Grantland's Zach Lowe broke some bizarre news on Thursday: the NBA Board of Governors voted this week to award the Oklahoma City Thunder roughly $15 million because of an issue with Kevin Durant's super-max contract.
Here's the set-up. In July 2010, Durant reached a max early extension deal with the Thunder. It would go into effect for the 2011-12 season, as per a normal early extension. The thing with maximum contracts is that they depend on the salary cap level: prior to 2011, the "max" for a player with just four years of service was 25 percent of the cap, or just under $15 million in starting annual salary. So while Durant and the Thunder reached that deal in 2010 and reports suggested an estimated contract value using simple math, the actual figures couldn't be sorted out until the league set the 2011-12 cap level.
The lockout got in the way. One of the concessions to the players' union made by owners was that certain high-level rookie contract players would be eligible for a "super-max" second contract. The criteria was tough -- you had to have won the MVP, been voted an All-Star starter twice or made two All-NBA teams -- but there was one obvious immediate candidate, Derrick Rose. (I believe I was the first to dub it the "Derrick Rose Rule," which is a bit dubious because of what comes next. The official term is "Designated Player.")
So the lockout deal is reached in November 2011, including the Rose Rule, and the league set the cap for the 2011-12, which means the Thunder can figure out Durant's exact contract figures. But wait! His agent noted that while he signed his deal before the lockout, it hadn't gone into effect and that he should be eligible for the super-max as a two-time All-NBA honoree. The deal between Durant and the Thunder was for the maximum salary he was eligible for: that'd be the super-max salary level. The league considered the argument, and approved the boost in December 2011. Durant ended up with the super-max, and the extra $15 million over five years it entailed.
Now, according to Lowe, the Thunder has convinced a majority of the Board of Governors that because it signed the deal with Durant not expecting to be paying 30 percent of the cap to him, it should be repaid for the difference. In other words, the damn owners cost the Thunder $15 million on Durant's already-inked deal by approving the Rose Rule.
But here's the thing that strikes me as supremely odd about the whole situation: in January 2012, a month after the league granted Durant the super-max, the NBA also allowed the Thunder to sign Russell Westbrook to a "Designated Player" deal even though the collective bargaining agreement capped the usage at one per team.
Now Westbrook didn't sign a deal in January 2012 to give him 30 percent of the cap beginning in 2012-13 if he made another All-NBA team in 2011-12 (which he did). It wasn't a true Rose Rule deal. The deal was capped at the 25 percent level. But it was a five-year extension. Teams cannot sign a player to a five-year early extension while having another player they signed to a Designated Player contract on the roster. By virtue of the NBA granting Durant a Rose Rule contract (which was in excess of what Durant thought he signed in 2010), the NBA had made Durant a Designated Player ... and then a month later allowed the Thunder to sign a second Designated Player.
The league could have handwaved this away by saying that Durant wasn't technically a Designated Player because he signed his deal in 2010, before the lockout deal. But that doesn't jive with the salary boost the NBA itself approved at Team Durant's behest. Either Durant is a Designated Player, or he's not. Because of the NBA's decisions to retroactively grant Durant that status and then approve OKC signing a second Designated Player contract, the Thunder got an unfair advantage. You could make an argument that the fifth year the Thunder unfairly were able to award Westbrook kept his salary request lower, and will do so again in 2016-17, when we could have been a free agent if not for the double DP deals. (As a free agent with more than seven years of service, he'd be eligible as a free agent to sign a fatter deal than what he'll be paid in 2016-17. Of course, he didn't have to sign a five-year deal, but locking up cost-effective max-level players for as long as possible is textbook team management, and the league allowed the Thunder to do that in this case despite the rules pointing the other direction.)
And now the Thunder are getting repayed a portion of Durant's salary, which may allow the team to go out and sign a player while flirting with the luxury tax line. (If there are cap implications -- Lowe couldn't confirm that -- it gets even better for OKC, as they'd have more breathing room.)
At the end of the day, the NBA owners picking up the tab approved this. But the whole situation is bizarre, and it's pretty amazing that with all of the lawyers and interested parties in the room working out the finer details of the lockout deal no one thought to explicitly address the issue of Durant's already signed early extension. I'm really not sure how this could have been handled any more messily. At the very least, the Thunder shouldn't have been allowed to offer Westbrook a Designated Player contract. But there's nothing the league can do about that now, though giving the Thunder $15 million doesn't seem like an especially fair or sensible solution.
UPDATE, July 20: J.A. Sherman at WTLC and Kevin Pelton privately note that the Rose Rule (30 percent of cap for eligible second contract players) and the Designated Player clause (five-year early extension for one player on the team) are not necessarily tied together. It just is most likely to turn out that way, as with Derrick Rose. That makes sense as it relates to the league allowing a five-year extension for Westbrook, but it doesn't make sense with regards to the league telling the Thunder to pay Durant 30 percent of the cap in the first place. The league is acknowledging the length of contract Durant agreed to before the lockout, but not the dollar amount. Again, it's a weird situation in which the league clearly retracted its position after a vote of the owners. Just very weird.