Reward Will Outweigh Risk in Kobe Bryant's Contract Extension

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Reward Will Outweigh Risk in Kobe Bryant's Contract Extension
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Kobe Bryant isn't a franchise player. 

He's a franchise.

The Los Angeles Lakers' front office and ownership know this, and so they acted accordingly. 

Bryant agreed to a contract extension with the Lakers on Monday morning, ending any speculation that he wouldn't be in a Lakers uniform next season. 

According to Ramona Shelburne of ESPN Los Angeles, Bryant's extension is worth $48.5 million over the next two seasons. This deal will also have Bryant maintain his status as the league's highest-paid player going forward, which probably wasn't an accident. 

We know that Bryant is obsessed with the symbolism of numbers, and this extension should satisfy him in that regard on a few different levels.

Now that Bryant's salary number is all settled, the next big numbers he'll be chasing are six and 38,387. That's Michael Jordan's amount of rings (Bryant has five) and the number of points Kareem Abdul-Jabbar, the all-time points leader, scored in his career.

It was hard to imagine that Bryant would ever pursue either of those numbers in another uniform, and it's certainly not hard to see the incentive for either side to get a deal done. 

From the Lakers' standpoint, they get to remain loyal to one of the greatest players (and biggest cash cows) to ever live while keeping his legacy cemented solely in Los Angeles. Lakers fans may have literally rioted if Bryant was let go, so from an emotional and business standpoint, this was a no-brainer.

Bryant, meanwhile, gets to achieve what seems to be a rarity these days, and that's remaining with one franchise for his entire career. There will be no muddying of his image, no Wizards jerseys with his name on the back hanging on the clearance rack. He'll finish it where he started.

The mutual interest between Bryant and the Lakers to get something done likely led to this extension, but the timing is a bit curious. Perhaps the Lakers viewed this as the inevitable conclusion.

Still, signing a 35-year-old player fresh off a torn Achilles tendon injury before he even plays a single game is a gamble, to be sure.

While no one doubts Bryant's insane work ethic, the Lakers can't know with any certainty how he'll hold up over the life of this extension, and that's enough to make a lot of people nervous.

 

A Discounted Risk

It's important to remember that Bryant had publicly balked at the suggestion of taking a major pay cut for his next deal earlier this year. Perhaps this extension, which is a substantial drop from the $30.4 million salary he's making this year, represented a meeting in the middle of sorts for both Bryant and the Lakers.

Don't be misled by the gaudy extension number, either. Bryant's $48.5 million extension doesn't qualify as a true max contract, even though Bryant will be getting paid more than every other player in the league.

A true max contract for Bryant would have been 107.5 percent of his salary in the last year of his previous deal, regardless of that contract being signed during the last CBA. Bryant technically could have received an extension starting at $31.9 million next year.

Andrew D. Bernstein/Getty Images

Maybe that made the Lakers feel like $23.5 million for Bryant next season was a bargain that could only be negotiated before Bryant took the court again and re-established himself as worth every penny he could possibly receive.

By betting on Bryant and taking the plunge now, the Lakers at least clarify their cap situation moving forward.

If the Lakers had waited until the offseason to negotiate, Bryant would have had a cap hold of $31.9 million unless he was renounced prior to free agency.

In this scenario, the Lakers wouldn't have had the cap space to offer a max contract as long as Steve Nash stayed on his current deal. Bryant had to sign first if the Lakers wanted another max guy, unless that other player was named Pau Gasol.

It makes sense not to waste time in free agency, particularly when a good portion of the deals are negotiated before the July 1 start date. The timing took a lot of folks by surprise, but that doesn't mean it wasn't the right time to get something done.

 

Do the Lakers Have Max Cap Space?

With Bryant's new extension, the Lakers can create max cap space regardless of what happens with Nash. Bryant is locked in, and so the free agent recruitment process for a second star can truly begin. 

If Nash stays on his current deal worth $9.7 million next year and Nick Young accepts his player option worth $1.2 million, the Lakers will have roughly $36.2 million committed to four players (Bryant, Robert Sacre for $915,243, Nash and Young). Ryan Kelly and Elias Harris could also be retained, but it seems more likely they'll be renounced prior to free agency. 

Let's also assume that the Lakers renounce all their other free agents and exceptions to maximize space. After factoring in seven minimum cap holds ($507,336 each), the Lakers should be right at 40.6 million. You also need to add the salary for the Lakers' draft pick, which we'll conservatively project to be about $2 million, which was the rookie scale amount for last year's 13th pick in the draft. 

Next year's projected cap is as follows:

If this holds up and the Lakers renounce their rights to everyone who isn't on a guaranteed deal, the Lakers should have about $20 million in cap space. Here's the projected max scale next year:

  • 0-6 years experience: 25% of cap. Projected at $15.5 million max.
  • 7-9 years experience: 30% of cap. Projected at $18.6 million max.
  • 10-plus years experience: 35% of cap. Projected at $21.7 million max.

Fear not, though. The Lakers will be able to offer a max contract to a player with more than 10 years of experience (Carmelo Anthony or LeBron James, for example) because max contract amounts depend on the Basketball Related Income (BRI).

Let's allow the author of the Salary Cap FAQ, Larry Coon, to explain further.

They use a different cap calculation to determine the maximum salaries, which is based on 42.14% of projected BRI. For this reason the maximum salaries are not actually 25%, 30% or 35% of the cap, and instead are a slightly lower amount.

So to sum it up, Bryant's pay cut should allow the Lakers to be able to just barely offer a full max deal to any available free agent.

That's big.

Noah Graham/Getty Images

 

What About Nash?

The Lakers could potentially clear cap space next season by making a decision on Nash.

If Nash were waived and subsequently claimed by another team, it would absolve the Lakers of his salary worth $9.7 million next year.

That, of course, seems highly unlikely. Nash just isn't healthy or young enough (he'll be 40 next year) to justify a deal worth $9.7 million for next season.

Remember, Nash would have to be claimed by another team to get his full salary off the books. If he went unclaimed, the Lakers would still be on the hook for his entire salary.

However, the Lakers could use the stretch provision to create extra cap room this season. They would still have to pay Nash his full $9.7 million owed after waiving him, but it would be stretched out evenly over the next three seasons.

Using the stretch provision would create an extra $6.47 million in cap space for the Lakers this offseason, which is a substantial amount. However, the Lakers would have to pay Nash $3.23 million a year through the 2016-17 season.

Obviously, a lot depends on Nash's health and performance. Retirement doesn't seem like an option now, but that could change at any point. If Nash can return and stay healthy, perhaps the Lakers would be more likely just to keep him. 

Andrew D. Bernstein/Getty Images

 

What About Gasol?

The outlook for Gasol was never all that bright, and Bryant's extension did very little to change that.

To create max space in free agency next year, the Lakers have to renounce the rights to Gasol; otherwise he'd have a $20.2 million dollar cap hold, which would sap all of the Lakers' available space.

Maybe you're thinking the Lakers could sign a max player in free agency and then use Gasol's Bird Rights to bring him back as well?

Unfortunately, that's not possible.

If the Lakers renounce Gasol (which is the only way to clear all that cap), they also renounce his Bird Rights. That means the Lakers can no longer sign Gasol if it takes them over the cap, which is what Bird Rights allow.

What that means is that if Gasol is renounced and the Lakers sign another max player, he can be brought back only on a veteran minimum contract or whatever available cap space is left, as his Bird Rights no longer apply the moment he's renounced.

It's possible that Gasol can be re-signed using whatever cap exceptions the Lakers don't renounce, but Gasol should certainly demand much more than even the biggest possible exception (mid-level at $5.3 million). 

While it's possible that Gasol could sign an extension this season, it seems unlikely. The Lakers barely have enough room for a max deal as is, and even with the stretch provision being used on Nash, Gasol's extension would almost certainly stop the Lakers from having max cap space.

Noah Graham/Getty Images

 

Balance and Options

Perhaps the Lakers might consider a different route altogether in free agency.

Instead of gunning for potentially available max players like LeBron James, Carmelo Anthony or Chris Bosh, or even younger restricted free agents like Greg Monroe or Eric Bledsoe, maybe the Lakers will opt to go after other aging veterans to join Bryant in this short two-year window.

With guys like Dirk Nowitzki and Paul Pierce headed for free agency, maybe Bryant can spearhead the basketball version of The Expendables in Los Angeles. Having everyone on the same contract timeline could help the Lakers have a clean rebuild once Bryant retires.

But no matter which way the Lakers take this, re-signing Bryant isn't as much of a risk as it appears to be on the surface.

Did the Lakers make the right choice extending Kobe Bryant now?

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Sometimes it can be hard to evaluate the risk of not taking a risk. Injuries and age aren't on Bryant's side, to be sure, but the Lakers couldn't afford to let Bryant succeed elsewhere. It would have been another blow to the Lakers' image a year after they suffered a major one with Dwight Howard leaving.

For a franchise that has convinced guys to take discounts for years and years and has continually held court as one of the marquee teams in the league, that sort of thing matters.

Bryant always needed to come back; it was just a matter of money.

And Bryant took his pay cut, and it was a rather substantial one at that. Max cap space wasn't sacrificed, an entire fanbase wasn't alienated, a legacy was kept intact and flexibility was retained.

Even if it doesn't pan out, this was the right move for the Lakers.

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