Next Contract Series: Tyrese Maxey

Keith Smith
Keith Smith, Resident NBA ExpertNovember 15, 2023
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The 2023-24 season is less than a month old, but Tyrese Maxey of the Philadelphia 76ers is already one of the league’s breakout stars. When things could have gotten messy for the Sixers, as the James Harden drama swirled, Maxey stepped up to give Joel Embiid a new star-level running mate.

There’s little thought that Maxey might be a flash in the pan. He’s shown the ability to more than a third- or fourth-banana previously. It’s only now that Maxey is getting the usage to show he can be an All-Star (and maybe more!) himself.

That leaves the 76ers in an interesting spot. Daryl Morey delayed signing Maxey to a lucrative rookie scale contract extension this past offseason. The reason for that made sense. Philadelphia will still control the summertime process, by making Maxey a restricted free agent. And the team can use his smallish cap hold to maximize their cap space, while still giving Maxey the contract he earns.

All of that makes sense. Maxey transferred a bit of risk to himself by playing out his rookie scale deal, but he’d be set to cash in even bigger if he had a great year.

And having a great year is exactly what Maxey is poised to do.

Now, some of that risk (but not too much) has flipped back towards Philadelphia. Let’s break it all down!

Signing a Rookie Scale Extension this season

We’re only including this to note that Tyrese Maxey is no longer extension-eligible. The deadline for players to sign rookie scale extension was back on October 23.

That means Maxey is now destined for free agency this coming summer. Barring some unforeseen disaster, Philadelphia will issue Maxey a qualifying offer worth $8,486,620. That’s a bump up from the $6,259,588 qualifying offer Maxey was set to get. The reason for this is that Maxey will assuredly meet starter criteria and will earn the larger qualifying offer.

In reality, none of that really matters, beyond the Sixers tendering Maxey a qualifying offer to make him a restricted free agent. He’s not signing the qualifying offer.

What does matter is Maxey’s cap hold. That figure will be $13,031,760. That’s what will sit on the Sixers books and that’s what will drive Philadelphia’s offseason.

Finally, for what’s it now worth, before 2023 free agency/extension season opened we projected Maxey to sign a five-year, 25% of the cap maximum extension. Nothing has changed to make anyone believe Maxey will make less than that amount, so let’s use that as our starting point.

Re-signing with the 76ers on a 25% Maximum Contract

As we said above, we projected Tyrese Maxey would sign a five-year rookie scale extension worth 25% of the cap. This was before Daryl Morey unveiled his cap space plan. But that deal should still be on the table, once Philadelphia uses up their cap space. Here’s what that contract projects to look like for Maxey:

  • 2024-25: $35,500,000
  • 2025-26: $38,340,000
  • 2026-27: $41,180,000
  • 2027-28: $44,020,000
  • 2028-29: $46,860,000
  • Total: five years, $205,900,000

That’s a five-year max deal at 25% of the projected $142 million cap for 2024-25. It includes the maximum 8% raises for Maxey, as well.

That’s right at where we projected Maxey on an extension (with a minor adjustment, as the projected cap has come in lower than originally anticipated).

But…Maxey might be poised to cash in even bigger, if he keeps up his torrid pace.

Re-signing with the 76ers on a 30% Maximum Contract

If Tyrese Maxey makes an All-NBA team, he would qualify for Designated Player status. That would make him eligible to jump to a 30% of the cap maximum. That would look like this:

  • 2024-25: $42,600,000
  • 2025-26: $46,008,000
  • 2026-27: $49,416,000
  • 2027-28: $52,824,000
  • 2028-29: $56,232,000
  • Total: five years, $247,080,000

That’s a 30% of the cap maximum contract with 8% raises. That’s a difference of $7.1 million in first-year salary and about $41 million in total salary over the life of the deal.

This is big, because Maxey likely would never have received Designated Player language in a rookie scale extension. He hadn’t sniffed an All-Star selection, let alone All-NBA selection. Now? Maxey looks like an All-Star lock, and there aren’t six guards playing better than he is in the NBA through the first few weeks of the season.

Note: If Maxey qualifies for Designated Player status by making All-NBA this season (he could also qualify by winning MVP or Defensive Player of the Year, but neither are likely), he doesn’t have to automatically get the full 30%. He’s simply eligible to get up to that much. Maxey and Philadelphia could negotiate for anything up to 30%. But history tells us that if a player is eligible for it, they’re going to get the 30% max.

Signing with another team as a free agent

If things were to get sideways between Tyrese Maxey and the Philadelphia 76ers, he could choose to leave town. In that case, it doesn’t matter if Maxey qualifies for Designated Player status or not. You can only get a Designated Player deal from the team that drafts you, or if you were acquired while still on your rookie contract.

Here’s the maximum deal Maxey could fetch from a rival team as a free agent:

  • 2024-25: $35,500,000
  • 2025-26: $37,275,000
  • 2026-27: $39,050,000
  • 2027-28: $40,825,000
  • Total: four years, $190,848,000

That’s a four-year, 25% of the cap max with the max allowable 5% raises. As you can see, Maxey would make about $6.4 million less by leaving the 76ers, even on the comparable 25% starting salaries over four years. Adding in the fifth year, which Maxey can only get from Philadelphia, is where the real difference in total salary comes in.

The Philadelphia 76ers Cap Situation

As we’ve noted several times, Philadelphia didn’t extend Tyrese Maxey, because they plan to use cap space this summer. There are a few paths the Sixers can take with their cap flexibility:

Clearing the decks

In this scenario, the 76ers go about as scorched earth as they can with the roster and leave only Joel Embiid’s contract and Tyrese Maxey’s cap holds on the books:

  • Joel Embiid: $51,415,938
  • Tyrese Maxey (cap hold): $13,031,760
  • Total cap space available: $65,864,062

This would mean Philadelphia would salary-dump Jaden Springer’s contract onto someone, waive Paul Reed (or salary-dump him, should his contract become fully guaranteed), renounce all of their free agents and trade away their 2024 first-round draft pick (or select a draft-and-stash player).

In this situation, the 76ers would have enough cap space to sign a 10+ Years of Service free agent at the projected max of $49,700,000, with just over $16 million in remaining cap space. Philadelphia would also have the Room Exception available, which projects to be just over $8 million.

So, let’s say the 76ers use all of their available cap space, and then they re-sign Maxey to a 30% of the cap max, they could be looking at the following:

  • Joel Embiid: $51,415,938
  • Max Free Agent: $49,700,000
  • Tyrese Maxey: $42,600,000
  • Leftover Cap Space Free Agent: $16,164,062
  • Room Exception Free Agent: $8,063,000
  • Nine Veteran Minimum Free Agents: $18,977,157
  • Total salary: $186,920,157

That would leave the 76ers over the Luxury Tax by $14,353,157 and over the Tax Apron by $6,991,157.

As incredible (and rare!) as it would be, that’s how a team can go from using cap space to deep into the luxury tax in the same summer.

Retaining some talent

In this scenario, the 76ers don’t clear the decks. They keep the following on the books:

  • Joel Embiid: $51,415,938
  • De’Anthony Melton (cap hold): $15,200,000
  • Tyrese Maxey (cap hold): $13,031,760
  • Paul Reed: $7,723,000
  • Jaden Springer: $4,018,363
  • 2024 First Round Pick (projected at 28): $2,668,715
  • Total cap space available: $40,929,280

This seems a bit more realistic. Philadelphia retains the ability to re-sign Maxey and Melton, while keeping Reed and Springer (a regular rotation guy and someone Nick Nurse seems to like) in the fold. And they use their draft pick to add some cost-controlled back-end roster talent.

Let’s say Philadelphia uses every bit of that cap space to sign one player, here’s what their books could look like:

  • Joel Embiid: $51,415,938
  • Tyrese Maxey: $42,600,000
  • Free Agent Signing: $40,929,280
  • De’Anthony Melton: $15,200,000 (same as his cap hold for simplicity’s sake)
  • Room Exception Free Agent: $8,063,000
  • Paul Reed: $7,723,000
  • Jaden Springer: $4,018,363
  • 2024 First Round Pick (projected at 28): $2,668,715
  • Six Veteran Minimum Free Agents: $12,651,438
  • Total salary: $185,269,734

This would result in the 76ers being $12,702,734 over the Luxury Tax and $5,340,734 over the Tax Apron.

Of course, in both scenarios presented above, if Tyrese Maxey doesn’t qualify for the 30% max salary, he’ll come in at $35.5 million vs $46.7 million. That lops off $7.1 million off either tax bill. Even then, Philadelphia still goes from being a cap space team to a tax team in the same summer.

Now, the Sixers could further cut the tax bill down by signing their two 2024 second-round picks to a deal that would start at about $1.2 million. That would shave roughly $2 million more off the tax bill.

Summary

Tyrese Maxey is going to get paid this summer. He’s either getting a 25% of the cap maximum contract or a 30% of the cap maximum contract. ESPN’s Bobby Marks noted that Maxey would be the first player in history to qualify for a Designated Player deal when coming off their rookie scale contract that didn’t sign an extension. That’s pretty remarkable, even considering the Sixers cap space aspirations.

Normally, we predict what a player will sign for, or suggest an alternative structure, at that point of a Next Contract analysis. There’s no need here. Maxey is going to re-sign with Philadelphia, and it will either be for the projected $35.5 million first-year salary or the $42.6 million first-year salary.

The real difference will come with how deep into the tax the 76ers go. It’s extremely rare for a team to use both cap space and end up as a taxpayer in the same season. You have to have a player with a small enough cap hold to use cap space, while also knowing that same player is also going to sign a max deal.

And that’s exactly where the Sixers are.

Even if Daryl Morey uses some of next season’s flexibility in a form of “pre-agency”, the math doesn’t really change. Maxey is still getting a max deal, whether the Philadelphia 76ers use their cap space now, or in July. And, if they use that space now, they could stay over the cap to retain some additional free agents.

Almost any path leaves the Sixers as a very expensive, somewhat top-heavy team. But they should have enough depth to remain title contenders for the remainder of Joel Embiid’s contract, and into the years when Philadelphia transitions to become Tyrese Maxey’s team.

 


#nba #next contract series #tyrese maxey #tyrese maxey
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