What can the Indiana Pacers offer Buddy Hield in a contract extension?
On Wednesday, Shams Charania of The Athletic reported that the Indiana Pacers have started trade talks involving guard Buddy Hield after the team and player could not agree on a contract extension. More details can be found here.
Charania reported that Hield did not feel wanted by the Pacers because of an extension offer that came recently. The natural progression from such a reaction is a trade. Hield is a veteran on an expiring contract — if the Pacers can get long-term value for a player they know could leave in a year, they have to consider it.
That Indiana even offered an extension is noteworthy. President of Basketball Operations Kevin Pritchard discussed what it would take for the blue and gold to agree to terms on a longer deal with Hield in April, and a role change was implied.
Perhaps those discussions have been had. But either way, according to Charania, Hield was not enthused by whatever the Pacers offered. Without knowing the specifics of what the extension offer was, it's hard to say if Hield is justified for his reported reaction.
If Hield is traded, he can still be offered an extension by his new team. But Indiana has one advantage in a longer deal that other teams don't, so it's a useful exercise to look at what the parameters are for a Buddy Hield contract extension.
The 30-year-old has a base salary of just over $18.5 million this season, though his cap hit is higher (roughly $19.2 million) due to some bonuses in his deal. Those numbers are important when looking at contract extension numbers.
Right now, and until June 30 of next year, Hield could sign a veteran extension that is up to four years in length. It would add on to his current contract, so a four-year extension would bring his deal to five years in total, including the upcoming season.
The salary in the first year of Hield's extension can go as high as 140% of his base salary in the coming season. That number comes in at slightly under $26 million. The guard could get as much as 8% raises from that first year salary every year, and altogether that would add up to a maximum extension of four years, $126.5 million plus bonuses.
At his current age and level of play, Hield is not worth that much. But any extension that fits within those parameters (starts at $26 million or lower, raises from 0-8%, one-to-four years added) would be legal. Even if the Oklahoma product is ultimately dealt, his new team could offer him a veteran extension.
The Pacers have a unique situation in that they still have some salary cap space (roughly a maximum of $7.5 million). That means they could renegotiate-and-extend Hield's contract, something they did with Myles Turner last season.
When a contract is renegotiated, the salary in the current season is bumped up. It can be increased by as much salary cap space as a team has. For example, if the Pacers used all of their remaining cap room to renegotiate Hield's deal, they could bump up his salary in the coming season (2023-24) to just over $26 million, plus bonuses (which would also increase in this instance).
From there, they could extend his contract into future seasons. If a renegotiation is done, a team can actually drop a player's salary in the following season (in this case, 2024-25) by as much as 40%. Like a standard extension, though, it could also go up by 40%. That's what former Pacer Domantas Sabonis did with his contract extension this offseason — he received a renegotiated salary for the coming season ($28 million) with the Kings and then an extension that started with a 40% raise over that number ($39.2 million).
Under these parameters, Hield could technically extend for four years and get up to $171 million in new money (an extra $7.5 million this season and then an additional $163.5 million via the extension) plus bonuses. Hield is not worth close to that much on a five-year deal, but that is the maximum it could go to in a renegotiate-and-extend situation.
On the flip side, dropping his salary by 40% means that a $1 raise followed by a 40% decrease in salary is possible. With no raises in the added years, that deal would add just under $45 million to Hield's contract over four seasons.
In short, many extension possibilities exist for Hield at a very wide range of values. Without knowing what was offered or what Hield wants, it is impossible to determine what does and doesn't make sense for both parties.
If Hield is traded, any team could in theory offer him the same veteran extension as the Pacers if their salary cap situation allows it. Only organizations with cap space can renegotiate-and-extend Hield's deal.
The Pacers have been in situations before, including with Turner and Sabonis, where a contract extension happened after comments suggesting otherwise. Nothing has happened with Hield yet and things could change. If he does agree to an extension with Indiana, it would have to fall within the parameters listed here. Otherwise, the Pacers need to consider a trade.
- Report: Indiana Pacers start talks on a Buddy Hield trade after extension discussion breaks down. CLICK HERE.
- Takeaways for the Indiana Pacers from the 2023 FIBA Basketball World Cup. CLICK HERE.
- Jermaine O'Neal shares his thoughts on his number not being retired and how the Indiana Pacers franchise treats former players. CLICK HERE.
- Pacers guard-to-be Darius McGhee discusses what makes Andrew Nembhard so good on the Locked On Pacers podcast. CLICK HERE.
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