There are no hard and fast rules when it comes to deciding whether to sign a player to an early extension. General managers are facing the class of 2008's early extension deadline on a case-by-case basis.
It's that time of year again for NBA general managers. Well, to be clear, it's not technically that exact time of year because of the lockout, but the point still stands. Over the next week or so, general managers across the league have to decide if it's worth locking in their 2008 draft picks with early contract extensions or if it's more prudent to let them hit restricted free agency. The deadline is January 25, and already, rumored discussions with players have hit the news wire.
This year, it's especially important that general managers get it right. The 2008 draft class is arguably the deepest one since 2003. There are obvious max-contract players (Derrick Rose, who already has his new deal), guys for whom teams are currently deciding if they should receive a maximum contract (Kevin Love, Eric Gordon), potentially-solid core pieces (Danilo Gallinari, Brook Lopez, Roy Hibbert), good role players that teams may try to lock up cheaply (Nicolas Batum, Ryan Anderson) and truly unique cases where the team doesn't really know where they fit (JaVale McGee, J.J. Hickson). That's a lot of talent that will be in high demand if it hits the open market.
But should they all get early extensions? Here, people love to act like they have all the answers. On one side, you have folks saying that locking in core pieces early is good business. On another, you have people saying teams bidding against themselves is unnecessary when they have the ability to match any offer in the offseason.
The truth is, though, that all possible options come with considerable risk, making these decisions some of the toughest things a general manager ever has to decide. To put this into perspective, I've rounded up all the possible ways these decisions could play out. As you can see, there's no one right way to do business.
SCENARIO I: The Extended Players That Became Bargains: This seems like the best-case scenario for a general manager, and in many ways it is. He takes a leap of faith that a young player will continue to improve his game like he's supposed to do, and the young player rewards him by actually becoming better and outperforming his contract.
But even here, there's a potential downside. Take the case of Caron Butler and the Washington Wizards. When he was acquired from the Lakers in 2005, Wizards GM Ernie Grunfeld made the incredibly risky decision to offer him a five-year, $47.5 million contract before he even played a game in D.C. Butler had been very up-and-down in his three-year career with two other teams, but Grunfeld felt he had something and wanted to lock him up. Butler took the deal, became an All-Star and a core piece of some playoff teams. It seemingly worked out beautifully. But towards the end of his deal, Butler, unhappy he was underpaid and disillusioned due to the Wizards' problems, asked for another extension. When he didn't get it, he got mad and started to play selfishly, helping to kill the Wizards' 2009-10 season even before Gilbert Arenas fired the final shot. What was a brilliant decision ended badly for Grunfeld and the Wizards.
Nevertheless, this is still the ideal scenario for a team. Any Wizards fan would trade Butler's four good years for his one bad one at the end.
SCENARIO II: The Extended Players That Become Albatrosses: This is the major risk with giving someone an early extension. It's always possible that the player's early success was a mirage and they can't sustain it, in which case a GM gets stuck with a long-term contract to a player that doesn't deserve it.
The obvious cautionary tale is another Grunfeld example. In the summer of 2010, he elected to give Andray Blatche an early five-year, $35 million extension, hoping the talented, but inconsistent big man could build on his strong play from the end of the 2010 season. Instead, Blatche suffered a foot injury, rehabbed it poorly and reverted back to his uneven play from before the contract. Worse, the deal set a bad tone, with several other Wizards youngsters looking to get theirs so they could receive similar contracts. Grunfeld took arguably as big a risk with Blatche as he did with Butler, and this time, it didn't work out at all.
SCENARIO III: The Unpopular Extension Decisions That Work Out: There's a natural disinclination to early extensions for non-stars because of the downsides presented above, so you'll often see plenty of outrage when such deals are handed out. But sometimes, things work out anyway. For example, here's one prominent writer's reaction to the Grizzlies handing Mike Conley a five-year, $40 million deal before last season.
In the long history of terrible moves by the Memphis Grizzlies, mark my words, this one will reign supreme.
Worse than drafting Hasheem Thabeet.
Worse than trading Pau Gasol for Marc Gasol, Kwame Brown, and cash.
Worse than re-signing Rudy Gay for $80 million.
This, this right here, is not just the worst move in the history of the Grizzlies, but it is the shining golden cap on the mountain of terrible moves made by NBA owners over the past 2 years.
I quote this not to pick on Matt Moore, because we all thought this was a bad deal. A year and a half later, Conley has made major strides, and all of us, including Moore, have eaten crow. These things sometimes happen and it's hard to explain them.
Other examples: I don't want to jinx it, but Andrea Bargnani is playing like he's worth the five-year, $50 million deal the Raptors gave him in 2009, one that many people criticized.
SCENARIO IV: The Extended Players That Become Fairly Compensated: Not much to add to this one. Things sometimes work out well for all parties.
Examples: Danny Granger with the Pacers, Kevin Martin with the Kings before being traded, Andrew Bogut with the Bucks, Jared Dudley with the Suns, Joakim Noah with the Bulls and pretty much any max extension guy like Chris Paul, Kevin Durant, Deron Williams, LeBron James and such.
SCENARIO V: The restricted free agent that become overpaid in the summer: This happens far more than most fans realize. There's a tendency to think that giving a player an early extension is unnecessarily bidding against yourself, and waiting until the summer provides more certainty. However, it just as often drives up the price tag to retain him, because most NBA players actually improve between their third and fourth year in the league. (Shocking, I know). If the goal is to lock in a core piece without breaking the bank, teams are often better served doing it earlier rather than later.
There are two types of situations in this scenario. The first is when a very good player gets paid on a scale closer to a superstar because the team waited to extend him. Most of the time, teams can live with this, because at least the player is helping you win. Prominent examples here include a trio of small forwards: Rudy Gay with Memphis, Luol Deng with Chicago and Andre Iguodala with Philadelphia. Again: this isn't that bad, but those players still saw their price tag rise because the team waited on extending them.
The other situation is when an average-to-mediocre player receives a contract he doesn't deserve because the team is scared to lose him. The best example here is Atlanta's Marvin Williams. He had a so-so year in 2007-08, and the Hawks could have capitalized by giving him a more affordable contract. Instead, fearful that Scenario II would play out, they waited. Williams ended up having the best season of his career, and the Hawks gave him a five-year, $38 million deal. Unfortunately, Williams hasn't improved since then (though he's playing well early this year), and the Hawks are stuck paying above-average money for below-average production.
The point here is that waiting often makes things worse for teams, not better.
Other examples of Scenario V-1: Emeka Okafor with Charlotte.
SCENARIO VI: The restricted free agent who thinks he's worth more and takes the qualifying offer, only to leave: Sometimes, it's not the team's fault that an early extension can't get done. Sometimes, the player thinks he's worth more on the open market, finds he isn't and is forced to take a one-year qualifying offer before trying again next year. Nine players have done this in the past, and all nine ended up on new teams. There are three players who took this route this season: Nick Young with Washington, Spencer Hawes with Philadelphia and Marco Belinelli with New Orleans. It remains to be seen if they buck the trend.
SCENARIO VII: The restricted free agent who plays poorly after not getting an early extension: This doesn't happen often, but it's always something to watch. One major example I can name is Randy Foye with the Wizards. Washington acquired him in a trade with Minnesota at the 2009 draft, couldn't work out an early extension with him and saw him play poorly the next year, making their decision to jettison him the next summer that much easier.
SCENARIO VII: The restricted free agent who is a bargain. While there's a lot of risk that a restricted free agent can go by the way of Scenario V, there are also times when waiting works out anyway. It worked out pretty well for the Houston Rockets and point guard Kyle Lowry, for example. They didn't have the opportunity to extend him early because he was with the Grizzlies, but he didn't get a ton of suitors in free agency in 2009, allowing the Rockets to keep him for four years and $24 million. Lowry is now one of the league's best point guards.
SCENARIO VIII: The restricted free agent who ends up being fairly paid: Again, this is pretty straightforward. It happens a good amount of the time, just like someone who is fairly paid when given an early extension.
What's the lesson of early extensions? There are no rules. With so many possible scenarios, general managers simply have to approach these on a case-by-case basis, and we the fans have to react in the same way. There's risk involved in every possible action, so it's on the general manager to really know his player and figure out what resolution makes sense for him given his state of mind and the state of the team.
Outside of the draft, it's probably the hardest thing an NBA GM has to do. Just keep that in mind before immediately criticizing whatever the Timberwolves decide to do with Love.