To extend or not to extend: A closer look at the contract situations of Aaron Gordon and Elfrid Payton

The summer of 2017 has already been a busy one for newly hired President of Basketball Operations Jeff Weltman and General Manager John Hammond. The top executives of Orlando’s revamped front office diligently worked their way through the draft in June despite being hired by the Magic only four weeks earlier. Weltman and Hammond selected Jonathan Isaac with the sixth overall pick, traded Orlando’s 25th pick for a future first round selection, and drafted Wesley Iwundu in the second round (Orlando also traded their 35th pick for a future 2nd round pick).

Orlando’s new brain trust made it a priority in July to revamp the Magic’s bench through free agency. Shelvin Mack, Jonathon Simmons, Arron Afflalo, and Marreese Speights were all brought in to provide depth and help shore up a bench unit that struggled mightily for most of the second half of last season.

When considering the limited time Hammond and Weltman had to prepare for the draft, as well as the limited amount of cap space the organization had to work with to improve the roster, one could certainly conclude that Orlando’s summer was a positive one. In fact, members of the national media such as Kevin Pelton of ESPN and David Aldridge of TNT/NBA TV have taken notice of some of the positive moves Orlando made as well.

With students now back to school in Central Florida (and teachers, sigh), the summer of 2017 is fading away in our rear-view mirrors. The Magic will head to Fall Training Camp in five short weeks, and will kick-off their 2017-18 schedule on Wednesday, October 18th.

October 18th has become a very significant date for Magic fans to anticipate, and not just because it’s Opening Night. At some point between now and 11:59 PM on October 17th, Weltman and Hammond will have to decide whether it’s in the organization’s best interest to negotiate rookie-deal contract extensions with Aaron Gordon and Elfrid Payton. For all we know, those negotiations could be happening at this very moment (in fact, there’s probably a very good chance both parties are in discussion).

Gordon and Payton are both heading into their fourth seasons as members of the Orlando Magic. First round draft picks from the 2014 NBA Draft (such as Gordon & Payton) are eligible to sign early extensions up until the beginning of this season. First round rookie contracts in the NBA are four years in length; if first round picks from the ‘14 class fail to reach early extension agreements with their current teams, then they will become RFA’s (restricted free agents) in the summer of 2018.

In other words, if Jeff Weltman and John Hammond fail to reach an early-extension agreement with Gordon and/or Payton before October 18th (or if they just choose not to), then Orlando’s 2014 lottery picks become free agents for the first time in their careers.

For context, Orlando recently went through this process with Nikola Vucevic and Tobias Harris in 2014, and Evan Fournier in 2015. The organization reached an early-extension agreement with Vucevic in ‘14, and as it turned out, the Magic likely saved a lot of money by locking up the Montenegrin before he hit free agency. In contrast, Orlando failed to reach early-extension agreements with Tobias Harris and Evan Fournier, but still awarded both players with new contracts that following summer (2015 and 2016 respectively). Of course, that was all done under previous management (who we don’t speak of, still salty here).

To make things more complicated, it’s not even completely up to Orlando’s management to make Aaron Gordon and Elfrid Payton early contract extensions happen; Gordon and Payton also have to want to agree to a contract early (before their restricted free agency status kicks in).

Lets take a look at what the Gordon and Payton camps may be gaining and/or losing by agreeing to an early contract extension, as well as what the organization may be thinking during negotiations:

Why should Gordon and/or Payton sign an early-extension?

1) Play out next season with a clear mind, long-term assurance

Gordon and Payton, both entering their fourth professional season, will be playing for the same head coach in consecutive seasons for the first time in their careers. That’s pretty hard to believe. They’re not going to be bogged down this time around with learning brand new offensive and defensive schemes, terminology, and assignments on the fly.

That doesn’t necessarily mean that Orlando’s young prospects will be completely care-free this upcoming year. Once the ‘17-18 season tips-off in October, Gordon and Payton’s free agency clocks will officially begin to tick. That means that at various times randomly throughout the season, Gordon and Payton will have their contracts, their long-term financial security, the numbers they are producing, and their futures with the organization on their minds. I certainly wouldn’t blame them for any of this, it’s simply human nature.

And of course, the ugly elephant in the room that no one in professional sports likes to recognize is a factor in this discussion as well: injuries. Both Gordon and Payton are in their early 20’s, their careers in the NBA are just getting started. By all accounts, they will both enjoy long and healthy professional careers for another decade and beyond. But nothing is promised; I think in the back of all professional athletes’ minds is the idea that one play could bring to an end everything they’ve ever worked so hard for. There are other sports (namely football) that create more opportunities for career-threatening injuries than basketball does, but you still never know.

However, if either player opted to sign an early extension before the season starts on October 18th, that would certainly clear the path for them to secure a comfortable, care-free, and long-term future with the organization heading into the primes of their careers without worrying about free agency down the road.

2) 2013 draft class as a case study

Eight players from the ‘13 class agreed to early-extension contracts before last season’s deadline at the end of October (Oladipo, Zeller, McCollum, Adams, Antetokounmpo, Schroder, Dieng, and Gobert). That left 15 players selected in the first round of the 2013 draft eligible for restricted free agency this past summer (if you’re doing the math and scratching your head, seven players weren’t eligible because they never came to the NBA, left the NBA, or perhaps their 2nd/3rd year options weren’t picked up).

This was not the ideal summer to be a restricted free agent for the most part. Of course, there are always a few exceptions. Otto Porter “got his” from the Wizards, who matched an offer sheet that was extended to Porter from Brooklyn (4/$106M). Kelly Olynyk cashed in with the Miami Heat (4/$50M). And in one of the surprise moves of the summer, the New York Knicks swooped in and came over the top to pry away from Atlanta their former pick in the ‘13 draft, Tim Hardaway Jr. (4/$71M).

Still, as the NBA calendar pushes well into August, there are a number of restricted free agents from the 2013 class who have yet to sign a contract. I’m sure Alex Len (5th pick), Nerlens Noel (6th picks), Shabazz Muhammad (14th pick), and Mason Plumlee (22nd pick) never thought they would still be un-signed past the third week of August. Now they have to be considering taking their qualifying offers, playing out this season without a new contract, and then starting the process over again next summer as unrestricted free agents. You could even include a guy like Kentavious Caldwell-Pope on this list of free agents that have had their plans change dramatically. Caldwell-Pope was seeking upwards of $20 million dollars per year this summer. Instead, the Detroit Pistons (his former team) pulled their previously extended qualifying offer to Caldwell-Pope, and he signed as an unrestricted free agent with the Los Angeles Lakers (for $17.7 million, but he only got a one-year deal).

My point being, Payton and Gordon won’t be able to control the market during next summer’s free agency frenzy. Spending has seemed to settle a bit across the board in the NBA compared to the previous two summers; teams are adjusting after the league-wide salary cap increases of a year ago. There is no guarantee that a better deal than the one potentially (or hypothetically) offered to a guy like Gordon or Payton in September/October will be there for them in the summer.

Jeff Griffith-USA TODAY Sports

Why should Gordon and/or Payton pass on signing early-extension contracts?

1) Drive up Orlando’s offers by using bids from other teams

I think a concept that is sometimes lost on a lot of NBA fans when talking restricted free agency is the fact that a player is not actively choosing not to be a part of a particular organization just because they are seeking offer sheets from other teams. Does that make sense?

I saw a lot of this in various comments sections on this site during Tobias Harris’ restricted free agency season. Harris was often unfairly criticized for not wanting to be here because he didn’t agree to an early-extension with the Magic (I believe most assumed he was trying to find a way to play in New York). It wasn’t up to Harris whether he was staying or going; the organization had the option to offer him an early extension, not offer him an early extension, match any offer sheet that was awarded to him, or let him walk. It wasn’t his choice, and it won’t be up to Gordon or Payton’s discretion this time around either.

Yes, the organization will ultimately hold the upper hand with Elfrid and Aaron, but one still shouldn’t blame them for wanting to test their values on the open market (if it comes to that). The summer of 2018 could potentially be the fist time either player experiences free agency. If that’s the route they opt to take, it shouldn’t be something that’s viewed as an indictment on the organization or a change of heart on their parts. It’s just restricted free agency 101; play the game. Seek offer sheets from other clubs. You could potentially land a huge deal that your organization chooses to match, or worse case scenario, you start your career anew in a new city with very full pockets.

The free agency class of 2018 could potentially include the likes of Kevin Durant, LeBron James, Russell Westbrook, Paul George, Chris Paul, DeMarcus Cousins, and Isaiah Thomas to name a few (depending on player options). Those are some of the marquee names of the NBA and you would have to imagine that numerous teams will be working diligently between now and next summer to clear available space to squeeze those guys in. The teams that miss out on those top tier names could potentially have a sizable amount of cash to throw at an Aaron Gordon or Eflrid Payton. It could be worth it to Gordon and Payton to wait and see if that ends up being the case.

2) Improve their play, improve their pay

Gordon and Payton could very well choose to “bet on themselves” (I despise sports cliches, but I find it rather difficult to write thousands of words about sports without using at least one). Both Aaron Gordon and Elfrid Payton have accomplished (individually) a respectable amount in the NBA already for young 20-something professionals, there’s no denying that. They have both started their fair share of games for the Magic, posted numerous double-doubles (a handful of triple-doubles in Payton’s case), and exploded for 25+ point performances on rare occasions throughout the first three years of their careers. Those counting statistic accolades seem to matter to agents when negotiating contracts for their clients, numbers equal cents (actually dollars, hopefully you get the pun).

But still, one would be hard pressed to say that Gordon and/or Payton have been great for the Magic. They’ve rarely even been good for long stretches at a time, only showing flashes of potential here or there. I understand why, I get it completely. Payton was thrust into a major role with the team well before he was ready his rookie season, and Gordon was woefully played out of position for a large chunk of last season. Both players have shown moderate improvements in various aspects of their games over the course of the last three seasons. Yet there’s absolutely zero doubt that Aaron Gordon and Elfrid Payton’s best days in the NBA are still in front of them, they will continue to get better.

What could Gordon, or Payton for that matter, get sometime between now and October that wouldn’t be there available to them next summer as a restricted free agent? By declining to sign an early extension with the Magic, Gordon and/or Payton could potentially milk more cash out of the organization (or another team) by having “contract year” type years (is “contract year” a sports cliche? If so, I guess that’s two).

What could the numbers on early-extension offers for Aaron Gordon and/or Elfrid Payton look like?

I thought about continuing this article from the perspective of the men on the other side of the negotiating table. What would the organization gain from extending Gordon and Payton early? What are the risks? I quickly realized that approach would be redundant; some of the reasons why Orlando would want to lock up Gordon and Payton long-term mirror some of the reasons why Aaron and Elfrid might not want to, and vise-versa.

Perhaps a more productive approach in this discussion about the likelihood of Aaron Gordon and Elfrid Payton signing early-extensions with the Magic is to predict what kind of offers Orlando’s new management will present to the Gordon and Payton camps.

1) Elfrid Payton

I think the value of Payton’s eventual second NBA contract is going to ultimately surprise a lot of Magic fans.

Elfrid’s play in three seasons with the Magic has been rather tumultuous. He was given the keys to run Orlando’s first unit before he was reasonably ready to do so, mostly due to inferior options at the position on the roster. He was benched last season because of inconsistent play, something that has plagued him his whole career. But he earned his starting role back, and finished the season with his longest stretch of strong play to date (albeit in games against teams down the stretch who were either resting starters or tanking, but still something positive).

I’m positive Elfrid Payton is not finished improving as an NBA player, but it’s still as clear with Payton as anyone else on Orlando’s roster what his limitations are. He’s never going to be a knock down shooter who stretches a defense. And even more troubling, he hasn’t shown the ability in three seasons to be able to defend elite point guards either (despite his superior length and athleticism at the position). Of course, Payton’s agent is going to be selling the positives associated with extending his client, that’s his job. And believe it or not, Payton’s play has some “selling points”.

Payton has complied more total assists (1,530) than any other player in the NBA under the age of 25, and it’s not really close (second on the list has just over 1,100). I understand that assists are to be viewed as rudimentary counting stats that are a reflection of the minutes Payton has played in his career thus far; I get it. But his career assist percentage (33.7) is third amongst players under-25 as well. According to Basketball Reference, Payton improved his PER (13.8 to 17.2), TS% (45% to 52%), TOV% (20% to 15%), Offensive Win Shares metric (0.0 to 2.4), and “Value Over Replacement Player” metric (0.8 to 1.7) from his rookie season compared to his third professional season.

Where does this all leave Elfrid Payton in the pecking order of NBA starting point guards? How much money would the Magic have to offer Payton to make signing an early-extension worth his while? I’m sure Weltman and Hammond aren’t going to come over the top with an offer that could be considered an overpay, not without seeing Payton play regularly firsthand.

I feel the best way in today’s NBA to go about estimating the value of a player’s future contract is to focus solely on the contracts that have been signed since the salary cap inflation of 2016. Focusing on contracts signed prior to 2016 would just be comparing apples to oranges. Since the salary cap increase in the summer of ‘16, the following 11 starting point guards in the NBA have signed new deals either through early-extensions, restricted free agency, or unrestricted free agency: Damian Lillard, Mike Conley, Matthew Dellavedova, Jeremy Lin, Rajon Rondo, Dennis Schroder, Stephen Curry, George Hill, Jrue Holiday, Kyle Lowry, Jeff Teague.

Curry (will make roughly $34M in ‘17-’18) and Lillard ($26M in ‘17-’18) are franchise cornerstones that belong in the highest tier of NBA point guards, so there’s no use in comparing their contracts to what Payton might get. Conley ($28M in ‘17-’18) and Lowry ($28M in ‘17-’18), while not in the class of a Curry or Lillard, are both perennial fringe all-stars with career resumes that trump Payton’s; nothing to see there. I consider Hill ($20M in ‘17-’18), Holiday ($25M in ‘17-’18), and Teague ($19M in ‘17-’18) to be slightly above-average NBA lead guards who fall somewhere in the 9-14 range of my personal NBA point guard rankings, which is still probably one tier above where Elfrid Payton falls at this point for me.

Rondo doesn’t really work with this exercise, he will playing next year on a one-year deal (his second in the last two seasons) for close to the league minimum. I appreciate Dellavedova’s scrappiness (will make roughly $9.5M in ‘17-’18), but I know for sure I’d rather have Elfrid Payton long-term than the 26 year-old Aussie. I guess he serves as our floor.

That leaves Dennis Schroder ($15.5M in ‘17-’18) and Jeremy Lin ($12M in ‘17-’18) as the most comparable point guards (their NBA status that is) to Elfrid Payton that have signed new contracts since the salary cap spike. Schroder is actually a perfect example for this case study; he signed an early-extension with the Hawks last year worth $62M over four seasons. Here’s how Payton and Schroder’s career numbers stack-up:

Schroder is more of a threat from the perimeter than Payton is. Who isn’t? He’s also played on better teams than Payton has (with more talent surrounding him) and has experienced some playoff success already in his career. Now, a strong argument can surely be made that over $15 million per year is too much money for Schroder’s inconsistent play.

Still, when the salary numbers come in for Payton (either now or next summer), I would bet the money fall somewhere close to what Schroder makes. Since we’re talking an early-extension, I wouldn’t be surprised if the Magic came with an offer of something in the range of 4/$44M-4/$48M. I’m not sure that would be enough to get anything done with Payton, but I’m also not sure the Magic offer much more than that before the start of this next season.

2) Aaron Gordon

I find it much more difficult to try and estimate a potential contract in the Aaron Gordon early-extension negotiations than I do for Elfrid Payton. Even though Payton is still in the beginning years of his career in his own right, I think his limitations as a player and proverbial long-term NBA ceiling is much clearer than Gordon’s. Gordon’s career numbers with the Magic hardly jump off the page, but his flashes of brilliance have been quite brilliant (and quite flashy).

Like Payton, Gordon has been plagued by inconsistency at times throughout his three year stint in Orlando. Losses and tough NBA lessons have been plentiful for both Payton and Gordon since they were selected in the ‘14 lottery, but it’s Gordon who has always seemed like he was playing “catch-up” to where he wanted to be at that moment in his career. Gordon broke his foot three weeks into his rookie season, which limited his 2014-2015 campaign to just over 45 games. After a very positive sophomore NBA season in which Gordon improved his game across the board, Gordon’s play took a noticeable step backward in the first half of last season.

Of course, as well all know, Gordon’s poor play had a lot to do with the Magic acquiring Serge Ibaka. Ibaka manned Orlando’s starting power forward position from the beginning of last year through February, which meant Gordon was playing primarily on the perimeter. Frank Vogel’s experiment playing Gordon at small forward was clearly a mistake; Gordon’s play at the power forward position after the Ibaka trade was much stronger (averaged roughly 16 PTS/6 REB in March & April). Still, Gordon has yet to crack at least 30% from three-point range in his career (even though he’s steadily taking more long range attempts as his career progresses).

With all that being said, I still catch myself at times forgetting that Gordon is only 21 years old. Gordon has played in over 200 NBA games, has started in over half of those contests, and has logged just under 5,000 NBA minutes. I repeat, he’s only 21. Yes, Gordon has met adversity in his career, but that’s to be expected of a 19-20 year old. He’s still scored over 30 points in a game four times in his career; he has posted 20 double-doubles through three seasons. You can see Gordon’s potential, but can he tap into it more regularly, and how much more of it can he foster?

I would imagine the Magic brass have more of an interest in seriously negotiating an early rookie-extension with Gordon, the organization has more to gain (in other words, more they could potentially save). For this reason, I would have to assume that Gordon is probably less likely than Payton to accept an extension prior to this season. Gordon could very well be on the precipice of taking a leap in his career. Agreeing to a deal with the Magic prior to a vital contract year could cost him millions of dollars.

Again, I’m not completely comfortable predicting how much Weltman and Hammond are willing to offer Gordon, but I’m sure they will make a substantial offer. Thaddeus Young makes just under $15M per year, Tobias Harris is due to earn $16M this coming season. Those deals have to be at least in the neighborhood of where Gordon’s offer could come in at. An early rookie contract extension offer of 4/$62M to Gordon wouldn’t shock me. Would that potentially be enough for Gordon though, that I’m not so sure about?

3) How would extending either player early affect Orlando’s cap situation?

I don’t really foresee a cap advantage the Magic would be utilizing by signing either Gordon or Payton early, nor do I see a discerning cap advantage they would be gaining by waiting. Teams will often wait to re-sign their restricted free agents until the end of the summer of that player’s restricted free agency season so they can fit other unrestricted free agents under their team’s cap, knowing all the while they fully intend to go over the cap to bring their own restricted free agent back (think what San Antonio did, waiting to re-sign Leonard during his RFA season until after they signed LaMarcus Aldridge).

But Orlando is already tightly snug just under the cap this season, with no significant money scheduled to come off the books in the near future. Sure, contracts like the ones held by Nikola Vucevic or Terrence Ross could be moved fairly easily between now and next summer. However, if that doesn’t happen to occur, Orlando is going to be looking at next to no cap flexibility next summer (with or without Gordon and Payton). Signing Gordon and/or Payton to early extensions would completely take the Magic out of the free agent conversation in 2018. Yet Gordon and Payton’s cap holds that would be holding Orlando back if they weren’t extended this fall would be significant enough next summer to eliminate Orlando’s free agency plans as well.

This is a numbers game. I wrote four thousand words, but it really comes down to only three guys getting on the same page (player, agent, management). That’s easier said than done, and this all becomes moot if any one of them feels that next summer is a more appropriate time to rehash this examination. Two young and talented twenty somethings are heading into free agency for the first time with millions of dollars at stake. The only thing left to do is wait and see if anything is agreed upon before October 18th, one way or the other.

Leave your comments below, please let me know what you all think! I really enjoyed this study and I’m anxious to see how it all plays out.