How Teams Have To Plan Ahead With Underpaid Players

Veteran extensions in the NBA are limited to 140% of the player’s latest salaried year, meaning players earning significantly less than their market value simply won’t have any financial motivation to extend.

Chicago’s Coby White is one primary example of a player who could leave the Bulls in unrestricted free agency in 2026 due to that rule.

However, there might be an avenue for those teams to still retain their players, even if they have to go through free agency to do so.

The death of free agency

While things can change, only one team – Brooklyn – is expected to have cap space this summer.

That’s in large part due to superstars signing max extensions on top of their max extensions (meaning the 140% rule isn’t relevant in those situations), thus filling up the cap.

Traditional free agency has been replaced with trades, and that’s a win for incumbent teams hoping to get their player back, as outside teams flat-out can’t offer major money deals to their players, unless they offer to do via sign-and-trade, something the incumbent team can just refuse to do.

Let’s look at Minnesota’s Naz Reid as an example, given the complexity of his situation.

Reid will be extension eligible this summer, but he’s also got a player option worth $15 million. So any extension would rely on him opting in, which seems unlikely given that he’s outplaying his contract.

Should he opt in, and extend, his starting salary will come in at $21 million, and that deal won’t activate until 2026.

So already, there could be challenges ahead for Reid and the Wolves. Is he looking for a larger salary package? Would he prefer to get more money right off the bat, instead of waiting a year?

If he’s looking for more money, and the Wolves are happy to oblige, the best course of action if for Reid to simply turn down his player option and enter unrestricted free agency.

Usually, that’d mean the Wolves would risk losing him, as they can’t just match a contract like teams can with offer sheets.

But with virtually no one having cap space, and Reid looking for big money, that threat is more or less gone, allowing Minnesota to re-sign him to a deal that makes sense for both sides.

Now, do note that the Reid scenario works because we’re working on the assumption that he’s looking for money beyond what the Non-Tax MLE can offer – projected to check in at $14.1 million – as any player estimated below that value would still be a threat to leave.

A wrinkle that could complicate matters

All that said, it’s unclear for how long teams will have the above advantage, as the salary cap is estimated to grow 10% per year due to the new TV deal.

For teams with players who can enter free agency this summer, who are on below-market deals, this year marks a tremendous opportunity to sign their own guys to long-term deals without much competition.

The Bulls, to use the example of White, would have loved to see his contract end this year, as opposed to next, so they wouldn’t have an army of teams fighting for his services.

By 2026, who knows how many teams will have space? Some will plan for it, others will simply have it due to the cap spike. As such, more teams could line up as potential suitors for players that year.

Of course, this all leads back to the root of the contractual conflict: The 140% extension limit.

While it did go up 20 percentage points in the new CBA, it clearly didn’t fix what it set out to do, which was to give teams a better chance of retaining their own players.

Fortunately, if the NBA and NBPA (the players union) agree that an increased extension limit would benefit both sides, they can amend it together.

Unless noted otherwise, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball-Reference. All salary information via Spot. All odds courtesy of FanDuel Sportsbook.