Checking In On The Designated Veteran Extension

Although the NBA and NBPA didn’t agree to make many significant changes to the league’s rules and regulations when they negotiated their most recent Collective Bargaining Agreement, the new CBA did introduce a new wrinkle that allows star players to receive higher salaries.

The new Designated Veteran Extension allows players who meet a certain set of criteria to sign contracts with a starting salary of up to 35% of the cap instead of just 30%. These players generally have to make at least one All-NBA team, can’t change teams after signing their rookie extensions, and have between seven and nine years of NBA experience.

Designated Veteran Extensions couldn’t be signed until July 2017, so now that the new league year is underway and the new CBA has taken effect, we’re starting to get a sense of how these extensions will work. The sample size is still very small, but here’s what we know so far:

Three of four players eligible for Designated Veteran Extensions have signed them.

Having met the required criteria, Stephen Curry, James Harden, John Wall, and Russell Westbrook were the four players eligible this offseason for the new kind of contract. Curry inked his quickly, becoming the first player to do so as a free agent. He’ll receive a five-year contract starting in 2017/18 that will be worth more than $200MM.

Harden and Wall followed suit in recent weeks. Both players have two years remaining on their respective contracts, but were permitted to sign Designated Veteran Extensions that added four new years to their existing deals. We won’t know the precise value of those extensions until the salary cap is set for the 2019/20 league year, but they currently project to be worth upwards of $170MM over four years.

Westbrook is the lone holdout so far, but there has been no indication yet that he’s unwilling to sign an extension. Last summer, the MVP-to-be didn’t sign his new deal with the team until August. Westbrook has until opening night this year to re-up with the Thunder, and the club sounds confident that he’ll do so. If he does, that would mean all four DVE-eligible players would sign new extensions.

Multiple DVE candidates have been traded.

The Designated Veteran Extension has had an interesting side effect so far. Three players who were candidates to become eligible for a new super-max extension have been traded before getting a chance to gain that eligibility.

DeMarcus Cousins was the first to be dealt — he would have become eligible for a Designated Veteran Extension with the Kings if he’d earned an All-NBA nod this season, but was dealt to the Pelicans in February, eliminating the possibility for such a deal.

Meanwhile, last month, Jimmy Butler and Paul George were both traded despite the fact that they’d have become DVE-eligible in the summer of 2018 if they’d earned spots on one of next year’s All-NBA teams.

Not all of those players and teams were in exactly the same boat. George, for instance, seemed to want out of Indiana whether or not a Designated Veteran Extension would be on the table a year from now. However, Cousins and Butler seemed more invested in remaining with their current teams to see whether or not that opportunity at a super-max deal panned out.

In those instances, it’s possible that the Kings and Bulls were simply ready to rebuild, and decided the time was right to cash in on their stars. However, it’s worth considering whether the looming possibility of a Designated Veteran Extension played a part in those teams’ decisions. Unlike Curry, Westbrook, and Harden, players like Cousins and Butler aren’t perennial MVP candidates, so their teams may have been less eager to commit to a contract that paid $40MM+ annually.

For instance, had Cousins remained on the Kings and become eligible for a DVE this offseason, the franchise would have been in a tough spot — if the team was uncertain about committing that sort of money to Cousins and made a lesser offer, he may have viewed it as a sign of disrespect and demanded a trade, knowing that he wouldn’t be giving up a chance to max out his earnings since his current team was unwilling to give him that DVE. At that point, Sacramento’s trade leverage would have been reduced significantly.

It’s still too early to know exactly how the Designated Veteran Extension will affect player movement long-term, but based on the early returns, it appears it will work as intended for the very best players in the NBA, while perhaps further complicating the contract situations for the second- or third-tier stars.