The Golden State Warriors Gave Klay Thompson An Extremely Smart $70-Million Contract

The Golden State Warriors gave Klay Thompson a four-year, $US70-million contract extension last week, and Thompson has been on fire ever since.

It was widely assumed that the extension was a maximum contract for Thompson because the numbers add up to such. However, the Warriors very cleverly arranged an extension for Thompson without giving him a “true max,” according to Grantland’s Zach Lowe.

A “true max contract” is set at 25% of the league salary cap for the first year of the deal, with 7.5% increases each season. With the NBA salary cap about to rise to unpredictable levels, Thompson’s deal would have exploded with it. Instead, the Warriors protected themselves by giving Thompson a deal that’s fixed at $US69 million for four years, regardless of whether or not the cap goes up. Lowe explains:

“The league has projected the 2015-16 cap at about $US66.5 million, and under that cap number, a Year 1 maximum salary for Thompson would come in at about $US15.5 million. But if the cap shot up higher than that, Thompson’s salary under a true max contract would shoot up with it.

“The Warriors have protected themselves from such a scenario by giving Thompson almost the exact dollar-for-dollar equivalent of a max contract under the $US66.5 million cap scenario — but doing so outside the confines of a maximum contract, per several sources familiar with the matter. In other words: Thompson’s contract sticks at four years and $US69 million regardless of what happens to the 2015-16 cap between now and the start of next season.”

The cap is set to explode to $US90 million in the 2016-17 season when the new TV deal kicks in. There’s also rumblings that the league and the players’ union could agree to a “smoothing” proposal where part of the cap jump comes a year early, in the 2015-16 season. If the cap unexpected jumped in 2015-16 and the Warriors had given Thompson a “true max,” it would have cost them significantly more money.

According to Lowe, the Thompson deal means Warriors would have room to keep their core together and still have a shot at another max player like Kevin Durant, who’s conveniently a free agent in 2016.

As of now, the Warriors have about $US56 million in guaranteed money for the summer of 2016 (which obviously doesn’t factor in any signings or draft picks in between now and then). If the salary cap is in the $US90 million range, the Warriors will have over $US30 million in cap space.

It’s silly to think about a player’s free agency two years before it hits, but a Stephen Curry-Klay Thompson-Kevin Durant trio is enough to make fans drool.

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