Paul George wants to leave the Indiana Pacers in 2018 free agency and prefers the Los Angeles Lakers. What are the financial implications of this decision?
It has been no secret that Paul George would like to play for the Los Angeles Lakers, but that secret grew from a whisper to a loud roar over the weekend.
Adrian Wojnarowski of The Verticalreported that the All-Star forward has told the Pacers that he plans on leaving the franchise in 2018, and he prefers the Lakers. Woj also reported that general manager Kevin Pritchard is already engaging with teams on possible trades.
The Pacers now find themselves in an impossible situation, trying to maximize the return on a lame-duck superstar. Teams will be called and offers exchanged, but the price for George, which at the 2017 trade deadline was reportedly very high, has now depreciated, since Woj tweets are to the trade market like market news is to the stock exchange.
However, walking away from the Pacers in 2018 comes at a cost to George, too. The collective bargaining agreement (CBA) is designed to help small markets, like Indianapolis, compete with the sunshine markets of Los Angeles. By leaving the Pacers and signing with another team, George would cost himself between $47-77 million of guaranteed money, depending on if he qualifies for an All-NBA team next season.
A new wrinkle to the CBA, the Designated Player Exception (DPE) allows players in their seventh or eighth year of service (as George will be in 2018), with one or two seasons remaining on their contract (which George would have if he opts-in), to sign a five-year extension at 35 percent of the cap.
To qualify, George needs to either win the MVP next season, or the more likely scenario, make one of the three All-NBA teams.
The Pacers could decide to play a game of chicken with George, making an investment in his on-court performance next season, hoping he qualifies for an All-NBA team, and thus, allowing them to make an offer he quite literally could not refuse.
The hope would be that walking away from $77 million guaranteed is more difficult than passing on $47 million that he could theoretically make back by signing a new contract after the four years of his new contract expires.
Unfortunately for the Pacers, even if the above scenario were to materialize, Paul George still has options to make sure he gets paid elsewhere. If the Lakers are his dream destination, he could sign a short-term contract (two years) to bridge the gap on his service time until he becomes a 10-year veteran. As a 10-year veteran, he would qualify for 35 percent of the cap on a max contract, as opposed to only 30 percent of the cap.
A superstar wants to play for them and it is known throughout the league, reducing his trade value. There are creative ways to ensure he gets paid a competitive amount over the next seven seasons if he decides to join his hometown Lakers in free agency next summer.