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Clearing Up the Jeff Green Contract Situation

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Earlier yesterday, it was announced that Jeff Green and the Thunder had broken off negotiations to extend his contract to play for the Thunder. This may look like bad news for some, but in my opinion, it's only bad news for Clay Bennett's wallet.

In the off-season, Jeff Green will become a restricted Free Agent. This means that Jeff Green can sign an offer sheet from the highest bidding team, and if the Thunder aren't willing to match the offer within 7 days, the other team then gets Jeff Green.

This means that, as long as the Thunder are willing to pony up the cash, we can keep Jeff Green for at least one more year. No matter what Jeff or any other teams say or do.

If Jeff Green wants to leave, his best strategy would be to either sign an offer sheet so outrageously high that the Thunder wouldn't be willing to pay it, or sign a one year offer sheet so he'll be an unrestricted Free Agent next year.

If the above was incomprehensible, let me give a real life situation. Two years ago, the Thunder wanted to sign C.J. Miles. He was a restricted Free Agent in Utah. The Thunder signed his offer sheet, and the Jazz had 7 days to respond. Within about a half a week, the Jazz decided to re-sign him. So, the Jazz essentially took the Thunder's contract offer and put their name at the top. C.J. Miles is now forced to stay in Utah. Had the Jazz refused to sign the offer, the Thunder would have taken C.J. Miles, and he would have been forced to go to them. The only decision that lies with the player in restricted free agency is which team they'd like to sign an offer sheet with. The rest is up to their home team.

Below: How much are the Thunder willing to spend? Hard Cap/Soft Cap? Will the Thunder Re-Sign Green? New CBA?

Thus, the question now is how much money the Thunder are willing to spend. And the answer is, they can spend as much money as they want. In the NBA, unlike other sports, there is a "soft" cap and a "hard" cap. When teams are under the soft cap, they can sign players as much as they want until they hit the soft cap barrier. When teams are over the soft cap, they can only sign draft picks, re-sign their own players, or sign free agents to a mid-level, low-level, and minimum exception when they are over the soft cap.

The Thunder will be over the soft cap next year. So that means they can only sign any new Draft Picks they get, re-sign anybody whose contract has expired on the roster, or sign someone in Free Agency for one of three specific amounts allowed by the NBA.

But, what about the Hard Cap? Well, the hard cap isn't really "hard" as it might be in other sports. Rather, when a team does reach the hard cap, they have to pay a luxury tax. That is, for every dollar of player salary that is over the hard cap, the team has to pay that same about to the league. So, if the Thunder are 1 Million Dollars over the Hard Cap after signing Patrick Ewing to a 1 Million Dollar contract for that year, they have to pay Patrick Ewing his 1 Million Dollars in addition to paying the league 1 Million Dollars. So it's double jeopardy.

If this is confusing, let me bring up another real life situation. This Summer, the Heat were far below the soft cap, having only Michael Beasley and Mario Chalmers under contract, for about 3 Million. They had yet to re-sign any of their former players (like Wade and Haslem), so they had room to sign two maximum level contracts from Free Agency, because they were so far below the soft cap. They did so, and signed LeBron James and Chris Bosh. How did they afford Dwayne Wade? Well, they "officially" signed James and Bosh before Wade. So while James and Bosh put the Heat right on the brink of the soft cap, it didn't matter, because when they re-signed Wade, they were re-signing their own player, so they could go as far above the soft cap as they wanted. They didn't have very many players of their own to re-sign though, so they aren't in danger of hitting the hard cap/luxury tax.

The Thunder's hard cap situation doesn't look that bad right now, but the situation could turn dire in a few years. We've already signed KD to the maximum amount of money. If we have to sign Jeff Green AND Russell Westbrook to that amount, we could be looking at the players costing us around 45 Million in 2 years. And this is ignoring the fact that we have to re-sign Ibaka, Maynor, and Harden while fielding at least a 12-Man roster. It's not off-the wall to think that we could be hitting the Luxury Tax at around 70 Million in 2-3 years.

And thus comes my point. When the Thunder are considering re-signing Jeff Green this off-season, they'll have to seriously consider whether they'll want to start paying the Luxury Tax in a few years or not. I could see a team like the Washington Wizards (Green's hometown team that has money to spend) signing Jeff Green to a maximum offer sheet. And the Thunder will have to pay that if they want to keep Jeff Green. And in the end, I think they're willing to pay the price. Because losing Jeff Green would be a terrible P.R. move, and I don't see anyone on our roster replacing his PPG right now. That might change over the course of the season, but if I had to decide right now, I would sign Jeff Green, and I think the Thunder would, too.

But, before I go, let me tell you about one tiny, minuscule snag that could happen in this entire arrangement. The NBA is going to negotiate for a new Collective Bargaining Agreement next summer. The debates are expected to be heated due to the recent economic recession, with owners wanting to decrease player salaries. More than likely the general structure of the system will stay the same, but if the concept of Restricted Free Agency decides to change or be abolished altogether, we will have a completely different situation on our hands. Speculation at this point is pointless, but not keeping a wary eye on the situation when it arises would be foolish. All we can do for now is look at the situation under the current contract structure and hope it holds up.

I'll be doing some articles about the salary cap structure of the NBA in the future, but if you have any questions about this article or the cap structure in general, feel free to ask them below.

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