Back in 2003, as the Nets were looking for a buyer (who eventually became Bruce Ratner), owners Lewis Katz and Ray Chambers decided to buy out Dikembe Mutombo. Mutombo, who had been disappointing in his first year with the team, was owed $37.6 million over two years. His $19.3 million contract in 2004-05 would have been the NBA's second highest.
So, to improve the balance sheets, the Nets bought out the 7'2" center for around $27.5 million, roughly 73 percent of what was owed. That $19.3 million salary would instead be a $14.1 million hit on the salary cap. The deal ultimately saved the Nets $20 million in salary and luxury taxes and Ratner agreed to buy the team two months later. It was the biggest buyout ever at the time.
Now, while there's been a lot of talk about stretching Deron Williams contract, there's been little discussion of the more traditional buyout, like the one Mutombo received. Billy King didn't shed any light on what he's planning when he spoke to media earlier in the week and no doubt, the Nets would rather trade D-Will than buy him out. Still, a traditional buyout has advantages.
Under the stretch option, the Nets could choose one of two routes, based on timing. If they decide to stretch Williams before July 1, the remaining two years on his contract --$43.4 million-- would be extended over five years, twice the number of years remaining on his contract plus one. If they wait to stretch him after July 1, they’ll pay him the full $21 million next season, then stretch his last year — worth $22.3 million — over three years.
Here's how it would break down as reported by The Brooklyn Game.
|If stretched between 7/1-8/30/2015||$8,674,787||$8,674,787||$8,674,787||$8,674,787||$8,674,787|
|If not traded & stretched 8/30/2015 or after||$21,042,800||$7,443,712||$7,443,712||$7,443,712
The advantage, particularly under the post-July 1 option, is that the Nets would only carry a seven-figure hit on its cap, but that cap hit would stretch out to 2018-19. That's a long time to carry so much non-productive salary on your books. Also, Williams would have no say in the matter. The stretch option is in the hands of the team.
Under a traditional buyout, the deal is negotiated, and it would be done and over with after 2016-17, when the cushion of the new TV rights deal will be available. Let's say the Nets offered their point guard 70 percent on the dollar, or $30.4 million over two years. Their cap hit next year would be $14.7 million and $15.7 million in 2016-17. Those are big numbers but rather than wait five years to get Williams off the books, it would be done in two. If another team signed him, the Nets liability would be reduced further (as it would be with the stretch option).
Either the stretch or traditional option would carry basketball risks. As disappointing --and as expensive-- as Deron Williams was this season, he performed at a much higher level than Jarrett Jack, who both backed up and played alongside him. As John Schuhmann asked in a tweet this week, "How they getting a new PG?" Trade for Ty Lawson, who is now persona non grata in Denver? Sign Cory Joseph with mini-MLE? Draft someone?
It won't be easy. Nothing this summer is likely to be easy. And there is no biggest issue that what to do with Deron Williams' contract. Is a stretch or buyout likely? It's possible, mainly because the instruments exist, but it would be an extreme step, one the Nets are, as far as we know, willing to make.
- Should Brooklyn Nets Stretch Deron Williams? - Devin Kharpertian - The Brooklyn Game
- GM King, Nets have work cut out for them - Mike Mazzeo - ESPN New York
- How Nets will approach all 15 players in busy, crucial summer - Tim Bontemps - New York Post