Next Contract Series: Klay Thompson

Keith Smith
Keith Smith, Resident NBA ExpertOctober 20, 2023
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Klay Thompson has spent all 12 seasons of his NBA career with the Golden State Warriors. That includes the two seasons when Thompson painstakingly rehabbed from first a torn ACL and then a torn Achilles’ tendon. Given all Thompson and the Warriors have been through together, including winning four titles, it’s hard to imagine Thompson wearing another uniform.

Yet, Thompson and Golden State having seemingly made little progress in extension talks. That leaves Thompson potentially playing out an expiring deal and his future a little unsettled.

Before we get into what Thompson’s next contract could look like, let’s do a little background.

Thompson was drafted by the Warriors at the 2011 NBA Draft. He played out his rookie scale deal, and inked a four-year, $69 million extension. Thompson played that deal out, and then signed a new five-year, $190 million maximum contract in the summer of 2019.

That max deal is the one that is wrapping up now. Golden State signed Thompson to that contract, knowing he’d miss the first season, after he tore his ACL in the 2019 NBA Finals. After two missed seasons, Thompson return to help the Warriors win the 2022 NBA Finals. Now, he’s wrapping up the deal on a $43.2 million expiring contract for the 2023-24 season.

Thompson is 33 years old. He’ll be 34 when his next contract starts, whether it’s an extension or a new contract. Because Thompson is turning 34 ahead of next season, he’ll avoid bumping into the Over-38 rule by one season. That keeps things much simpler, when we consider the absolute max deal Thompson could ink.

Let’s dive into the various options Thompson and the Warriors have, now and this coming offseason. 

Signing a Veteran Extension this season

Thompson is extension-eligible right now. There’s no waiting period for him to extend with the Warriors. Because he’s on an expiring deal, Thompson will remain extension-eligible through June 30, 2024 (the eve of free agency). Extension-eligible players that are on expiring deals (or have an option for the 2024-25 season) can sign an extension through the end of the league year. Extension-eligible players will multiple years left on their contract can only extend through October 23.

For the Warriors and Thompson, that gives them plenty of time to hammer out a new deal. A max extension for Thompson would look like this:

    • 2024-25: $49,700,000
    • 2025-26: $53,676,000
    • 2026-27: $57,652,000
    • 2027-28: $61,628,000
    • Total: four years, $222,656,000

Thompson is eligible to extend for up to four total season and for 140% of his current salary. That 140% would take Thompson past his max salary, so he would be capped at $49.7 million for the 2024-25 season. That’s the projected 10-plus years of service maximum at 35% of the projected $142 million salary cap. If the cap goes up more than projected, the contract would adjust accordingly.

It’s important to note that this is the maximum amount that Thompson is eligible to extend for right now. It’s not likely he would get quite that much. We’re just setting the parameters here.

Re-signing with the Warriors as a free agent in 2024

If Golden State and Thompson can’t reach agreement on an extension, but they aren’t quite ready to part ways, he’ll be eligible to add a fifth season in a new max contract. The first four seasons would look the same as above, but there would be a fifth season tacked on:

    • 2024-25: $49,700,000
    • 2025-26: $53,676,000
    • 2026-27: $57,652,000
    • 2027-28: $61,628,000
    • 2028-29: $65,604,000
    • Total: five years, $288,260,000

This is a five-year, maximum salary, starting at the projected 35% of the cap max with 8% raises. Being able to add that fifth year makes a major difference, even if it’s unlikely that this contract would end up at that level.

One important note: If Thompson were to sign a new contract, as opposed to an extension, he’d be eligible to add a rare negotiated no-trade clause into his new deal. To date, only Bradley Beal (now of the Phoenix Suns) has a negotiated no-trade clause. Thompson would not be able to add a no-trade in an extension, because his current contract does not include a no-trade clause.

Signing with another team as a free agent in 2024

If things get really sideways and Thompson leaves the Warriors, here’s what a max deal with another team would look like:

    • 2024-25: $49,700,000
    • 2025-26: $52,185,000
    • 2026-27: $54,670,000
    • 2027-28: $57,155,000
    • Total: four years, $213,710,000

That’s a 35% of the cap maximum contract, but limited to four years and 5% raises. In comparison to the extension Thompson could sign, he’d be leaving almost $9 million total on the table. And, of course, Thompson could only get a fifth year from the Warriors in a new contract.

Summary

As we said before, it’s really hard to imagine Klay Thompson playing out his career in anything but a Golden State Warriors jersey. The Warriors took care of Draymond Green this summer, despite rumors that a separation could happen. And, of course, Stephen Curry is signed through the 2025-26 season.

Curry is Curry, but Green’s new contract could be a possible signpost for where Thompson’s next deal ends up.

Even as he’s aged, Green has remained a productive player. He no longer brings that Defensive Player of the Year impact every game, but he summons it when necessary. And he’s still a good playmaker, rebounder and leader.

Thompson bounced back with a pretty solid season in his return year in 2022. He averaged 20.4 points per game on 43/39/90 shooting splits. That was good enough to be a big part of the Warriors winning the 2022 NBA Finals.

Last season, Thompson was even better. He averaged 21.9 points on 44/41/88 shooting splits. Most importantly, Thompson played in 69 regular season games and held up physically through the team’s second-round playoff exit.

That last part is important, as that’s what should give the Warriors (or, less likely, another team) confidence in giving Thompson a new contract. However, despite us laying out the max terms, Thompson isn’t getting a max deal. Instead, his current $43.2 million contract probably represents a good starting point for an extension.

In recent years, we’ve seen a handful of veteran players do an in-season extension that took their salary down from the prior season. The best example was Al Horford last season. Horford was on an expiring $26.5 million contract with the Boston Celtics. He signed a two-year, $19.5 million extension that runs through this season and next.

Thompson is younger than Horford, and better positioned to not have to take such a drastic pay cut. As laid out above, he’s still extremely productive, and he has a long, championship history with Golden State.

That brings us back to Green and his new contract. He made $25.8 million in 2022-23, before declining a $27.6 million player option for 2023-24. Despite rumors that Green could look to leave the Warriors, he pretty quickly agreed to a four-year, $100 million contract. That deal sees Green make $22.3 million this season, before topping out with a $27.7 million player option in 2026-27.

While Green hasn’t missed seasons like Thompson has, last year’s 73 games were the most he’s played in a single season since 2017. He’s regularly become a guy who will miss 20-30 games a year. Thompson, despite the two missed season, has been a relative ironman. And again, his nightly production is always there. He’s one of the more consistent performers in the NBA from game to game.

Adding it all up, and given the Warriors ever-present massive tax bill, an extension like this seems to make sense for both sides:

    • 2024-25: $35,000,000
    • 2025-26: $32,200,000
    • 2026-27: $29,400,000
    • 2027-28: $26,600,000
    • Total: four years, $123,200,000

That’s the max allowable of four years, but it includes the max allowable 8% declines each season. As this extension would run through Thompson’s age-34 through age-37 seasons, it’s fair to expect some drop-off in his play. Having the contract mirror that makes sense. If Thompson wants a player option on that final season, that’s fair. Green got one on his new deal, and Andrew Wiggins got one in the extension he signed last summer. If that's the case, the final season would need to be for the same amount as the preceding season. This is because a player option can't be for less salary than the prior season was for. That would boost Thompson's contract to a slight bit more.

For Thompson, this locks in more money than Green got, which seems fair, given his durability and overall impact. It also aligns the team to have Thompson, Curry, Green and Wiggins all signed through at least the 2025-26 seasons.

If it’s more important for the Warriors to keep the tax bill in check right now, especially given the new second apron restrictions, they could structure a traditional deal that looks like this:

    • 2024-25: $27,500,000
    • 2025-26: $29,700,000
    • 2026-27: $31,900,000
    • 2027-28: $34,100,000
    • Total: four years, $123,200,000

The overall money is exactly the same, but the contract starts lower and goes up the max allowed 8% per year. Again, a player option on the final season is a fair concession by Golden State.

This type of structure would help the Warriors lower their overall team salary into a range where getting under the second apron entirely is possible.

In reality, Golden State and Thompson will likely agree to a total salary number, and then the Warriors can structure the deal in whatever way they deem most beneficial. There are plusses and minuses to both approaches. A lot depends on how much the team cares about dodging the second apron in the immediate, balanced against creating some flexibility further down the line.

In the end, an extension makes the most sense for both Thompson and the Warriors. There’s no reason to make him play out the season in limbo, and possibly creating unnecessary drama approaching free agency in July. For Thompson, sacrificing making the most possible money to lock in security for the remainder of his career makes sense too. Look for both sides to eventually find that middle ground and to get a deal done before the end of the season.

 


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