The new Collective Bargaining Agreement loosens rules on veteran extensions. Three-year contracts can now be extended two years after being signed (one year shorter and sooner than previously), and non-designated-player extensions can add four years (one more than previously).
One element of the new rules that hasn’t received enough attention: The maximum starting salary of an extension is the greater of 120% the player’s previous salary or 120% the estimated average salary (previously it was based only on previous salary).
So, Heat guard Josh Richardson – who will earn $1,471,382 in the final season of a three-year contract he signed as a second-round pick in 2015 – is eligible for a potentially market-rate extension. Miami can offer him an extension with a starting salary up to $9,412,200 and a total value up to $42,166,656 over four years (starting Thursday).
The Heat is expected to discuss an extension with him, and my impression is that Richardson will at least consider it, though a strong case could be made for gambling on himself and waiting for restricted free agency next summer.
Tyler Johnson – who has held a similar role to Richardson in Miami – just signed a four-year, $50 million deal last summer. But the salary cap is stagnating, and the same money won’t be available next summer.
The largest extension the Heat can offer is in the ballpark of Richardson’s value. I wouldn’t be surprised if they offered a little less. I wouldn’t be surprised if he rejected even the highest-possible offer.
Richardson, who turns 24 before the season, shot 3-pointers well as a rookie then again late last season. He was injured a few times earlier last season, which could explain his downturn – or maybe, in a larger sample, he’s not quite as good of an outside shooter. He’s a solid defender and offers some playmaking ability (for himself and others), though giving him too large of an offensive role is asking for trouble.
The biggest question about his game is his 3-point shooting. Where it lands between pretty good and very good will determine much of his value. Miami might want him to prove himself more before paying him, and/or he might bet on his ability to do so.
Richardson can sign an extension anytime between Thursday and June 30. If he doesn’t, he’ll become a restricted free agent.
One possible advantage to waiting: His cap hold would be just $1,839,228, and because the Heat would have his Bird Rights, they could hold him at that number, conduct all their other business then re-sign him to any amount up to the max. However, they don’t project to have cap room next summer, anyway. So, though the flexibility wouldn’t hurt, unless they plan to clear space, that strategy holds less value.
It’s time for Richardson and the Heat to make hard choices about his worth and the value of security – financial for him, talent-retention for them. They could even take this into the season and assess as they go.