What Does A Herb Jones Extension Look Like?

Analysis of options the Pelicans have regarding Herb Jones

The new CBA has finally been published and hoards of cap nerds will be pouring over it the next few days. I will not be one of those folks - my job does not depend on understanding the 676 page document by an arbitrary deadline. Instead, I will be bringing you similarly nerdy content regarding the extension possibilities Herb Jones has available.

As a second round pick, Herb Jones signed a contract with the Pelicans that includes a team option for the 2023-24 year. If the Pelicans do not opt to pick up that option, Jones becomes a restricted free agent (RFA). If the Pelicans DO pick up that option, and they should, Jones will become a restricted free agent the following summer.

Due to the nature of restricted free agency, the Pelicans will have matching rights on any contract offered to Jones in free agency. This can be a risky option for free agents and they can see themselves squeezed out of the market if there is sufficient fear the incumbent team will match any offer sheet. Josh Hart experienced this as the market quickly dried around him and he was forced to sign an extremely team friendly contract.

Nevertheless, the amount the Pelicans can offer Jones changes dramatically depending on what they choose to do. There are 3 practical options the Pelicans have if they wish to retain Jones long term.

1. Reject Team Option, allow Herb Jones to be a RFA this summer.

2. Exercise Team Option, allow Herb Jones to be a RFA next summer.

3. Exercise Team Option, extend Herb Jones this summer on top of the option year.

Option 1 - Reject Team Option

This option involves the Pelicans deciding to reject their club option on Jones and getting him paid a year early. To me, this is the most complicated and least necessary of pathways. For starters, Jones would become was is called an “Arenas Free Agent”. Without getting too much in the weeds here (yes I know this substack is designed specifically to get into the weeds), this creates complications for teams trying to offer or match the free agent by opening the door for a “poison pill” structure. For a great explanation on this complication, check out Keith Smith’s article on Spotrac, which discusses this exact scenario in relation to Austin Reaves.

For our purposes, we’re going to assume any poison pilling of Herb Jones is unlikely. It would be a safe assumption that the Pelicans choosing to reject Jones’ option would be in conjunction with his representation and working out an immediate new deal - similar to how the Rockets operated with Jae’Sean Tate last summer. In this scenario, the Pelicans are limited to what they can offer Jones because they will only hold Early Bird Rights on the player, rather than the full Bird Rights. Additionally the Pelicans can use the full Non-Taxpayer Mid Level Exception. This will be a slightly greater amount than Early Bird Rights, but comes with some additional constraints - notably the hard cap.

Early Bird Rights allows teams to give players 105% of the average player salary from the previous year. The maximum term is 4 years and the maximum raises are 8%. The most money the Pelicans can offer Herb Jones under this construction based on current projections is: The data has been updated to reflect the values provided to teams by the league office. The below is the exact contract Herb Jones has agreed to.

• 2023-24: $12,015,150

• 2024-25: $12,976,362

• 2025-26: $13,937,574

• 2026-27: $14,898,786

Total: 4 years, $53,827,872

The amount above is very nominal and a rather enticing contract structure for the Pelicans. The issue here is that the Pelicans are within a razor’s edge of the luxury tax and this would require additional maneuvering to bring to reality. I am not a fan of potentially surrendering more assets in the name of tax dodging.

Option 2 - Exercise Team Option, Jones Enters RFA Next Year

This option is the Pelicans deciding to play it safe. There is no rush to lock Jones down prior to other teams being able to bid on him. In this scenario, the Pelicans would play out the season in an effort to further evaluate Jones and their roster. This world makes trading Jones an easier option and the receiving team would receive full bird rights on the player as well as matching rights in free agency.

Upon entering restricted free agency, Jones would be able to seek an offers sheet from any team in the league and the Pelicans would be able to match should they desire. The moment Jones signs an offer sheet, the Pelicans will lose the ability to conduct a sign and trade. Prior to that, the Pelicans can work with Jones and his representation to find a sign and trade that mutually benefits both parties in the event the team wants to move in a different direction. The Pelicans have worked a sign and trade for Lonzo Ball previously.

This option carries a few risks for both sides, as discussed above. The Pelicans run the risk of a team signing Jones to a number they are not comfortable matching and losing Jones for nothing. Likewise, Jones runs the risk of cap space drying up and not being able to field a competitive offer sheet. In a world where Jones does not improve from beyond the arc, the free agent market place might be a cold and unfriendly space.

I personally feel that there is enough goodwill between both sides that a good faith negotiation would take place. Full Bird Rights on Jones would allow the parties to sign any deal up to Jones’ max. Additionally, I feel the upside of trade flexibility is a strong reason for the Pelicans to let the season play out without signing Jones to an extension this summer.

Option 3 - Exercise Team Option, Extend Herb Jones

Due to the nature of Jones’ contract, if the Pelicans opt to exercise his team option, they will be able to extend him under the Veteran Extension criteria. Fortunately for Jones, the new CBA will be going into effect on July 1st and he will be subject to the new and expanded extension rules.

Where previously the maximum allowable salary in the first year of a veteran extension was 120% of the greater of the player’s prior Salary and the Estimated Average Player Salary, the new CBA will allow for the extension to be 140% of the stated amounts.

To put it in plain language, Jones’ salary in the final year of his current deal is $1,836,096. This is not the number that will be will used to extend upon. Instead, the number that is relevant here is the Estimated Average Player Salary in the year the extension will be signed.

The Estimated Average Player Salary is calculated by taking 104.5% of the league’s Average Player Salary the previous year, which is calculated by after league audits. For our purposes, the Estimated Average Player salary for the 2023-24 season projects to be around $11.2 million. The numbers will not be clear until the accounting is done by the league office, so we will use $11.2 million as the placeholder value.

Jones would be eligible for a 4 year deal with 8% raises. The structure would look like this:

• 2024-25: $15.68M

• 2025-26: $16.93M

• 2026-27: $18.19M

• 2027-29: $19.44M

Total: 4 years, $70.25M

Now remember, this number can fluctuate based on what league calculations come in at, so the real contract may possibly reach up to $75 million. If I was advising Herb Jones and the Pelicans put this deal on the table, I would strongly encourage him to accept it. This would mitigate any injury risk or risk associated with stagnation or regression in production.

For the team side, I think there are benefits to securing Jones long term to what amounts to ~11% of the cap. If there is belief that Jones will not regress as a player, then this is not only a fair market deal, but also one that is inherently tradeable in the new media deal environment. Cap raises compound while salary raises do not, and it is very possible cap growth rapidly outpaces the growth of Jones’ contract.

The Pelicans, do however, run the risk of opportunity costs down the line. For starters, the second Herb Jones has secured an extension, he becomes much more difficult to trade. Now you might be wondering why a team would have any plans to trade a player they freshly extended, but teams need to be prepared for every possibility. The mismatch between Jones’ relatively small salary this coming year and the much larger extension salary in the following year creates what is also dubbed (perhaps inaccurately I’d say) as a poison pill provision. Different from the Arenas provision, this situation makes salary matching in trades difficult in a separate way.

There is also downside in committing to long term money prematurely and discovering lack of fit rather quickly. Jury remains out on what a team featuring Jones and Williamson will face in the playoffs due to a lack of spacing, particularly if the Pelicans are unable to secure a spacing big man. Likewise, there remains the Trey Murphy issue. At this juncture, Murphy needs to be the clear starter moving forward - will Jones on an extension complicate the relatively political matters of who comes off the bench? If the Pelicans do indeed discover Murphy as the unquestioned starter long term, then is it worth committing long term money to Jones early? One could argue that the Pelicans’ propensity for premature extensions has gotten them into the cap jam they are presently in.

Ultimately Jones is one of my favorite players to wear a Pelicans’ uniform and I am rooting for his success. If the Pelicans decide to extend Jones at his max number stated above, I might fret about their ability to make moves around the edges, but would feel comfortable at his cap hit.