New Details Emerge on Paul George's Contract; Salary Could Be Lower Than Expected

Accountant-Visor

Zach Lowe of Grantland wrote up a tremendous breakdown of how Paul George has improved this season. In short, he notes that George is using more possessions than ever (i.e., handling the rock and shooting more) while turning the ball over much less. In fact, Lowe points out that Carmelo Anthony (a shooter who isn’t making many plays) and Brook Lopez (an interior finisher) are the only two guys in the league using so many possessions with so few turnovers.

How is he doing this?

Lowe highlights the way George is using screens better and making more astute decisions when coming off the pick. A lot of it is about timing, knowing when to pull up and keeping his dribble lower to the floor.

The article is detailed and fantastic. Go read it.

But while all these developments are dynamite for Indiana’s long-term hopes to contend for multiple titles, Lowe also got the scoop on a report that may be just as critical: Paul George’s five-year extension has a lower maximum potential salary than I expected.

The nitty-gritties are a bit arcane — and it’s quite possible that Lowe’s account will prove much clearer than this drawn out explanation — but it basically goes like this:

1. Under the new collective bargaining agreement, an NBA can designate one player for a five-year maximum contract. (Other than that one guy, everyone else can receive, at most, a four-year contract.)

2. The Pacers designated Paul George as that guy and signed him to a five-year maximum extension.

3. Normally, that “maximum” level refers to 25% of the salary cap. However, due to the so-called Derrick Rose rule, certain players can become eligible for a 30% maximum. Such eligibility is based upon receiving certain accolades. One way to become eligible for 30% is to make two All-NBA teams before the extension kicks in. Paul George made All-NBA last year, so if he does so again, he becomes eligible for the 30% max.

4. However, that eligibility doesn’t automatically mean the team is on the hook for 30%. They can negotiate with the player and settle on any number in between the 25% normal max and the 30% “super” “Derrick Rose” max.

5. According to Lowe, Paul George agreed to a 27% max (provided he makes All-NBA again; if he doesn’t, the most he can make is 25%). And it seems as though the Pacers got him to take this lower salary figure by offering him an opt-out clause after his fourth year. Basically, Indiana hedged the risk that George will make All-NBA again and they will have to pay 30% by giving their superstar a bit more flexibility to jump ship in the event that he decides, in the summer of 2018 that he no longer wants to play in Indiana.

6. Obviously, Indiana doesn’t want to lose George, but the potential savings for the Pacers are significant. So it seems very much worth it for a front office that (1) is confident its superstar will make All-NBA this year, and (2) is staring down a luxury tax figure that may force them to lose a player like Lance Stephenson.

Here is a breakdown of the total money that the Pacers will save by negotiating down to 27% vs. 30%.

Year
27% Max Salary
30% Max Salary
IND Savings
2014-15 $15,792,610 $17,547,345 $1,754,734
2015-16 $16,977,056 $18,863,396 $1,886,340
2016-17 $18,161,502 $20,179,446 $2,017,945
2017-18 $19,345,947 $21,495,497 $2,149,550
2018-19* $20,530,393 $22,811,548 $2,281,155
Total $90,807,509 $100,897,232 $10,089,723

* if Paul George doesn’t opt out

Lowe phrased the Pacers thoughts on the negotiation as such:

Indiana was reluctant to do the opt out, but ultimately yielded on the issue, per sources close the talks. They’ll have the advantage of George’s Bird rights as long as he’s on the team, regardless of the opt-out clause. The main point of the “designated player” provision is to give teams the chance to lock up a franchise player they drafted for a year longer than usual. George’s deal subverts that principle, and allows him to hit the open market earlier than expected.

Indiana will take the trade-off if George continues to play at the level he has shown so far this season.

There is no question that this is good for Indiana’s short-term chances to contend. Regardless of how far the team goes in the 2014 playoffs, this team will have some tough financial decisions, primarily regarding Lance Stephenson (who will be a free agent) and Luis Scola (whose salary is not fully guaranteed for next year).

If Paul George makes an All-NBA team this year, now they will have a little extra breathing room under the luxury tax threshold.

Topics: Salary Central

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  • Jackson

    Great, that should mean that we can re-sign Lance by at most moving Copeland

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  • Philip Tarrant

    So…good and bad news. With the way PG is currently playing, I would love the security of having him locked up for 5 years, but given his personality and the fact that his is a max deal anyway, if we continue to be the kind of team we are now, he could have a long future here. I hope that he is like Reggie and continues until retirement, personally.

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