The Complicated Case of Zion Williamson’s Next Contract

Keith Smith
Keith Smith, Resident NBA ExpertMarch 07, 2022
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UPDATED 4/29 PER A PROJECTED $128.1M 2023-24 LEAGUE CAP

Zion Williamson has finally made his way back to New Orleans for the next phase of his rehab. Williamson has missed the entire season due to a fracture in his right foot. Williamson spent several months rehabbing away from the team in Portland. Now, he’s back in New Orleans, but there’s still no timetable for his return.

At best, it seems like Williamson might play in 10 or so games this season. And that’s at best. If the uber-talented third-year forward doesn’t appear in games this year, he’ll have played in a grand total of 85 games over his first three seasons. 85 games. Or just three more games than one standard NBA season. And thus come the complications with Williamson’s next contract. All signs point to Williamson wanting a full max deal. The Pelicans may be reluctant to go there. Again, 85 total games. In three years!

What we’re going to do here is break down a few different options for Williamson and the Pelicans, as well as Williamson’s options if New Orleans were to trade him.

One note: Williamson has one year left on his rookie scale deal. He’s under contract to the Pelicans for $13,534,817 for 2022-23. Any new deals we are talking about here would start with the 2023-24 season. 

 

The Full Max

We’ve harped on the 85 games a bit, but those 85 games were pretty great. Williamson averaged 25.7 points, 7.0 rebounds and 3.2 assists in those appearances. He’s been borderline dominant as an offensive player whenever we’ve seen him. If the health wasn’t a question, the Pelicans would likely give him a full max extension, without a question. Here’s what that would look like:

  • 2023-24: $32,025,000
  • 2024-25: $34,587,000
  • 2025-26: $37,149,000
  • 2026-27: $39,711,000
  • 2027-28: $42,273,000
  • Total: Five years, $185,745,000

    (based on a $128.1M 23-24 league cap)

This is a five-year extension with 8% raises. It starts at the full projected max of $32,025,000. This is the so-called “standard” max extension that the best players sign coming off their rookie scale contracts. The very best can also command a player option on that fifth season, a la Jayson Tatum and Donovan Mitchell on their current contracts.

 

The Full Max with “Embiid Protections”

We’re not going to re-do the math here, because the contract would be the same as above, but with some important non-guaranteed money.

Back in 2017, Joel Embiid signed one of the more unique max extensions in NBA history. The Philadelphia 76ers and Embiid agreed to a deal with prior injury protections. If Embiid suffered a relapse with foot or back injuries, which had sidelined him during his first few seasons, the Sixers were able to waive him and get out of the max deal with minimal guaranteed money owed to Embiid before each of the final four seasons of the extension.

The key was that Embiid had to miss 25 games or play fewer than 1,650 minutes in the prior season. If that was the case, Philadelphia could waive him and get out of paying the remaining years of his contact.

Obviously, the above never happened and Embiid blossomed into one of the NBA’s most dominant players. He’s even gone on to sign a second max extension. But the 76ers were protected if things went sideways.

Could New Orleans and Williamson come to an agreement on something similar? It’s possible. They could put in protections for foot or knee injuries, both of which Williamson has had since coming to the NBA. But Embiid’s former deal remains unmatched since he signed it. It’s not just rare, it’s completely unique.

One other factor to consider: Embiid signed that extension with that specific language, because he and the 76ers had a great working relationship from the time he was drafted. Williamson and the Pelicans haven’t been in that spot. That alone could be enough to take this option off the table.

 

The Designated Player Rookie Extension

Another extension option for Williamson and the Pelicans is to sign an extension with Designated Player language. This is the type of extension that Luka Doncic and Trae Young both signed last offseason and will have kick in for the 2022-23 season.

Essentially, if Williamson comes back and has a monster 2022-23 season, he can qualify to jump from the 0-6 Years of Service/25% of the cap tier to the 7-9 Years of Service/30% of the cap tier. That deal would look like this:

  • 2023-24: $38,430,000
  • 2024-25: $41,504,400
  • 2025-26: $44,578,800
  • 2026-27: $47,653,200
  • 2027-28: $50,727,600
  • Total: Five years, $222,894,000

    (based on a $128.1M 23-24 league cap)

In order to qualify for the Designated Player Rookie Extension, Williamson would have to accomplish one of the following in 2022-23:

  • Win MVP
  • Win Defensive Player of the Year
  • Make an All-NBA Team. This can be First, Second or Third Team.

It’s probably safe to take the first two out of the mix. But it’s not crazy to think Williamson could make an All-NBA team. Again, in a mostly-healthy 2020-21 season, he put up 27/7/4 on 61% shooting. Those are All-NBA type of numbers, especially if the Pelicans make the jump to being a playoff team.

The better question is: Would New Orleans even offer this? This is riskier than a standard max deal because of the roughly $36.8 million more in total salary over the life of the deal. What if Williamson had exactly one healthy, dominant season and then went right back to being injured on a regular basis? Talk about an albatross on your cap sheet.

 

The Extension After a Trade

Here’s where things get kind of interesting. There’s been extensive reporting that Williamson isn’t exactly happy in New Orleans. If the Pelicans can find a team willing to gamble that they can get him happy and healthy, they could cash in and trade Williamson before signing any sort of extension.

In this case, Williamson would still be eligible to sign any of the extension possibilities laid out above. This includes the Designated Player Rookie Extension. As long as a team acquires a player while they are still on their Rookie Scale contract, they inherit the ability to sign that player to a Designated Player extension.

Something else to keep in mind: It’s likely that Williamson is traded before he signs an extension OR that he’s traded after the extension kicks in with the 2023-24 season. Signing an extension this summer, then trading Williamson at any time during the 2022-23 would come with the “Poison Pill” challenge.

Since a player signed to a Designated Player extension can’t be traded for one year, we’ll use the standard full max extension as our example here.

Because Williamson would have a pending extension on the books, he’d count for his 2022-23 salary of $13,534,817 as outgoing salary for the Pelicans. For the acquiring team, Williamson would count for the average salary of all of the years he’s under contract. In this case, that would be $32,947,470.

That $19.4 million difference makes putting a trade together nearly impossible. Once the league year flips over to 2023-24, Williamson would count for his actual salary of $31,750,000 for both sides of a trade. And, of course, if he’s traded before an extension is signed, Williamson counts for the $13,534,817 salary on both sides.

 

Playing Things Out to Restricted Free Agency

There are two ways this could go. The first is fairly simple. The Pelicans and Williamson don’t reach agreement on an extension this offseason and he ends up set for restricted free agency in 2023-24. Nothing changes as far as the contracts the Pelicans can offer him, minus the ability to offer a Designated Player Rookie Extension. Because it would be a new contract, New Orleans can’t do the extension. However, if Williamson met the criteria, he would still qualify for the so-called “Rose Rule” and it would essentially be the same deal as the Designated Player Rookie Extension, in terms of salary and years.

And, as always, the Pelicans could offer him a standard full max contract, or an amount less than that.

Second, Williamson could sign an offer sheet with another team and force the Pelicans to either match it or let him walk. That offer sheet projects to look like this:

  • 2023-24: $32,025,000
  • 2024-25: $33,626,250
  • 2025-26: $35,227,500
  • 2026-27: $36,828,750
  • Total: Four years, $137,707,500

This is a four-year max deal with 5% raises. Generally, an offer sheet includes all the bells and whistles to entice the incumbent to let the player walk. This deal would likely include a 15% trade bonus, a player option on the fourth season and probably some up front actual payments. The idea is to make it so that it’s as uncomfortable as possible for the incumbent team to match.

 

Signing the Qualifying Offer

This would be unprecedented for a player of Williamson’s stature. No first overall pick has gone this route. Either they’re such a bust that the team holding their free agent rights is ready to move on, or, more commonly, the player is good enough to get a shiny new deal.

It’s been mentioned that eventually some top pick is going to want to change teams badly enough that they won’t sign an extension, nor test the offer sheet process. In that case, the thinking is that player will simply sign their qualifying offer (a one-year contract for a pre-set amount) and then become an unrestricted free agent the following season.

For Williamson, his qualifying offer currently projects to be $17,595,263. If he signed that qualifying offer, he’d play the 2023-24 season for the Pelicans and then become an unrestricted free agent in the summer of 2024.

However, there is a very important caveat in Williamson’s case. In order to get that $17.6 million Qualifying Offer, he’d have to meet Starter Criteria. That means in 2022-23 (assuming he does not play at all this season), Williamson would have to start either 41 games or play at least 2,000 minutes. Given that he’s played a total of 85 games in three season and topped out at just 2,026 minutes in his one healthy season, there’s a risk Williamson won’t meet Starter Criteria.

If Williamson fails to meet Starter Criteria, his Qualifying Offer would drop to an amount equal to the 15th pick of his 2019 draft class. (This was Sekou Doumbouya for those that are curious!) In that case, Williamson’s Qualifying Offer would drop to $7,744,600.

Signing the $17.6 million Qualifying Offer is risky enough that it’s unlikely. Signing one for nearly $10 million less would never happen. And it’s important to note that the Pelicans had even a whiff that Williamson might be looking at going the qualifying offer route, they control his starts and playing time. Teams have been known to hold players out, bring them off the bench or reduce their playing time in order to keep Qualifying Offers at a lower amount.

 

Summary

Zion Williamson’s pending extension talks may be the most fascinating in NBA history. Between his health issues, uneasy relationship with the New Orleans Pelicans and the current trend of players signing extensions and asking for a trade later, this could be a precedent-setting deal.

There are a few priors to consider here. We already covered Joel Embiid. The Sixers center had played in just 31 games when he signed his extension. Those 31 games were terrific, but the injury history gave us the most complicated maximum extension in NBA history. And that type of extension hasn’t been seen since.

A couple of years later, Ben Simmons signed a five-year, maximum extension despite having missed his rookie season. But he had appeared in 81 and 79 games in years two and three of his career. Not exactly the same territory as Williamson.

Markelle Fultz might be the closest comp we have for Williamson. He played in just 33 total games in his first two seasons with the 76ers. He was then traded to the Orlando Magic and played in 72 games in his third year. But given his injury history, and related relative lack of development, Fultz signed a three-year, $50 million extension. And that includes only $2 million in guaranteed money on the final season. It’s hard to imagine Williamson accepting an extension that small.

The other “sort of, but not exactly” player who can work as a comparison is Kristaps Porzingis. He had played in considerably more games than Williamson by the time he was extension eligible, but Porzingis was traded to the Dallas Mavericks while recovering from a torn ACL suffered in his third season. Even though Porzingis missed the entirety of his fourth season, he still signed a full five-year, max deal with the Mavs as a restricted free agent.

There really isn’t a great comp here. Embiid seems safest, but he and the 76ers were already inexorably linked through “The Process” by the time he inked his team-protected extension. There was none of the tension that Williamson and the Pelicans reportedly have.

Usually, we finish these pieces with a projection of what the next deal might look like. In this case, it’s truly impossible. We can comfortably rule out Williamson signing the Qualifying Offer. Given the health issues, it’s hard to believe Williamson will play enough next season to make an All-NBA team and qualify for the Designated Player Rookie Extension. So, we can probably rule that out too.

That leaves either a standard max (which could include the Designated Player language, just in case Williamson breaks out) or playing things out to restricted free agent.

It’s also possible things go the Kristaps Porzingis route. The Knicks were worried Porzingis would never get, and stay, healthy. They simply cut ties and traded him, as opposed to tethering their future to an injury-prone big man. The Pelicans could do the same. And they could do it early enough to leave Williamson time to ink an extension with an acquiring team. Or they could skip the extension and trade Williamson in-season, and let his new team handle his restricted free agency and a new contract as they see fit.

Anyone who tells you they know how this will go down either has a crystal ball, or is simply guessing. Zion Williamson’s next deal, or maybe even lack thereof, will be debated endlessly, because it is truly one of the most complicated contract cases in NBA history.

 

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