The team taking their contract in still has to match salaries to absorb their full amount, but the team trading them can only use half their salary (or their previous year’s salary) to match the salary coming their way.
As an example, let’s envision a Raptors’ sign and trade for Giannis. He signs his four year maximum contract with a starting salary of $33.7 million, plenty enough to trigger BYC. So that means the Bucks can only use his old salary ($27.5 million) to match salaries. The Raptors need to send out $26.9 million to match his salary and operate over the cap. They have two great candidates for salary matching in Chris Boucher and Aron Baynes, with about $14.3 million combined salary next summer. The only place the Raptors can really find the other $12.6 million they need is a Norman Powell sign and trade.
Now, Powell will almost certainly get more than that on the open market, and if the team wants to convince him to go to a specific market they probably have to pay more, not less, than he could earn elsewhere. So let’s assume he gets a bigger raise. Problem is, if he gets a bigger raise, he’s BYC as well. Which means to count as $12.6 million, Powell would have to earn twice that. So pencil him in for $25.2 million in starting salary. That’s a bit high for him, but over the course of a 4-year deal if they drop his salary every year instead of giving him raises the average salary can end up more like $23 million. Still maybe a little much. The Raptors could also throw in another salary to bring that down a bit, say a minimum salary like DeAndre’ Bembry. But remember: the more contracts added, the harder it is to make that deal work.
Anyway, the Raptors could give Powell that $25.2 million, and then the total salary heading to the Bucks is $39.5 million. Sadly, they can only use a matching value of $27.5 million for Giannis, so can only absorb about $34.5 million in salary. So they need to send out more salary, which the Raptors would need to match, and on and on we go, unless we find a third team to take some salary, and they’ll want to be compensated for their services. Sign-and-trades are hard enough, double sign-and-trades even harder — because of the number of parties who have to want it to happen, never mind adding yet another team.
Every team trying to sign-and-trade for Giannis, not just the Raptors, will be in that situation to some degree or another. Miami has backed themselves into this being their only avenue to chase Giannis if he reaches free agency next summer. If that’s the one place he wants to go, it likely will get done, but if he’s deciding between a few places, it’s just the sort of limitation that might knock a team down a rung in that debate.
So you can see why teams would want to do it, but it’s real hard to make work and is surely not Giannis’ ideal solution.
But what is?
Have Cake, Eat it Too
Is there a way to get Giannis without losing his Bird Rights, allowing him to sign a shorter term deal to get to the supermax on time and then sign him for five years at that elevated salary?
Well, there is one way. Get traded before the deadline. Any team trading for him would still lose the ability to give him a supermax right away, but they would get his Bird Rights. They sign him to his 2+1, then they sign him to the 5-year supermax.
And Giannis (and his agent) likely knows this is the case. If he has a specific destination in mind, and the financial considerations above are significant to him, that’s the sort of scenario where he might ask for a trade to his preferred destination.
Enter the following tweet from John Hollinger of the Athletic:
Fun fact: The ~600k cap # difference between this and his vet min allows him to be a salary match in a trade for a $27.528M player with Powell, OG, McCaw, and one of Thomas/Davis. Otherwise he'd make too little. If there were some hypothetical player who makes $27.528M, that is https://t.co/NMOSWCaB46— John Hollinger (@johnhollinger) November 27, 2020
Hollinger is talking there about Alex Len’s salary. The Raptors signed Len to barely above his minimum salary with the rest of their Mid-Level Exception. Oh, and the “hypothetical player” who makes exactly that amount that Toronto could then match: Giannis.
Similar to maximum salaries, minimum salaries are different for players with different experience. There is actually a full sliding scale from rookies all the way up to 10-year plus veterans. The league, to discourage teams from going with younger players to save money, reimburses teams for any minimum salary above the two-year veteran value — which is also the value that counts as the cap hit for those players. So Len would have made almost exactly the same amount of money (give or take $0.1 million), but since he did not technically sign for the minimum, his cap hit is the larger salary he is owed ($2.3 million), not that reduced 2-year veteran minimum salary ($1.6 million).
Why would a team ever choose the higher cap hit? The tweet above lays out the answer — bigger cap hit, more salary for matching in a trade.
But Len is on a one-year deal, that means he can only be used to match in a trade between now and the deadline. Which means the Raptors are preparing for a situation where maybe they can trade for Giannis this season, not wait until next off-season for a sign-and-trade or clear cap space to sign him directly.
The suggested trade above is not one I think they would do — in this hypothetical scenario, they know they are getting Giannis the following summer, he has indicated they are his destination of choice to be traded to, etc. So the Raptors would likely not include a piece as valuable as OG Anunoby. The whole point of acquiring Giannis early for the team is to be able to keep their best players around him since they don’t need to clear cap. But Stanley Johnson makes essentially the same amount of money and can be substituted in the trade.
The trade then is this: Giannis for Norman Powell, Terence Davis, Patrick McCaw, Stanley Johnson and Alex Len, plus maybe a draft pick or two to provide the Bucks some extra value before Giannis walks for nothing. That just might work. The Bucks get the Bird Rights to Norm, who (a) has always tormented the Bucks in the playoffs and (b) could step into a larger role and perhaps find even more success as a scorer, and they get Davis (who will be a restricted free agent — RFA), plus draft assets to help with life post-Giannis.
The Raptors would be left being able to re-sign Giannis and Lowry next summer, re-up OG as an RFA, and keep Baynes and Boucher on their second years, with Pascal and FVV already locked up.
In an open market that would never be the best offer for Giannis, but this would be a case of a pure rental for most teams if they don’t think they are getting him long term. So the Bucks may play ball. Especially if this scenario plays out near the deadline after a less than stellar start for the Bucks in the regular season (which I admit is unlikely, but we are dealing in low probability scenarios here by nature).
Despite the above, the smartest thing for the Bucks to do is hold onto Giannis, even if he does not accept the supermax extension this offseason (he has until December 21st, at which point if he doesn’t sign it the speculation will really ramp up). He can still sign the supermax with them next summer as a free agent, and if they have success in the playoffs this year after their off-season moves, that might be a good enough pitch to keep him.
But the Bucks have shown they don’t necessarily make all the smartest moves, as their relative mess of an offseason as proven. If Giannis asks for a trade, or indicates he intends to leave, they just might explore their options (as limited as they might be).
And if they do, the Raptors are prepared. As they always are.