One Move Could Prevent the Kings From Stretching DeMar DeRozan's Contract

The end of August is usually a slow month for NBA transactions. Aside from the draft, the Sacramento Kings have had a slow offseason in general, with August being no exception. However, Sacramento is now getting close to an important deadline.

The Kings must decide whether to use the stretch provision on DeMar DeRozan’s $10M guaranteed salary by August 31. In other words, the Kings are deciding between paying DeRozan $10M this coming season or paying DeRozan $3.33M for each of the next three seasons.

We discussed the DeRozan situation in depth here about a month ago. Without DeRozan signing a substantial contract elsewhere to significantly reduce the dead cap hit via a set-off, waiving and stretching has always felt like the likely option.

Which Way Are the Kings Leaning?

Kings insider James Ham discussed this topic on the Locked On Kings podcast. Ham clearly laid Sacramento’s decision tree out based on what he has heard from a league source. Ham explained that “the Kings will stretch the DeRozan $10M unless they can make a trade that saves them $10M.”

I would be worried if the front office was not exploring this option. As explained later, though, there are reasons to not spend too much time on the trade machine coming up with trades that save the Kings $10M.

Scott Perry has plainly stated that they will not pay the luxury tax this season. This makes sense. The Kings won 22 games last season and are currently over the tax before filling their 14th roster spot. In no world should this be a luxury tax team.

The Sacramento Kings are projected to have a $225M payroll next season. That's $24M over the luxury tax and $3M over the 2nd apron.

Kings GM Scott Perry on the team's financial situation: “My philosophy is never to be a team going into the luxury tax unless we were ready to…
— Matt George (@MattGeorgeSAC) April 15, 2026

Ham did not discuss the potential set-off the Kings will receive when DeRozan signs with another team, which would alter the amount of savings needed to duck the tax.

It sounds like the Denver Nuggets’ interest in DeRozan is at a veteran minimum, which would come with an ~$846K set-off on DeRozan’s dead cap hit this season. So, the need to save $10M could dip to ~$9.15M were DeRozan to sign before the Kings have to make their decision.

This may seem incredibly nitpicky, but it is hard to overstate the importance of every dollar spent, and, conversely, every dollar saved – especially for a team that has not paid the luxury tax in two decades (and never under the current regime) and has no business doing so this season.

As a brief aside: given their luxury tax history (or lack thereof) under the current regime, I remain skeptical that they will pay the tax when (if?) the team gets good again, but we can cross that bridge when (if?) we get there.

Though Ham’s discussion of this hypothetical creative solution was stimulating, it seems like the idea will stay exactly that: a hypothetical. Ham went on to say that, according to his source, “it’s unlikely that the Kings are able to pull something off between now and August 31.”

Why Are They Leaning This Way?

This brings me to why I have not considered salary dumps as Sacramento’s avenue to ducking the tax: teams do not let you just clear space for nothing. There has to be an incentive for the receiving team to take on more money in an era where every dollar under the tax and aprons mean more than ever.

Given the league-wide sentiment around almost all of Sacramento’s non-rookie scale contracts (all negative value), teams are asking Sacramento to either (i) attach draft capital to whatever contract they are sending out to save this hypothetical money, or (ii) take back less money this season, but on a longer-term contract. Perry’s words and actions since he took over last summer indicate that both of these options are non-starters.

Recent precedent shows that shedding ~$10M of salary likely requires attaching multiple second-round picks to whatever salary Sacramento would be sending out. Perry has mentioned that they do not want to part with draft capital to get off their veteran contracts. Additionally, Sacramento has almost no future seconds to use in deals of this nature.

Kings post DeMar DeRozan

Includes his $10M salary for 2026-27

Sacramento is $1.8M above the luxury tax

They have $3.85M in unlikely bonuses counting against the apron pic.twitter.com/6tIhzFUnRg
— Bobby Marks (@BobbyMarks42) July 6, 2026

Parting with firsts when you are at ground zero of a rebuild should absolutely be off the table, so it is hard to see this sort of transaction happening. So, there are myriad reasons why a salary dump incentivized by draft capital is not realistic.

Sacramento has similarly balked at the idea of taking long-term money back in trades. Absorbing Jakob Poeltl and his bloated contract was seemingly a major sticking point in deadline negotiations with the Toronto Raptors in trades centered around Domantas Sabonis.

Reluctance to part with draft capital and take on long-term money are both entirely understandable positions, especially as a rebuilding team. However, there are very few scenarios in life – let alone professional sports – where you can get something for nothing.

Where Does This Leave Things With DeRozan’s Dead Money?

All things considered, Ham’s source is almost certainly right in noting how unlikely a trade is, leaving the waive and stretch as a distant frontrunner regarding how to handle DeRozan’s dead money. It does not require attaching value or absorbing bad money to incentivize another team to help, making it by far the simplest path to maximize space under the tax for the 2026-27 season.

Nonetheless, Sacramento should absolutely keep working phones to try to make a trade happen. The effort is commendable. Ideally, they keep trying and find a way to work themselves into a larger trade. Other teams will come up on their own deadlines, which could increase their willingness to loop Sacramento in on whatever deal is in the works. As August winds down, though, expect to see an announcement that the Kings are waiving and stretching DeRozan’s $10M in the coming days.

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