James Harden signs four-year, $118M extension with Rockets
0:49 | NBA
James Harden signs four-year, $118M extension with Rockets
Sunday July 10th, 2016

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In a rare but logical move, the Rockets opted to renegotiate and extend James Harden’s contract, thereby buying themselves an extra season to reload around their All-Star shooting guard.

Although Harden was already under contract through the 2017–18 season on a five-year, $78 million rookie extension, the Rockets reached a new four-year, $118 million deal with the 2015 MVP runner-up, according to Yahoo Sports. The new agreement gives Harden significant raises during the 2016–17 and 2017–18 seasons while also extending his contract through the 2019–20 season.

The final year of the renegotiated deal includes a player option, meaning that Houston has delayed the earliest possible date Harden can hit unrestricted free agency from July 2018 to July 2019.

The four worst deals of NBA free agency | Dwight Howard leaves Rockets

For Harden, 26, the motivation to re-up is obvious: more guaranteed money now. The four-time All-Star’s 2016–17 salary will reportedly jump from $16.8 million to $26.5 million while his 2017–18 salary will increase from $17.8 million to $28.5 million. In addition to those raises, Harden will reportedly receive $30.5 million in 2018–19.

The new contract structure ensures that Harden remains Houston’s highest-paid player next season despite the NBA’s salary cap spike this summer. It also allows him to become an unrestricted free agent in 2019 after he’s completed 10 years of service, thereby ensuring his next contract can begin at the highest possible starting salary.

Generally speaking, NBA contract renegotiations are few and far between. However, the salary cap allows teams to use their excess cap space to increase a player’s salary if that player has completed at least three years of a contract that is four or five years long. In this case, Houston had extra space thanks to the rising salary cap and the departure of Dwight Howard, while Harden was eligible for a renegotiation because he was three years through a five-year deal.

The Rockets’ primary motivation here is stability. After making the 2015 Western Conference finals, Houston endured a disappointing 2015–16 that led to coach Kevin McHale’s quick firing and Howard’s off-season move to Atlanta in free agency. With new coach Mike D’Antoni on board and Harden left as the team’s only remaining star, the Rockets decided to recommit to their best and most productive player.

Houston surely realizes D’Antoni is doomed without Harden’s full buy-in: Last year Harden led the Rockets in minutes, points, assists, and he took nearly twice as many shots as any of his teammates. This new deal puts Harden back clearly at the top of Houston’s financial pecking order and preempts any possible tension over Harden’s salary being lower than that of off-season acquisition Ryan Anderson. The Rockets aren’t merely asking Harden to be the face of the franchise, they’re going well out of their way to reward him as a franchise guy. Ideally, this investment will earn them some patience from Harden as their coaching change and post-Howard roster reshaping process plays out.

Houston also bought itself an extra year to build around Harden before he can hit the market. For a team in transition, delaying the ticking clock to free agency is a major win. Under Harden’s previous deal, he would have entered the 2017–18 season in the middle of the free-agency frenzy that Kevin Durant dealt with this season. The renegotiation gives everyone more time: D’Antoni can focus solely on the court this season, Rockets GM Daryl Morey doesn’t need to enter “panic mode” next summer in an attempt to appease Harden, and Harden himself need not worry about media distractions and speculation until after his age-29 season.  

The downside to Harden’s renegotiation is the Rockets can’t spend the extra money they shuffled his way on filling out their roster this summer or next summer. Given that most of this summer’s impact free agents have already signed and the value of Harden’s raise ($9.8 million) doesn’t go all that far in this year’s market, Houston apparently concluded that it was better to solidify its long-term plan around Harden rather than marginally improve his short-term supporting cast. That thinking is justified, given Harden’s central role in Houston’s offense and his lack of major injury issues in recent years.

With or without this extension, the Rockets are only going as far as Harden takes them. Houston’s hope now is that a satisfied and compensated Harden is a motivated and focused Harden.

Grade: A

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