Inside the math of Julius Randle’s future max contract with the Knicks
The Knicks and Julius Randle are cruising towards a maximum contract negotiation. Is it possible that one of the solutions that gets Julius the most money could actually be the one that preserves a high amount of cap flexibility for the Knicks?
Admit it: When you read the words “Julius Randle max contract extension,” you develop a bit of agita. Maybe you feel this way because you believe Randle isn’t deserving of a fat new deal, or because you’re concerned about opportunity cost. You know this team needs to add more talent, and if Randle costs too much, he’ll impact what New York can really do in free agency.
So what should the Knicks do? They have a number of options available to retain Randle’s services. Let’s see if we can find the best option.
Scenario 1: Sign four-year max extension in summer 2021
Randle could sign a contract extension this offseason by tacking on four more years (not five, because he’s under contract next year) and have a starting salary of $26,028,000 in 2022, while earning $116,605,440 over the four years of that deal. If you read Brian Windhorst’s article, you’d see that Randle can make up to $23,760,000 in 2022, but Windhorst’s piece fails to account for the imminent playoff bonus in Randle’s future. With Randle in the playoffs, he gains an extra $945,000 next season, bringing his salary to $21,690,000 in 2021, and that increases the four-year max he could receive. It’s worth mentioning that while the Knicks could non-guarantee Randle’s contract or do a rare renegotiation with him, they are unlikely to do either option.
This deal would set up Randle for free agency once again at 31, and he would turn 32 early in the following season. Randle would make about $180 million from the Knicks over seven total years and can sign one last meaty contract, assuming all goes well. This benefits the Knicks greatly, yet it hurts Randle’s earning potential. When you look at the best players in the game, they’re not taking severe pay cuts, right? No! They’re getting paid max salaries. Randle deserves the same, especially if he keeps performing like he did this past season.
Scenario 2: Sign five-year max in summer 2022
If Randle waits until the 2022 offseason to sign a deal, he’s eligible to sign a five-year, 30% max deal starting at $34,735,800. A five-year max would give Randle a total of $201,467,640 and he would enter free agency at 32 before turning 33 in the following season.
When considering the first three years in New York, Randle will have made almost $265 million as a Knick. This is a big commitment for New York, but the concern has to do with Randle’s first year salary creating obstacles for adding top tier talent. It’s still possible to sign a player like Bradley Beal by doing it this way with Randle, but it’s extremely tight. There can be some maneuvering, but this deal would essentially take the Knicks out of the running for Stephen Curry or Chris Paul, as both can actually earn more than the 10-year max threshold.
So both of these scenarios come with their own specific problems. Scenario 1 doesn’t pay Randle what he would be worth on the open market and Scenario 2 complicates matters for the Knicks as they try to construct a contender.
I would like to find some sort of solution — a compromise, if you will — that can benefit all parties involved. Randle wants to get paid and the Knicks want to pay Randle. Randle wants to win, and so do the Knicks. So here is the happy medium: the Knicks extend Randle after this season for two years, and then give him a five-year max contract after that.
Despite breaking his right leg in his first career NBA game, Randle has been a workhorse. The big man has only missed 21 games over his last six seasons — for context, Kristaps Porzingis has missed more games this past season alone. The two games Randle missed in his first year with the Knicks were due to the passing of his grandmother, while two of the nine games he missed in New Orleans the previous year were the last two games of the season, when the tanking Pelicans were 2-12 in the 14 games prior to Randle sitting.
Yet even with that frightful rookie debut, Randle currently has seven years of NBA service. Simple math tells us that next year will be his eighth season in the NBA. Veterans who have accrued seven to nine years of service time can receive up to 30% of the salary cap, while players who have been in the league for at least 10 years are eligible for 35%. Even if Randle makes the All-NBA team, he is ineligible to receive a 35% super max this summer, as he was not drafted by the Knicks and was not traded to the Knicks while on his rookie contract.
Scenario 3: Sign two-year max extension in summer 2021, then five-year max in summer 2024
By inking a two-year extension this offseason, Randle would set himself up to earn a 35% max in 2024. The 2024 contract wouldn’t be a super max deal (as, again, he’s ineligible) but it would instead be the standard 35% given to players with at least 10 years of experience. The two-year deal is projected to be worth $54,138,240 in total, with the first year being the $26,028,000 and $28,110,240 described in Scenario 1. Once the contract expires, Randle could then sign a five-year max through his age-34 season and he would turn 35 shortly after that next season were to begin. The 2024 salary cap has not been projected, but the previous year will be at least $119.2 million. So if we decided to hypothetically bump the salary cap up to $125 million the following year, here’s what his contract would look like:
Not too shabby. When you factor in the money Randle has earned on this contract, that’s a total of about $370 million over 10 years.
What if we did something slightly different, though?
Scenario 4: Sign two-year max extension in summer 2021 with opt out included, opt out of deal, sign another two-year max in 2023 with opt out included, opt out of deal, and sign five-year max in summer 2024
Here’s a way for Randle to earn even more money. Randle could sign a 1+1 extension in 2021 with the second year being a player option, opt out in 2023, sign another 1+1, opt out again in 2024, and then re-sign for a five-year max deal. The contract in 2022 would be worth $26,028,000. If he opts out and signs for a 30% max, that would be $36,472,500 in 2023, before once again opting out in 2024 and then earning his five-year, $253,750,000 deal.
As you can see, Randle would earn a combined $62,500,500 in 2022 and 2023, and receive a projected bump in pay of $8,362,260 from Scenario 3. Randle would be taking home close to $380 million from 2019 to 2029.
Scenario 5: Sign two-year max in summer 2022 with opt out included, opt out of deal, sign another two-year max in 2023 with opt out included, opt out of deal, and sign five-year max in summer 2024
This would be how Randle can receive even more money. Randle would hit the free agent market in 2022 and could sign a two-year extension with an opt out. By doing this, he would earn $34,735,800 his first year. Randle could then opt out and re-sign for a 30% max again, which is projected to be $36,472,500. This would total $71,208,300 over the two-year span, leading Randle to then sign that five-year, $253,750,000 contract.
Making such a move would earn Randle $8,707,800 more than in Scenario 4, bumping his total amount earned as a Knick closer to about the $390 million threshold.
If the Knicks were to do this, they would enter the 2022 offseason with Randle’s cap hold at $32,535,000. New York can take advantage of Randle’s cap hold, sign their free agents, then go over the salary cap to give Randle his max contract. This would leave the Knicks with around $50 million to spend. However, if the Knicks extend Mitchell Robinson this offseason, they run the risk of not offering a player with 10+ years a 35% deal. So this isn’t the end of the world but it cuts things close — too close.
Scenario 6: Sign two-year max in summer 2022 with opt out included, opt in to deal in 2023, and sign five-year max in summer 2024
This is how Randle could, once again, earn even more money. The difference between this and Scenario 5 is that Randle would be opting in if it brings him more money.
Randle would sign a two-year contract in 2022 with an 8% raise. For reference, the maximum raise that Randle can receive annually while under contract is 8%. It’s possible that the max in 2023 is actually lower than the 8% raise from the $34,735,800 that Randle could earn if he opts in. Therefore, in that case, opting in would make more sense.
The difference between Scenarios 5 and 6 ain’t much when you’re earning over a projected $320 million anyway, but that’s what Randle would be eligible to receive.
The Knicks would certainly prefer to lock in Randle for 2022, as when you compare the maximum he could receive at this very moment compared to the cap hold he would have in summer 2022, signing him this summer would lead to a savings of $6,507,000 in free agency. With Joakim Noah’s dead money ($6,431,666) finally off the books in summer 2022, not extending Randle ahead of time would effectively negate any savings the Knicks could get. This is a player’s league, and Randle will absolutely get paid. This is merely a question of how willing he is to work with the team. The Knicks also may choose to not give Randle the power to continuously opt out. That’s a LeBron-esque power move that very few players have at their disposal.
In regards to cap space, Scenarios 3 and 4 projects to give New York somewhere in the ballpark of $56-58 million to spend in 2022. It’s a little too early to tell for certain as there are several moving pieces, and similarly with Scenarios 5 and 6 — that amount is expected to decrease with a Robinson extension looming this summer as well — but there should be room to sign a max player while still taking advantage of several rookie scale deals, including RJ Barrett’s.
Worried about the backend of that 35% max? I don’t care. I really don’t, especially if Randle plays at this level. It is the price of doing business to ensure Randle stays and that the Knicks can create the necessary cap space they need to build a legitimate contender. You think the Cavaliers would rather have a championship and Kevin Love’s terrible deal, or would they prefer never winning a ring and not having that bloated extension on their books? That’s a rhetorical question, if you didn’t pick up on it. What’s more, Love missing time is why the contract in Cleveland looks so bad. Randle may desire long term security like fellow Wildcat Anthony Davis did with Los Angeles, but again: Randle has barely missed time thus far.
The bottom line here is that the Knicks and Randle both stand to gain more by Randle signing an extension this offseason and delaying that 35% max contract for when the Knicks are presumably functioning as an over the cap team in 2024. After all, barring an unlikely Kawhi Leonard signing, the first time New York would be above the cap is after the 2023 offseason thanks to Randle, Barrett’s extension, and acquiring a star in 2022.
When considering his role on the Knicks, the landscape of teams with cap space in 2022, and that the only time Randle will have made the playoffs in his career thus far is with New York, there’s little reason for Randle to leave. What we don’t know is if Randle is amenable to taking a bit less than he could in 2022 to build a contender. Julius Randle is likely to be a Knick for a long time, something I’m still delightfully surprised to write after how last season transpired.
Scenarios 3 and 4 are, in my opinion, the best compromises if the Knicks do not land a marquee talent in 2021 and need to worry about cap space in 2022. Both options set Randle up to make over $300 million in a seven-year span starting in 2022, and each gives the Knicks more flexibility to provide Randle with a winning team. If either scenario happens, “Julius Randle max contract extension” shouldn’t give you agita at all.
