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Jayson Tatum’s contract extension possibilities

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Tatum is poised to sign the richest contract extension in Boston Celtics history.

Dallas Mavericks v Boston Celtics Photo by Brian Babineau/NBAE via Getty Images

If you’ve clicked on CelticsBlog in the last few weeks, you know Jayson Tatum has made quite the leap. Scroll around the site and you’ll see any number of pieces talking about just how good Tatum has been as of late. This article isn’t another one of those. Well…not really!

Because Tatum has been so good as he wraps up his third season, it’s time to cast our eyes towards the future. This summer, Tatum is eligible for an extension of his rookie scale contract. Danny Ainge will have until the start of the 2020-21 regular season (late-October) to extend Tatum’s contract. If no agreement is reached, Tatum will become a restricted free agent in the summer of 2021.

Let’s start there. Boston and Tatum not reaching a contract extension this coming summer/fall doesn’t mean Tatum is necessarily leaving town. Far from it actually. In that somewhat unlikely scenario, the Celtics would retain the right to match any contract Tatum could sign as a restricted free agent. At this point, the max deal Tatum could sign with another team in the summer of 2021 would be for four years and a projected $134,375,000. That’s a first-year salary of $31.25 million (which is 25% of the projected salary cap of $125 million for the 2021-22 season) with 5% raises.

Tatum and/or Boston could also delay signing a contract extension and he could still sign a full four or five-year max deal with the Celtics in 2021. That deal would be for either four years and $140 million or five years and $181.25 million. Same first-year salary applies in this situation of $31.25 million, but the raises jump to 8% off the first-year salary.

Another option for Tatum would be to sign his qualifying offer. That’s a one-year contract at just under $13 million. At the end of that one-year deal, Tatum would be an unrestricted free agent.

The final, and least likely option, is that Boston doesn’t even extend Tatum a qualifying offer. That would make him an immediate unrestricted free agent in 2021. That’s only happening if Tatum decides that he’s leaving the NBA so that him and Deuce can travel the globe winning father/son 2-on-2 tournaments.

Now, forget everything you read in the preceding four paragraphs. It’s all great and accurate information, but it doesn’t matter. There is no chance Jayson Tatum’s contract situation remains unresolved into the summer of 2021. There are a couple of reasons why:

· Tatum is really good and Ainge will want to lock him up as soon as possible.

· Boston is highly unlikely to be a cap space team that summer anyway.

· Even if the Celtics are somehow a cap space team in 2021, the difference between Tatum’s cap hold and max salary is about $6.5 million. That’s not nothing, but it’s not enough to risk anything going wrong with him even reaching restricted free agency.

Got all that? Good! Now, what’s most likely to happen is that at some point between the majority of free agency wrapping up in mid-July and late-October’s extension deadline, Boston will ink Tatum to the largest contract they’ve ever handed out.

How much that extension will be is where things get interesting. The Celtics have a few different ways they can structure it. They are:

· “Regular” Extension

· Designated Player Rookie Extension

· 5th Year 30% Max Criteria Extension

The first one is the easiest. A “regular” extension doesn’t really have a name, because it’s really just a regular, old extension. In a regular extension, Boston can sign Tatum for 1-4 years and at any number between his minimum and maximum in first-year salary. Consider the extension Jaylen Brown signed this past fall. That contract includes some bonuses Brown could reach, but the base is for four-years/$107 million, with a first-year salary of $23.8 million. That’s about $4.8 million less than Brown could have signed for in that first season. A regular extension for Tatum would project to be four-years/$140 million.

This type of extension is unlikely. For one, Tatum is ahead of where Brown was at a similar point in their career-arcs. Second, the summer of 2021 projects to be one with a lot of cap space available around the NBA. Combine those two factors and Tatum would have no reason to leave any money on the table.

The other two types of extensions are similar enough that they are often confused for being the same. Let’s knock out the Designated Player Rookie Extension (DPRE) first because it’s a little simpler. All the DPRE does is allow the team to sign a player to a five-year extension. There isn’t any change in the first-year salary from a regular extension. It simply adds one year to length of the extension. For Tatum, the max contract under the DPRE projects to be five-years/$181.25 million.

The other type of extension Tatum can sign is the 5th Year 30% Max Criteria Extension. This is commonly known as “The Rose Rule” because the first player to make use of this type of extension was Derrick Rose with the Chicago Bulls in 2011.

What the Rose Rule allows for is for a player to make a jump in salary tier from the 0-6 years of service max tier to the 7-9 years of service max tier. That’s a difference in first-year salary of 25% of the salary cap to 30% of the salary cap. Those first-year salaries for 2021-22 project to be $31.25 million (25%) and $37.5 million (30%) based on a cap projection of $125 million.

In order to qualify for the 5th Year 30% Max Criteria Extension, Tatum would have to meet one of the following criteria:

· Make an All-NBA Team. Can be 1st, 2nd or 3rd team in 2020-21. Tatum could have also qualified had he made All-NBA in both 2018-19 and 2019-20. But he did not make it in 2018-19, so this criterion can only be met in 2020-21.

· Win Defensive Player of the Year in 2020-21. Like All-NBA, Tatum could have made it by winning DPOY in 2018-19 and 2019-20, but he didn’t win in 2018-19. He also won’t win 2019-20 either, but we’re moving on.

· Win MVP in either 2019-20 or 2020-21. Winning MVP meets the criterion if the player wins the award in any of the three seasons prior to the extension. That leaves this season and next for Tatum to meet this criterion.

Now, you might ask yourself: “If Tatum can sign this type of extension next year, we won’t know yet what he’s done in 2020-21. How does that work?” Excellent question! Considering the vast majority of players haven’t made All-NBA nor won DPOY twice in their first three seasons nor won even one MVP, the CBA allows for some projecting here. Essentially, the contract is written as a DPRE contract, with the ability to jump to the Rose Rule level if at least one of the criteria is met.

So, if Tatum signs a 5th Year 30% Max Criteria Extension and meets the criteria, that contract projects to be up to five-years/$217.5 million. If Tatum doesn’t meet the criteria, it would be for five-years/$181.25 million.

One additional note: teams don’t have to go all the up to the maximum allowable amount in a Rose Rule extension. They can split the difference between 25% and 30% of the cap. They can also put some escalators in the deal, where it starts at 25% and can climb as high as 30% in first-year salary, if the player meets certain negotiated markers. The Rose Rule simply allows for the deal to go up to the max of 30% of the cap.

Now you know all the numbers. So, what will Ainge offer and what will Tatum sign? We already covered the reasons that a regular extension is out. And we know Ainge isn’t messing around and letting Tatum actually get to restricted free agency. Given Tatum’s current play, it’s likely Ainge will offer him both the Designated Player Rookie Extension (to ensure a five-year extension) and the 5th Year 30% Max Criteria Extension. This will allow Tatum to make the most possible money, if his play proves worthy.

This would put Tatum under contract with the Celtics through the 2025-26 season. It’s likely that fifth and final season will include a player option. Tatum will still only be 27-years-old in 2025 and a player option would allow him to get to that third contract even quicker.

Under Danny Ainge, the Celtics have only signed two players to rookie scale extensions: Jaylen Brown last fall and Rajon Rondo back in 2009. Barring something really unexpected Jayson Tatum will be the third and he’ll bring home the biggest financial windfall in Boston Celtics history.