The Paul George Situation: Should the Pacers be worried?

As the trade deadline was approaching, most Pacers fans expected some smaller moves to be made by the team. Some bench help to keep Paul George happy perhaps.

The Pacers were shopping around their 1st-round pick since it will be in the late teens, early twenties range, and the expectation was that maybe they’d do a similar deal like last year’s draft day acquisition of Thad Young from the Brooklyn Nets.

Then, seemingly out of the blue, the quiet rumblings of Paul George being traded started to become loud shouts. Pacer and NBA fans were glued to Twitter to see what would happen at the Deadline.

This was shocking to the Pacers fan base that has consistently been told that Paul George was not on the market and essentially untouchable. But now the Pacers may trade him? Why would they even consider this? And are some Pacers fans actually on board with getting rid of the superstar?

Let’s break it down the situation and bear with me, this is a bit long.

The Contract:

Paul George’s current contract runs through the 2018-2019 season, but that last season is a player option for George. PG is making $18.1 million this season, and $19.3 million for next year.  Because of the huge increase in the salary cap in the past few seasons (from $70 million in 2015-2016 season to $94 million currently), Paul George will definitely opt out of his current deal after next season and become a free agent as the cap continues to rise.

If for some reason he did keep his player option for that last year, it’d be $20.7 million. Luol Deng and Evan Turner are making more than $18 million per season in this cap climate. It would be a complete shocker if he opted in.

For his new contract (wherever it will be) Paul will fall under the 7-9 year player max bracket or 30% of the cap. So for instance in 2018 he could make $30.6 million for that season. (Up from the 20.7 million he’d make if he doesn’t opt out) Also there is the Designated Player Exception in the new CBA for star players drafted by their teams trying to re-sign them and prevent them leaving like a few stars have in recent years (Durant). Players can sign a 5-year extension on their current deal with their original team, while all other teams have only a max of four years to offer a player in free agency. So the Pacers would get to offer another year of security and $30+ million more than any other team.

(Here comes the math) Per Nat Newell of the IndyStar on Dec 15 2016 in his article entitled What does the new CBA mean to the Pacers and Paul George? The league calculates max salaries from a slightly lower figure, roughly $96 million off the cap of $102 million (2018-2019). Another team would be able to start an offer to George at 30 percent of that figure – $28.8 million. The other team can offer a 4.5 percent raise each season: $30.1 million, $31.4 million, $32.7 million for a total of $123 million over four seasons.

The Pacers can offer an extension on George’s $19.3 million contract for 2017-18. If George qualifies for the DPE: The 35 percent offer would be $33.6 million in year one of the new deal (3.5 million more than another team). They can offer 7.5 percent raises over five years: $36.1 million, $38.6 million, $41.1 million and $43.6 million for a total contract of six years, $212.3 million.

In other words, the Pacers can pay George more in year one than another team can pay him in year four. The Pacers would be able to offer $26.4 million more over four years and $70 million more total over 4.5 seasons. More in raises and more each year if he stays. But, PG needs to qualify for the DPE first.

For Paul to qualify for the new DPE he has to have on his resume either a MVP, Defensive Player of the Year, or one of three All-NBA teams the previous season he signs. OR been on All NBA/DPOY in two of the previous three seasons, or MVP once. We all know he has never been MVP or DPOY but he has made All-NBA teams. All-NBA 3rd team in 2013, 2o14, and 2016. 2015 being the season lost due to the broken leg injury.

That leg injury could end up costing PG a lot of money since he needs two All-NBA teams in three seasons. So two of three in these years: 2015, 2016, or 2017. Paul has to make an All-NBA team this year to qualify and chances right now are slim. Go through the Forwards in the NBA right now LeBron/Kawhi, Durant/Green, Butler/Hayward, along with guys like Millsap, Anthony Davis now at the four spot because of the Boogie trade, Melo? The top six spots will be tough to crack for George this season. Even with an injury to a top player like Durant, it’s going to be a challenge.

This should make the Pacers worried. They will no longer have that trump card to offer an extension to George this off-season and would have to hope that he qualified next season before he becomes a free agent.

If he doesn’t, then the field is more level between what Indiana can offer and what all the other teams can offer. I asked Steve Kyler from Basketball Insiders on Twitter what the Pacers can do if PG doesn’t land on an All-NBA team.

Basically the Pacers have some room to play. They can offer slightly larger annual raises and an extra contract year but that normally is minimal when we’re talking this kind of money with the cap on the rise each season. The same advantages home teams have wasn’t enough to get Durant to stay in OKC either.

The biggest card the Pacers have is to convince Paul to pick up his player option in 18-19 then they’ll increase his salary next year (renegotiate the team cap) in 17-18 by $11 million or the amount he would get if he signed a new contract under the new CBA cap.

Re-negotiation on this front by adding more years (up to the 2018-19 season) would also put Paul into the 10+ years veteran bracket when this new contact is done, which makes him entitled to 35% of the cap then and even more money. Paul was drafted in 2010 so his 2019-20 contract would fall under the 10+ year vet.

Kyler feels if the Pacers keep PG and are not able to re-sign due to the DPE requirements, it’s a Kevin Durant situation all over again. Not enough money in the end to matter when the situation for a finals run isn’t there.

The Pacers then have two options with George without the DPE:

  1. Trade him.
  2. Try and re-sign him, but risk him leaving for nothing.

Option 1: Trade Paul George. Many different times that this could potentially happen before he hits free agency. You could do it during off-season, closer to the draft once you know everyone’s draft order, or wait until next year’s trade deadline. There is the threat too however of teams knowing he won’t resign with the Pacers so they won’t offer very much to trade for him when they know they can just wait till he’s a free agent.

If Paul doesn’t want to stay, then the Pacers have to get something for him without seeing him walk for nothing. The argument though has been brought out that wouldn’t your star employee be more involved in how the business is run if he truly is your future? It didn’t seem to be the case during the deadline.

The Pacers would only trade Paul George if they KNEW he wouldn’t re-sign with them AND the deal for him was massive. Think more on the level of Carmelo Anthony trade than DeMarcus Cousins (thank goodness the Pacers are not the Kings). So maybe all these rumblings this deadline was to get a feel for PG’s market value?

Rumor is Pacers ownership wanted to test the waters to see PG’s value and Larry Bird swatted away any true offers. It was going to take a massive offer to make him pull the trigger this year.

The deadline revealed that the Denver Nuggets, Los Angeles Lakers, and Boston Celtics were all interested in Paul George. So many options out there but so long to go before any of them could happen that we’ll save the analyzation of potential deals for another time. But I’ll just leave this little tweet here that does not help the Pacers leverage situation if they do end up trading him down the line.

There are limited teams out there with the assets to trade for Paul let alone be in the mix for a championship as was discussed earlier. Paul is 26 and his prime is right now. He doesn’t have the time to sit through a 5-year rebuild (which makes the Lakers a curious choice for him). If the Pacers trade him, it needs to be a team he’ll want to re-sign with who he views as being in an immediate contending situation for the Pacers to get the best possible deal.

Option 2 – Re-sign PG. The Pacers preferred option, but one that also includes the risk of him leaving for nothing. Remember this is if Paul George doesn’t end up qualifying for the DPE and the money difference is minimal. The Pacers want to keep him obviously. It all comes down to the Pacers individual cap space and how much Paul does love the situation in Indiana. He could end up going to another team and leaving the Pacers with nothing in return, and after watching Kevin Durant do that to the Thunder last summer, the Pacers will do everything they can to prevent that from happening to this franchise.

The Pacers do have some things going in their favor: PG does want to bring a championship to Indiana and has said in the past that he wants to be bigger than Reggie Miller here. But George added the caveat that he wants to contend for a title like when they were in the Eastern Conference Finals two straight seasons. That’s the biggest key to this puzzle if the Pacers want to re-sign him without the DPE: building this team into a contender quickly. Bird will his work cut out for him this off-season as he tries to get this team out of mediocrity and back into the business of challenging LeBron in the East.

You don’t need to be in a major market to have a ‘brand’ and George has proven that already. Paul has his PG1 shoe coming out from Nike. He’s one of only four players to have a signature shoe deal with Nike (Kevin Durant, LeBron James, Kyrie Irving). His other partners include Gatorade, Papa John’s, Fanatics, FanDuel, NewEra, Bass Pro Shops, and 2K Sports. All from little ole Indiana.

Salary cap space won’t be an issue that they have to worry about. Right now, the Pacers team payroll is around $87 million (cap at $94 million and rising for next year). With Free Agents Aaron Brooks and Jeff Teague (re-sign please). A few players have team options: Lavoy Allen, Joe Young and Glenn Robinson III. Some have player options: Stuckey and CJ Miles. You will have to watch a few of those guys walk but you’ll still have the space left to sign both Teague this off-season and PG next season if need be.

It should be a very interesting next year in Naptown as Bird tries to build a roster to that can convince George to stay or trades away his superstar as a new era begins for the Pacers.

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