Making Sense of Restricted Free Agency's Massive Backfire

The whole theory of restricted free agency is an interesting one. Players coming off the entirety of their rookie contract hit the open market with the caveat that their former teams can match any offer they receive to keep them. Most of these players are either lower-tier guys trying to find the right fit and change or scenery that are restricted just so a team can keep their cap hold, or are mid-tier players not quite agreeable enough to come up with terms for an extension a year prior.

That second group is the one most harmed this summer by the workings of the salary cap and, more broadly, the idea of restricted free agency as a whole. It's a strange system that, if you will humor the analogy, harms the middle-class most.

Top-tier players coming off their rookie deals sign massive extensions to stay with their teams, which cannot afford to let such a valuable young player walk out the door without compensation. Those lower-tier players are often not matched, and they are either claimed off waivers or kept around long enough to serve as cap filler.

But those players in the middle, not quite elite enough to get that long-term extension but too good to let walk out the door are caught in a strange situation. Competing teams are hesitant to pitch an offer sheet that isn't an overpay since it is likely to be matched. Those teams lose financial flexibility and negotiating power for 48 hours while they wait for the team with right of first refusal to match or decline to match that offer sheet. During a hectic period of free agency that can become a massive loss if the offer gets matched.

This year has provided the perfect storm for harming their free agent pursuits with the lower-than-anticipated cap numbers. Teams that planned to try and fit things into a budget years in advance were left with less, or sometimes zero, maneuverability this summer. The sheer number of teams that could bid for top-dollar restricted free agents dramatically decreased.

The residual effect is chilling. Good players who are either seen as sure-to-be-matched RFA's don't get offer sheets elsewhere. Busy periods of free agency in early and mid-July pass by without interest as teams find other ways to utilize their cap space. Some, like Kentavious Caldwell-Pope, were forced to abandon their chances at a long-term deal after the Pistons rescinded his restricted tender and found a cheaper option elsewhere. KCP was then forced take a one-year high money contract with a new team and have to revisit free agency altogether next summer.

What's left is where we are as of this writing: a stalemate between the only teams remaining with cap space and the remaining restricted free agents on the market. Check out the remaining teams with cap space and the seven remaining RFA's with their tenders listed:
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RFA
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The restricted free agents remaining are in a similar plane:
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RFA2
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There's a lot to unpack here. The first graph on the team salaries is fairly simple: just a look at who has money left to throw at these players. But perhaps the first place to look is the red bar in the second graph: an anticipated value on the open market for each played based on their PER, other past free agents with similar PER and age, and money spent on similar players this summer.

Every player on this list far outperforms their restricted free agency tender (the red bar is greater than the green bar). It's easy to see the contention and hostility that arises as a result of this. Each team that sees that see the dried-up market for their own RFAs has zero incentive to offer them more than their tender right now. No competitors mean they can corner the market, and it's exactly what they're doing. Meanwhile, talented players remain unsigned, with their agents grasping at straws to try and find a suitable way to get their client the money they deserve.

Dallas, Phoenix and Chicago are all prime examples of this. All three teams possess the cap space to offer their RFA's a fair long-term value in comparison to other deals signed around the league, and they could do so without much consequence to the rest of their rosters or spending habits. When the gold bar on that graph is higher than the red, all the team is doing is driving down the price. It's not a negotiation, it's a manipulation of the market.

Collective bargaining agreements give general managers and front offices this power. Lower cap numbers have confounded it, and poor spending habits in years past when the cap boom took place have almost necessitated it from a front office standpoint.

Nerlens Noel, Alex Len and Nikola Mirotic are all playing a waiting game, waiting for some domino to fall around the league (via trade, via buyout or some offer sheet being signed first) that opens up their movement. Right now, every day that goes by gets all three closer and closer to taking that tender or a less-than-ideal one-year deal.

Mason Plumlee and the Nuggets are in a far different scenario, where Plumlee's average salary would likely loft the Nuggets above the cap. And Denver, with two key extension-eligible players coming this fall in Gary Harris and Nikola Jokic, are being prudent not to saddle themselves down with long-term monies -- especially if Plumlee is indeed to be a backup to Jokic. Going above the RFA tender to keep him almost certainly will push the franchise above the cap this year, limiting their mid-season flexibility.

The Nuggets have a lot to consider. After signing Paul Millsap this summer they have a glut of big men. Still, the prospect of letting Plumlee walk out the door and not matching an offer sheet is a difficult one. And the pressure is on the franchise a bit to find a creative solution here: should Plumlee accept the tender and become an unrestricted free agent next summer, Denver just crosses this bridge a year from now with far, far less financial flexibility.

GM Tim Connelly is almost forced to spend into luxury tax territory to keep their elite young players in town over the next three or four seasons. Plumlee's deal only provides less flexibility to do so. More than any of the three aforementioned teams with RFA's, the Nuggets have cause to get that tender from Plumlee other than simply wanting to pay less.

Memphis has perhaps the most complex set of areas to consider with its retention of JaMychal Green. As I wrote about this week on NBA Math, the Grizzlies are in one of the worst cap scenarios in the league, if not the single-worst. We'll try to simplify this as much as possible for the sake of explaining it...

Pay no attention to the gold bar in the negative. Yes, Memphis is over the cap. Since Green is their restricted free agent, they can go above the cap to re-sign him. The issue is how quickly the Grizzlies are creeping up on the luxury tax. Sure, the Grizz could offer JaMychal that long-term deal and still avoid being under the luxury tax for next season. But where does their alleviation come from, and how do they get better players around their core?

At some point the Grizz are going to have to pinch the pennies if they want to compete around Gasol and Conley. The easiest place to do so: their own RFA. Green is the only player on the team's immediate horizon (current players on rookie deals or future RFA's) that would be worth keeping around and having as a rotation player. It not only means the team must look elsewhere to bring in quality players, but that no other candidates really exist to help pinch those pennies.

Here's where things get complicated: since the organization is not offering that large contract which would hamstring them, Green's best move is to find a way to become an unrestricted free agent next summer. He'll undoubtedly cash in again next summer, and now the Grizzlies have lost their only RFA and chance to vault themselves into high-spending territory for nothing.

It's a lose-lose for the Grizzlies. Sign Green for what he's worth now, and the team has no chances to improve elsewhere without spending into the luxury tax. Continue to push off Green and he'll bolt next summer, killing the team's ability to replace his value.

JaMychal Green had a breakout campaign, but restricted free agency has kept him from cashing in (Credit: Montgomery Advertister)

Trying to find a new home

How do players or teams circumvent these issues? Well there are two main ways to place the player in a different situation, and we'll briefly touch on both. Those two methodologies are by signing with another team featuring cap space and getting traded by the middle of the season.

As for the cap space argument, we can simplify this by ruling out teams that have Mid-Level or Bi-Annual exceptions as over-the-cap operators. None of the five remaining RFA's would benefit more from taking one of those long-term deals for short money than if they took a one-year with their current team and cashed in next summer. For those purposes, the list is very narrow.

To narrow it further, think about crossing off teams like Dallas and Denver, both of whom are better suited to spend their money tossing it at their own RFA than trying to start anew.

That leaves only three teams with the possibility of swooping in and snatching one of these players away: Philadelphia, Chicago and Phoenix.

Indiana we can all but cross off; they have a shade over $6 million in cap space, which is less than any of these players would rightfully take. Same goes for Brooklyn just a shade beneath them at $5 million and change. The Sixers, first team with a glut of cap space, are preparing for their own mega-extensions in future years with guys like Joel Embiid. They stand little to gain from throwing money at an RFA other than driving up the price. Since only one player is from an Eastern Conference team, and it's one that figures to not be in the playoff race, there's minimal return on this idea. Remember, teams must overpay to get an RFA that isn't matched, so that move makes no sense for Philly.

Phoenix and Chicago, however, are unique scenarios. They both have the ability to sign one of the other RFA's first before they try to negotiate with their own RFA. The order of those operations is key; they must sign the new player first before exercising any retention on their own.

Would it be possible that the Suns try to steal JaMychal Green away? Would the Bulls really benefit from throwing a boat load of cash at Nerlens Noel?

The odds say no.

Both teams are in the midst of internal rebuilds, and if all goes to plan, will find themselves in two years where Philly is now - with a ton of money and the desire to keep their own guys with it.

That other option is a sign and trade, where another team inks a player to an offer sheet and then sends outgoing salary to the original team as a means of making the trade work. These scenarios are possible, especially for a player like Green whose team is already operating above the salary cap.

Even if no trade occurs this summer and these players re-sign for one season, there's nothing preventing that team from flipping them mid-season. In Denver, a one-year deal of Plumlee with the knowledge he's going to leave for more money and a role that isn't behind Jokic can turn into a second-round draft pick or a player to help down the stretch. Memphis could turn one year of JaMychal Green into some draft picks they desperately need. Even Chicago could turn Mirotic into a draft pick once they're out of the playoff race.

The point is this: there are a lot of paths towards a solution that get these guys on a roster. Most of them lead back to their original teams, and most lead to very little compensation compared to what they're worth.

​So I'll ask the question that begs to be asked... is restricted free agency broken?