They will still be facing important free-agency, draft and trade decisions this offseason — including Kevin Durant’s new contract, extension eligibility for Klay Thompson and Draymond Green, a key first-round selection and bench depth.
The contract structure of Kevin Durant
It’s no mystery Durant will opt out of his contract before his June 29 deadline and sign a likely max contract with the Warriors. After all, there is no incentive like last year, when Durant gave up $9 million so the Warriors could retain Shaun Livingston and Andre Iguodala.
Besides luxury tax ramifications, a Durant max contract does not impact how the Warriors can build out their roster this summer, even if he took an unlikely discount.
The question now comes down to the length of his maximum contract, which will start with a cap hit of $35.3 million next season.
Here are the three options that Durant and the Warriors will be faced with:
1. The four-year max
Because Durant has early Bird rights he is restricted to a four-year contract (not five). The breakdown on the four-year max would be:
2. The short-term max
Similar to the four-year max, Durant also has the option of signing a short-term max contract. For example, Durant can agree to a three-year deal with a player option after the second season:
The short-term contract would allow Durant to re-enter free agency in 2020, when the salary cap is projected to spike to $112 million, an increase of $11 million from the 2018-19 season.
Durant would then be eligible at the age of 31 to sign a five-year, $228 million contract to stay with the Warriors, or a four-year, $170 million deal with a different team.
Durant also would be eligible for a no-trade clause in 2020 because he would have spent four seasons with the Warriors and played in the NBA for at least eight seasons. But the Warriors’ negotiations with Stephen Curry last summer showed that the team’s ownership is reluctant to put a no-trade clause in a contract.
3. The one-year contract
The one-year contract with a player option for the second season would see Durant lose $5 million in salary for 2018-19 but give him full Bird rights to sign a five-year contract in the summer of 2019.
The only benefit in signing this contract is that the salary cap is expected to jump from $101 million (2018-19) to $108 million (2019-20). Durant could then opt out after the 2018-19 season and sign a five-year, $219 million contract. It would be the largest deal in NBA history if San Antonio forward Kawhi Leonard doesn’t sign a super max this summer.
The one-year contract combined with five additional seasons starting in 2019-20 would give Durant $249 million in guaranteed money.
The question of depth
Golden State’s future success will not be defined by only Curry and Durant, but by how the Warriors address the back end of their roster with limited resources this offseason.
With seven free agents, including Durant, the Golden State front office will face decisions to either retain them or go into the offseason with only the minimum exception and $5.3 million tax midlevel exception available. Golden State does have its first-round pick in June, however, unlike last season.
Here’s a look at the roster decisions the front office will face this offseason:
The former first-round pick has given the Warriors a glimpse of the benefits of drafting and developing. He’s averaging a career-high 20 MPG in the playoffs with his ability to guard multiple positions. Unfortunately, Looney is an unrestricted free agent because the Warriors declined his fourth-year team option for 2018-19 at the start of the season. The rationale was a combination of Looney’s lack of development during his first two seasons and roster flexibility, not to mention luxury tax savings. Because the option was declined, Golden State is restricted to paying the forward only $2.2 million, the salary of the option declined.
Looney, based on his age (22), upside, versatility and playoff success this season should see a figure in the $3-4 million range, a salary figure the Warriors will not be able to pay.
The front office has a decision to make regarding the veteran holdovers from their championship team in 2016-17: Zaza Pachulia, David West and JaVale McGee. The Warriors can bring back a group with championship experience that has an average age of 34, or turn to free agency and look to get younger.
The youth movement approach comes with restrictions, however. The Warriors, because of their high salaries, have only the $5.3 million tax midlevel and minimum exception at their disposal. Golden State has more flexibility when it comes to bringing back its own free agents, but at a cost.
Pachulia, West and McGee have early Bird rights and can each be signed to a new contract up to $8.7 million (105 percent of the average player salary). However, all three played a limited role in the postseason, and Golden State could be better served going in a different direction, even at the cost of veteran leadership.
The taxpayer midlevel exception
The one resource that tax teams like the Warriors can ill-afford to miss on is the taxpayer midlevel exception. Like the Thunder (Patrick Patterson) and Wizards (Jodie Meeks) recently, signing a player who turns out to be ineffective will weaken the team’s bench and put a heavy burden on the starters.
Where Golden State does have an advantage in free agency is the potential of a financial crunch this summer and a free-agent class dominated with role players (125 of the possible 150 free agents are rotational players).
With cap space at a low, 20 teams will have only the tax (like Golden State) or full midlevel to sign free agents. Like the David West bargain signing in 2016, Golden State will once again have an advantage, this time at the expense of teams that spent excessively the past two summers.
The former second-round pick has early Bird rights based on signing a two-year contract in 2016. The Warriors, at the time of the signing, were permitted to offer only a two-year deal because they had used cap space to sign Durant. Because McCaw has early Bird rights, Golden State can offer a contract up to $8.7 million (105 percent of the average player salary).
After a strong summer league and breaking into the rotation last season, McCaw had an inconsistent season that ended with a back injury in late March at Sacramento. The 22-year-old is widely regarded as a top target for teams in July based on his age and versatility, even with the restricted tag.
Expect the Warriors to tender McCaw a $1.7 million qualifying offer before June 30 and play the waiting game to see whether he will get an offer sheet.
To say that the June draft is important would be an understatement. Despite having a late-first-round pick (No. 28) and no second-round selection, teams built with $100 million tied into four players must have success with their tax midlevel (see above) and draft picks to have some stability with reserves. The alternative is to depend on one-year minimum players like the Warriors have done the past two seasons.
The Warriors have found success in buying draft picks in the second round and have $5.1 million in cash available if needed. In consecutive seasons, Golden State drafted McCaw (No. 38 in 2016) and Jordan Bell (No. 38 in 2017).
Both picks were bought for a combined $5.9 million.
The finances to keep the roster intact
Could a team that projects to have, at a minimum, $50 million in luxury tax costs in 2018-19 actually have a reprieve? The $90 million in projected luxury taxes in 2017-18 and 2018-19 is only the tip of the iceberg on where the Warriors’ finances are headed.
By virtue of being in the tax three out of the past four seasons (2015-16, 2017-18 and 2018-19), Golden State will now be considered a repeater tax team for the 2019-20 and 2020-21 seasons. Even with Golden State set to enter a new building, the timing could not be worse for the Warriors.
Three of their four core players — Kevin Durant (2018), Klay Thompson (2019) and Draymond Green (2020) — will be free agents. Durant will see a salary of $35 million this summer, Thompson $32 million in 2019, and Green north of $25 million the following year.
The Warriors will be in the luxury tax and faced with the same roster restrictions as they were in 2017 and again this July even if all three players take a discount.
Below is a conservative projection for the Warriors’ finances over the next three seasons, including the past two seasons since Durant’s arrival:
1. Kevin Durant signed to a $35 million contract and the roster filled with their own first-round pick and minimum exceptions. Does not factor in the $5.3 million tax midlevel.
2. Klay Thompson signed to a $32.4 million contract and the roster filled with their own first-round pick and minimum exceptions. Does not factor in the $5.3 million tax midlevel.
3. Draymond Green signed to a $25 million contract and the roster filled with their own first-round pick and minimum exceptions. Does not factor in the $5.3 million tax midlevel. Both Andre Iguodala and Shaun Livingston are free agents.
Summer cap breakdown
The no-trade restriction for guard Stephen Curry will be lifted on the first day of the moratorium (July 6). Because he was signed using the designated veteran contract (super max), Curry had a one-year trade restriction.
Don’t expect All-Stars Thompson and Green to take a future pay cut. Despite being extension eligible, Thompson could be extended for only $102 million with a starting salary of $22.8 million in the first year (2019-20).
The extension is $85 million less than the maximum allowable Thompson could sign with the Warriors as a free agent, and $37 million less if he signed with a different team as a free agent.
Green could be extended for $71.7 million for three years starting in 2020-21.
The draft assets
After not having a first-round pick in 2014 and 2017 because of the 2013 Andre Iguodala trade, the Warriors own all of their future first-round picks, including the 28th pick this June.
Here’s how ESPN’s Jonathan Givony and Mike Schmitz have Golden Statepicking in the 2018 draft:
- No. 28: Grayson Allen | SG | Duke