Report: Kawhi Leonard unlikely to sign contract extension with Spurs

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Kawhi Leonard, who’d been sidelined by an eye infection, has been cleared to play today.

But the Spurs-Suns game is of secondary importance today when it comes to Leonard.

This is the final day the fourth-year forward can sign a contract extension. If he doesn’t, he’ll become a restricted free agent next summer.

Marc Stein of ESPN:

There is a strong likelihood that Friday’s midnight deadline for contract extensions for first-round picks from the Class of 2011 will pass without a new deal for reigning NBA Finals MVP Kawhi Leonard, according to league sources.

Sources told ESPN.com this week that Leonard and the San Antonio Spurs, despite more serious discussions between the parties in advance of the Halloween buzzer, are unlikely to come to terms during this extension window

Leonard has reportedly been pushing for a max extension – as he should. The youngest NBA Finals MVP aside from Magic Johnson, he’s definitely worth the most San Antonio can pay him.

But for the Spurs, an extension doesn’t make quite as much sense.

Tim Duncan’s and Manu Ginobili’s contracts expire after this season. Depending what they do, San Antonio could have major cap space next summer.

If the Spurs give Leonard a max extension now, based on the NBA’s projected salary cap, he’d count $15,502,415 against the cap next offseason. If Leonard becomes a free agent, he’d count just $7,235,148 against the cap until signed. That extra $8,267,267 of cap space could be quite useful, and San Antonio could exceed the cap to re-sign Leonard after using it.

Because Leonard would be a restricted free agent, the Spurs face no risk of losing his this summer. Even if he signs an offer sheet before they have a chance to use their extra cap room, they’d be right back where they would have been had they extended him.

However, San Antonio is taking one risk by declining to give Leonard a max extension now – that he signs a shorter deal, maybe even the qualifying offer, this summer and hits unrestricted free agency sooner.

Based on my projected salary caps, Leonard would earn slightly more than he would on a max contract extension by taking the qualifying offer and signing a max deal with another team in 2016, when the cap is slated to rise dramatically due to the new national TV contracts. Though the difference is slight, that’s only if Leonard leaves San Antonio. If he re-signs, the difference is immense.

A max extension now projects to be worth $89,138,886 over five years. If Leonard re-signs in 2016, a five-year max contract projects to pay $117,233,535.

The math on Leonard’s outlook is the same as for Klay Thompson, explained here and here.

There’s obviously a risk in delaying a big payday, but if the Spurs – justifiably – decline to offer a max extension, that makes it easier for Leonard to roll the dice.

This might be the rare situation where a max extension makes sense for neither the player nor the team.