Although "Rudy Gay contract extension" is a four-word phrase capable of striking fear in the hearts of a fanbase, Kings supporters will likely view Sunday's news as a dodging of a bullet rather than a fatal blow for the franchise's future.
Sacramento has agreed to terms on a three-year, $40 million contract extension with Gay, according to Yahoo Sports and ESPN.com. Gay, 28, is on the books this season for $19.3 million. His new contract will pick up in the 2015-16 season and run through 2017-18, although the deal's final season is a player option.
Since signing a five-year, $82 million contract with the Grizzlies in 2010, Gay has emerged as one of the most divisive players in the league. A long, talented wing with plenty of natural ability, Gay's shooting efficiency and shot selection have often left something to be desired. Memphis hasn't skipped a beat since trading him to Toronto in January 2013. The Raptors, in turn, emerged as one of the East's top teams only after trading Gay to the Kings last December. Now in year nine, the 2006 lottery pick has still played in only one playoff series and he's advanced far enough in his career that he's now being paid on his polarizing performance rather than yet-to-be-realized potential.
Gay averaged 20.1 points (on 48.2 percent shooting), 5.5 rebounds and 3.1 assists down the stretch last season with Sacramento. While his arrival didn't suddenly boost the Kings into playoff contention, Sacramento did go 21-35 (.382) with Gay in the lineup, as opposed to 7-20 (.259) without him. This season, Sacramento is off to a pleasantly surprising 6-4 start, and Gay is averaging a team-high 22.5 points (on 44.8 percent shooting), 6.8 rebounds and 3.5 assists. He joins superstar-in-the-making center DeMarcus Cousins as the roster's two centerpieces, and both players entered the season with rare positive press thanks to their gold medal-winning stints with USA Basketball at the FIBA World Cup in Spain.
The Kings were reportedly keen on keeping Gay this summer, when he had the opportunity to opt out of his current contract and an early extension is likely the byproduct of those ongoing talks. Gay's opt-in ensured Sacramento would keep one of the league's most inflated contracts on the books for a second season. By drastically cutting Gay's average annual value and including an opt-out in 2017, this extension represents a dramatic improvement for Sacramento, but the Rudy Gay Experience is still going to cost the Kings. Trading for Gay required that the Kings pay him $17.9 million last year, $19.3 million this year and roughly $27 million over the next two seasons. That adds up to $64-plus million over four seasons, and there's a decent chance that Sacramento won't have an All-Star nod or a playoff appearance to show for that sizable investment.
Two obvious silver linings exist: The worst of the salary-cap carnage will be over after this season, and the new terms, on their own, are pretty reasonable. Remember that the league's new media rights revenue is set to jump for the 2016-17 season, meaning the second year of Gay's extension will occupy a relatively smaller portion of the Kings' cap than it will next season. Let's say, for example, that Gay's extension starts at around $12.5 million in 2015-16 and increases to $13.4 million in 2016-17 with standard raises. A $13.4 million salary in an $85 million salary cap would be roughly equivalent to a $9.9 million salary in the NBA's current $63 million salary cap. Critics can harp on Gay's quick trigger, limited range and unquestionable thirst for the long two, but it would be difficult to make the argument that he would be overpaid at less than $10 million a year. Indeed, Raptors guard DeMar DeRozan, Gay's former teammate, currently offers similar scoring production (and similar efficiency questions) at that price level, and he is generally regarded as a bargain rather than an albatross.
Sacramento is a franchise still looking to establish itself after the disastrous Maloof ownership tenure. New owner Vivek Ranadive has shown he is willing to spend for talent, but Kings management has mostly been forced to settle for C-list free agents (Carl Landry, Darren Collison). At least some portion of Sacramento's desire to retain Gay can be chalked up to the limited availability of better options that are actually attainable. The risk the Kings faced in trading for Gay was significantly greater than the limited risk generated by this extension. By keeping the term length short, the Kings do not need to fret about age-related decline, and Gay's contract figure will be infinitely more tradeable on his new contract compared to his current one should this chemistry experiment fail to pan out.
It's hard to view this as anything except a head-scratcher from Gay's perspective. The deal's average annual value of $13.3 million is down significantly from his last contract ($16.4 million) even though Gay has enjoyed good health in each of the last three seasons, won't turn 30 until August 2016 and was on track for a strong leverage position next summer. Outside suitors might not have been jumping all over themselves to acquire him next summer, but the Kings would have felt significant internal and external pressure to retain him in virtually any scenario. While extending now ensures that Gay gets another pay day and protects him against the threat of injuries this season, waiting until unrestricted free agency seemingly would have offered the opportunity for significantly larger riches. This especially if Sacramento continues on its upward trend and Gay continues to be a central piece of that newfound success.
This looks like a classic case of settling, which is understandable if Gay is enjoying his current circumstances but will likely be second-guessed once next summer's inflated deals are added to the mix and then once again when Gay's next opt-out is approaching. In a salary landscape where deal after deal (Gordon Hayward, Chandler Parsons, Klay Thompson, etc.) has initially raised eyebrows, it's somewhat surprising that Gay would agree to a shrug-inducer rather than fully flex next summer.
The challenge for Gay now will be to use his newfound security as fuel for a career year. There are some promising early signs. Gay's assist numbers and free throws attempts are at career-high levels and he's shooting fewer long twos, percentage-wise, than ever before. Both need to continue if Sacramento is going to keep pace in the West. The Kings, who haven't made the playoffs since 2006, are in the same place today as they were yesterday: hoping that a Cousins-Gay core can eventually revive their postseason dreams. This contract extension doesn't single-handedly dash those hopes. It should count as a mild win for the team, even if Gay's track record is pretty dubious.