Is Klay Thompson Worth A 5-Year $190M Max Contract?
The Golden State Warriors have not looked themselves this year. The Los Angeles Lakers are the latest rival to come into Oakland and hand the Warriors a beatdown uglier than a novelty Christmas sweater. The 26-point loss follows on the heels of home losses to the Toronto Raptors (by 20 points), the Oklahoma City Thunder (28 points), and the Milwaukee Bucks (23 points). Even last year, the Warriors would get up for the big games against contenders. But this time around they are getting soundly outplayed by the teams that are looking to take their crown.
Perhaps most concerning for the Warriors is the play of Klay Thompson. Always a streaky player, Thompson is in an extended slump. He’s shooting a career-low from the field (44%) and from three (33.7%). He’s also shooting a career-high 18.7 attempts per game. Behind the numbers, his shot selection has been awful. He’s been living on a diet of contested mid-range jump shots that would make even Kobe Bryant blush. Part of this stems from the period when Steph Curry and Draymond Green were out and shot-creation was in short supply. But despite their return, Thompson has continued chucking away like it’s the 1990s.
Klay Thompson’s upcoming payday
While there are more immediate problems for the Warriors right now, this is all happening in a contract year for Thompson. Kevin Durant is not the only player facing a legacy-defining decision next summer. Thompson is a free agent too. The noise around Thompson has been much more muted as he’s repeatedly professed his desire to re-sign with the Warriors. Unlike with Durant, no-one is expecting Thompson’s decision to derail the Golden State dynasty.
However, that could be a misread of the situation. Thompson is eligible for a contract starting at 30% of the salary cap, for five years, with 8% annual raises. The NBA’s salary cap is currently projected to be $109m this summer, meaning that Thompson’s starting salary would be around $32.7m. With the 8% raises, that max contract would have a total value of almost $192m over five years. Year-by-year Thompson would earn $35.3m, $38.1m, $41.2m, and finally $44.5m at age 34.
Those are very large numbers. In comparison, Steph Curry signed the largest contract in NBA history just 18 months ago, at a total value of $201m over five years. He’s currently being paid just under $37.5m. The next three seasons he’ll be earning $40.2m, $43m, and $45.78m in his final year.
Klay Thompson is incredibly valuable to the Golden State Warriors. With his (usually) dynamic three-point shooting, and excellent on-ball defense, he’s the perfect foil next to Curry. What’s more his durability means that he is likely to be productive for the course of his next contract. But for the Warriors, paying your fourth best player a shade under what Steph Curry is earning could be problematic.
The need for sacrifice
Klay Thompson’s father, the former Los Angeles Laker Mychal, has said that number is “set in stone” by the salary cap, clearly hinting that he expects his son to be paid the full whack. But it’s no secret that the Warriors are facing salary cap hell as they try to navigate the NBA’s repeater tax while retaining four All-Stars on new contracts. The reality is that the Warriors probably need a couple of those All-Stars to take a slight discount on what they could get in order to keep the bills down.
Even small amounts will have a huge impact. Once in the repeater tax, every dollar counts even more. The Warriors are likely to be over $30m above the tax line in the next few years, even with some conservative cap management. At that point, each dollar is multiplied by $5.75. An illustrative discount of $3m a year would save over $20m once the tax payments are factored in.
What Thompson decides to do will also have a knock-on effect on what is already shaping up to be a tricky negotiation with Draymond Green the following summer. Green is gunning for another Defensive Player of the Year contract, which would set him up for a designated veteran max contract reaching $235m over five years, with the final year paying out around $50m when Green would be 35. If Green becomes eligible only the Warriors could offer him that contract. The reality is the Warriors are highly unlikely to offer that kind of money to him for that long, no matter how important he is to their dynastic ambitions.
So far the Warriors have survived on a diet of prudent cap management, aided by reasonable sacrifices from their players. Steph Curry’s previous deal was so ridiculously undervalued that he simply had to take the max contract in front of him. Kevin Durant has twice taken discounts to help the Warriors sign other players. From Durant’s recent comments to Yahoo’s Chris Haynes, it sounds like those days are over. If the Warriors want to keep him as they move to San Francisco they’ll need to pay out the full $221m max contract only they can give him.
Years vs dollars
That leaves Thompson and Green. If the Warriors want this dynasty to continue and rival the greatest of the modern game, the reality is that both are going have to take haircuts of some sort. For Thompson, the Warriors will hope that he lives up to his previous statements that he’s open to taking a little less money. Green’s case is more complicated, but given he’s an undersized big with a high-intensity style of play, it makes sense to offer the discount in years rather than dollars and try to sign him to a shorter deal.
Of course, both players have earned the right to become free agents and see what their value is on the open market. Thompson will undoubtedly have a queue of suitors lining up, many of whom will be armed with the maximum four-year deal they can offer. Unlike the Warriors, other teams can only offer 5% annual raises. For Thompson that works out as $140.8m, with a profile of $32.7m in the first year, rising to $34.3m, $36m, and finally $37.8m.
The delicate art of negotiation
Somewhere in there is an opportunity for negotiation. Already those numbers look a little more reasonable than the maximum Golden State offer. In exchange for that guaranteed fifth year, the Warriors could ask for a slight discount from what other teams can offer. For example, a contract starting at around $30m, but with 8% annual raises, would still come in at $176m and give Thompson a payday north of $40m in his final year.
Ultimately contract negotiations are just that – a negotiation between player and team about the value that player has to that team. If both the Warriors organization and their players are serious about extending their dynasty then both sides will need to approach the negotiations over the next couple of summers in good faith.
Thompson is the first test case of the new reality the Warriors find themselves in. More so than his current jump shooting woes, it’s Thompson’s next contract that will determine whether or not this Golden State team ends up in the pantheon of all-time great sporting dynasties.
This article originally appeared in Forbes.