As a member of the 2016 NBA Draft class, Pascal Siakam has been eligible for a contract extension this offseason.
So why hasn't he signed one yet?
The short answer is it's complicated. The long answer is the Toronto Raptors stand to benefit in very different ways by signing their rising star to an extension now compared to next offseason.
With that in mind, I reached out to EarlyBirdRights.com founder and cap expert Jeff Siegel to get a better understanding of the situation facing Siakam and the Raptors.
Why the Raptors should get it done
Siakam has until Oct. 21 to sign an extension with the Raptors. If the two sides don't come to an agreement between now and then, he'll be a restricted free agent next offseason, giving him the option of signing a contract with any team in the league.
Siakam would likely get a lot of interest if that were to happen. HoopsHype currently has him as the second-best free agent in the class of 2020 behind only Anthony Davis of the Los Angeles Lakers, as does CBS Sports, SLAM and SB Nation now that Ben Simmons and Draymond Green are off the board.
The Raptors would still be able to match any contract offered to Siakam in restricted free agency, but delaying the process brings with it some long-term risks.
"In a lot of situations, a team is taking a risk by extending a player a year ahead of his free agency," Siegel explains. "He could get injured, his play could regress or his market value could fall for any other number of reasons. For this reason, teams usually ask players to take discounts, which the players are happy to take because it mitigates their risk of the same things lowering their value on the market the next summer.
"In Toronto's case, Siakam is nearly certain to get the max from somebody next summer, so the risk is on the other side of the table - the Raptors are in a situation in which a five-year max or a four-year near-max extension mitigates their risk of him signing a 3+1 deal (a four-year deal with a player option on the fourth year) elsewhere and leaving after just three more years with the Raptors.
"An extension still lowers Siakam's risk of his play taking a backslide this year in the wake of Kawhi Leonard's exit, but the risk of him taking a shorter-term deal elsewhere is what drives Masai Ujiri and the Raptors to the table to negotiate a longer-term extension."
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What happened between Gordon Hayward and the Boston Celtics several years ago should give the Raptors pause.
The Jazz found themselves in a similar situation with Hayward as the Raptors do with Siakam, and they chose to let Hayward play out his contract and test free agency instead of signing him to a five-year extension. That decision led him to an offer sheet with the Charlotte Hornets in the summer of 2014, which the Jazz matched, but it paved the way for Hayward to test free agency again - this time as an unrestricted free agent - three years later.
As a result, Hayward left the Jazz for the Boston Celtics just when the franchise appeared to be turning a corner.
The Jazz rebounded in a way nobody could have foreseen - they were fortunate to draft Donovan Mitchell with the 13th pick in the same summer Hayward left - but it's impossible to predict the Raptors having the same fortune if Siakam were to follow in Hayward's footsteps. In which case, the Raptors run the risk of seeing Siakam walk as he's entering the prime of his career by not getting a deal done now.
That begs the question: Why even wait?
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Why the Raptors should wait
Being the No. 27 pick in the 2016 NBA Draft, Siakam will make $2.4 million in 2019-20 and have a cap hold of only $7.1 million in 2020-21.
What that essentially means is Siakam will only count towards a tiny portion of Toronto's cap sheet until he signs an extension, giving the Raptors a tremendous amount of money to spend next summer with Kyle Lowry, Serge Ibaka and Marc Gasol all coming off of the team's books following this season.
"One of the big things Toronto has to weigh in offering the max extension is that it will cost them $21.9 million in 2020 cap space," Siegel writes, referring to how Siakam's next contract could pay him upwards of $30 million annually. "If [Siakam] signs an extension, his actual first-year salary will replace his free agent cap hold, which is at a measly $7.1 million since he was a late first-round draft pick back in 2016.
"Evaporating nearly $22 million in spending power in order to lock Siakam into essentially the same contract they can offer him next summer is normally something teams don't want to do, but the combination of Siakam's production and the weak 2020 free agent class tips the scales toward the Raptors offering that max extension, or very close to it.
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"The best possible outcome for the Raptors is to convince Siakam to wait until the summer, when they can still give him the full max, but that does introduce some level of risk that both sides will hold up their end of the deal. Toronto projects to have nearly $75 million in cap space next summer without a Siakam extension, so if they wanted to eat up $21.9 million by locking him now, they'd still have more money than they know what to do with in 2020."
To Siegel's point, the 2020 free agent class won't be as loaded as it was once expected to be, but there's still a possibility that Davis, DeMar DeRozan, Jaylen Brown, Brandon Ingram, Buddy Hield, Andre Drummond and Domantas Sabonis will all become available. The Raptors would have the room to sign not one, but two of those players to max or near-max contracts if they hold off on an extension for Siakam.
There's no guarantee the Raptors would be able to sign even one of those players, of course. The likes of Ingram, Hield and Sabonis will be restricted free agents - giving their current teams the option of matching any offer they receive - while Davis, DeRozan and Drummond could very well come to contract extensions before the Raptors even have a chance to get in a room with them.
Nevertheless, having that much cap space at least makes the Raptors an attractive free agent destination. And with a clean slate, it would give them the freedom to build something new around Siakam, ideally with players who are on the same timeline as him.
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How it impacts Siakam
The benefit of getting an extension done now for Siakam is he avoids the risk of injury or slip in play impacting his future earnings. That, however, assumes he and the Raptors are on the same page in terms of what his next contract might look like.
Even though he's coming off of a breakout season in which he was named the league's Most Improved Player, Siakam is older than most prospects entering the final year of their rookie contract, raising questions about how much he still has left to improve. We also don't yet know if he's fully capable of being the No. 1 option on a winning team. There are signs to believe he can, but we won't know for sure until the regular season begins, long after the deadline for an extension has passed.
For that reason, it would make sense if Siakam and the Raptors aren't quite seeing eye-to-eye ahead of the season. There's a chance he's looking for a full five-year max, whereas the Raptors want to see him prove himself as an All-Star before making a franchise-altering commitment to him.
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The good news for Siakam is the most he can earn on his next contract doesn't change whether he signs this offseason or next.
"There's no monetary difference to the max contract he can negotiate in an extension or in free agency next summer," Siegel writes. "Either way, he's eligible for a baseline 25 percent of the 2020-21 salary cap in Year 1 salary, which projects to pay him $168.2 million over five years.
"If he makes an All-NBA team this year, wins MVP or Defensive Player of the Year, then he's eligible for up to 30 percent of the cap, which would pay him $201.8 million on a five-year deal. He can negotiate that raise up to 30 percent in the extension, as Ben Simmons and Jamal Murray have already done with their respective teams this offseason."
All things considered, the Raptors have a lot to think about over the next month.
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