Collison & Ballmer: the potential of deep pockets

It got a little confusing yesterday, with some media types misinterpreting some comments from Darren Collison, but there was never any reasonable doubt that Collison would opt out of the second year of his two year deal with the Los Angeles Clippers. Even if Collison sincerely wishes to remain in Los Angeles, close to home, playing with the Clippers in an almost ideal situation as a valuable contributor on an emerging contender, the best way to do that is for him to opt out. What happens next is the only question.

Collison was due to make $1,985,500 next season after making $1,900,000 in his first season with the Clippers. That two year deal was less than he could have made elsewhere, but after a bad stint in Dallas, his market value was a bit down, so he was willing to take less to re-establish his value. He did that.

So mission accomplished, right? Time to reap the rewards with a much bigger contract, hence the opt out. Unfortunately, the Clippers are limited in what they can offer him by way of a new deal. The team is over the cap and can only use salary cap exceptions to sign free agents.

The fallback  for re-signing one's own free agents is the Larry Bird Exception. But full Bird rights aren't bestowed on a player until he's been with a team for all or part of three seasons. After a single season in LA, Collison is a non-Bird free agent vis-a-vis the Clippers -- they can offer him a 20% raise over his prior salary without using any other salary cap exception.

The Clippers also have their full mid-level exception (probably) and their bi-annual exception to use this summer, but they would almost certainly choose to save the MLE for another acquisition, and the BAE is actually less money than they can pay Collison using their non-Bird rights.

It's a given that the Clippers are happy with Collison, and would happily pay him $2.28M next season to keep him -- so it follows that Collison would opt out of his existing deal. There's no downside in terms of opportunity cost for the Clippers to sign Collison using non-Bird rights -- they'd still have their other existing exceptions to bring in outside talent. The only reasons the Clippers might choose to use one of the other exceptions on Collison would be (a) if $2.28M is not enough to keep him and they decide he's worth a chunk of their MLE or (b) if they needed to renounce their rights to him in order to get under the tax threshold (important for accessing their full MLE). By my math, they'll probably get under the threshold even retaining DC, but it might be close.

So for Collison, it becomes pretty much the same decision this summer as it was last summer. Take more money elsewhere, or less money from the Clippers to play close to home in a very good situation. The difference is that he now knows for certain exactly how good that situation is -- and it's pretty good.

Oh, and there's one other difference -- team ownership. Obviously Steve Ballmer is not yet the new owner of the Clippers, but while Donald Sterling may be able to delay things some, the fact is he will not own the Clippers going forward, and while the new owner may or may not be Ballmer, we can assume that the new owner will have some very deep pockets given the $2B price tag attached to the pending sale.

Remember that a player earns his Bird rights after three year's service with the same team and that Collison is a non-Bird free agent after one season in LA. In between those two things, after two years with the same team, a player is consider an Early-Bird free agent (officially an Early Qualifying Veteran Free Agent). Collison could, if he wants to remain with the Clippers, sign another short term deal (say $4.7M for two years with the second year being once again at his option), opt out again next summer, and then re-sign with the Clippers as an Early Bird free agent. The maximum salary for an Early Bird free agent is the NBA average salary, which runs a bit higher than the mid-level exception (for instance in 2013 the MLE was $5M while the average was a bit more than $5.325M).

It's not difficult for Collison and his agent to look at the ownership situation and project forward. He could make $2.28M next season and then sign a four year deal for somewhere in the neighborhood of $25M without ever leaving LA -- projecting to more than $5M per season for the next five without touching any of the Clippers' exceptions. Even if he's not a lock to get the full average from the Clippers next summer, it's not as if he would get a full MLE offer from a different team this summer. If he likes his situation in LA and has confidence that new club president Doc Rivers will have the support and check book of the new ownership group to take care of him going forward, staying in LA could actually be the most lucrative choice for DC.

Collison is not the only Clipper free agent in this situation. All of the mid-season acquisitions are in the same boat -- another season in LA with the Clippers qualifies Glen Davis, Danny Granger or Hedo Turkoglu for an early Bird contract next summer. Given Turkoglu's age, that's probably not an option for him. But both Davis and Granger could use some more rehab on their reputations -- if they like it in LA, they could choose to play another season at or near the league minimum and at least get early Bird rights as an option next summer.

It's the difference between having an owner whom players (and agents) assume will NOT spend money and having an owner whom they assume will spend. Collison is the test case, so keep an eye on what happens there.