Why Tim Duncan won’t exercise his ETO

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The short answer to the question of whether Tim Duncan will exercise his early termination option (ETO) is of course not, he’s due $21 million next season. But let’s put that aside for the moment.

I contacted CBA Super Ninja Larry Coon about a question which occasionally pops up in our comment threads. Namely, is there any chance Tim Duncan does the Spurs a solid and uses his early termination option to resign for less money. Duncan is due to make $21 million next season, his final year under contract with the Spurs.

Starting with the obvious: Why would anyone leave $21 million on the table?

Well, Tim Duncan has previously restructured his contract to provide the team with greater financial flexibility. Some fans are hoping for more of the same, and they’re banking that Duncan is the most benevolent soul since John Chrysostom. Moreover, Richard Jefferson famously left money on the table last summer in exchange for a longer term deal with guaranteed money. Jefferson, most believe, will make more with his multi-year deal, signed under the current CBA, than he would have made under the next CBA.

Because of these things some ask, “Is there any chance Tim Duncan will terminate his contract this summer?”

Larry Coon points out that the circumstances surrounding Tim Duncan’s ETO are dramatically different than Richard Jefferson’s. Coon’s reasoning runs along the lines outlined above:

Duncan’s situation is a little dissimilar to RJ’s last summer. Last summer was the final offseason under the current CBA. By opting-out last summer and re-signing for more years, RJ was locking in additional years under the purview of the current agreement. Given the way the new CBA is likely to tilt, this seems prudent & he’s more likely to earn more through 2014 by re-signing under the current CBA than by playing 2010-11 under his original salary and then signing one or more deals under the next CBA. Since Duncan would be re-signing under the next CBA, this factor doesn’t exist for him.

But Coon went on to describe some of the factors, as stipulated by the current CBA, which could play into Tim Duncan’s next contract, should he choose to ink a new deal a year early.

First, there is the Over-36 Rule.

…it’s not a showstopper, but the Over-36 rule also presents some difficulties. This rule makes it harder for older players to sign long-term deals. It’s commonly misreported to say that a player Duncan’s age (35 this summer) can’t sign a deal longer than three years. But this isn’t correct — the Over-36 rule simply reclassifies the salary in later years as deferred salary, which counts against the entire contract (just like a signing bonus). This is a problem in most cases, but not when the player is re-signing for less money, because the lower salary creates the overhead that the deferred salary fills.

If Duncan were to exercise his ETO, he’d have to take an immediate pay cut because of the Over 36 Rule.

Coon explains,

Under the current rules a free agent can sign for either the league-wide max, or 105% of his most recent salary, whichever is greater. Since Duncan’s likely to be above the league-wide max, the most he can get is 105%. This means that he can’t re-sign for as much as he’s already signed for in his option year.

Since Duncan makes $18.835M this year, his cap amount can’t exceed about $19.777M next season (I’m assuming the rules are the same under the next CBA. They won’t be more in Duncan’s favor, and if they’re more in the league’s favor then we’re back to my first point above). So his new base salary, plus a pro-rated portion of any salary beyond the third year of his contract can’t exceed $19.777M. This means he can sign a four-year deal starting at about $13.4M, for example, or a five-year deal starting at about $9.98M. Again, for most older players this would be a showstopper, but with your premise he’s taking a lower starting salary in exchange for a longer deal, so it’s a legitimate option.

The Over-36 rule doesn’t affect older players who sign three-year deals, so he could re-sign for three years with the only restriction being that the first year couldn’t be for more than $19.777M.

The Spurs could save either way. The new CBA might dictate a less cumbersome contract, even if Duncan chooses not to use his ETO.

At any rate, it’s unlikely Tim Duncan will use his ETO. The circumstances are too dissimilar to Richard Jefferson’s to warrant such a move.

  • rob

    What’s to prevent him from signing a new deal that is less than the max he can get? Are there rules that apply that states he couldn’t take less than the max?

    I’m of the belief (perhaps more appropriately “hope”), that after the new CBA is implemented, Duncan just may exercise his ETO. Take a lesser amount in order to help the team have the fianances to acquire top talent via free agency (or other means) and by doing so become the new definition of a franchise player.

    I know it sounds nestolgic, but what a way to elevate the greatness that already is Tim Duncan. Helping his lifelong team remain competitive even after his retirement so the team doesn’t have to suffer through the normal pains of rebuilding after loosing it’s greatest player.

  • rob

    Should of stated “career long” instead of “lifelong”

  • Pingback: Tweets that mention Tim Duncan's ETO and the next CBA | Larry Coon -- Topsy.com

  • Aaron

    A Duncan ETO doesn’t matter worth a darn anyway, guys…it won’t help. They’re still capped out unless the cap changes dramatically; they’re still looking at the midlevel to improve.

  • avoidalockout

    duncan should exercise his option and then he’ll either retire or just sign for less. i think if he could take a pay cut and it would add another star he’d do it. it’s all about winning, also remember they got a bunch of players to pay, george hill and an “aging” manu

  • werdb

    So say Duncan decides to retire at the end of his contract. With the new CBA in effect doesn’t this mean the Spurs won’t be able to sign a new contract in the range of Duncan’s current deal in return?
    They will have to take a hit in the caliber of player they can replace him with correct?

  • DorieStreet

    @ avoidalockout

    My guess is that he does what you opined. Duncan mentioned in an interview last month he would like to play 4-5 more years, but that would depend on his body in general & his knee in particular. I feel he knows he really just has this season & one more before his play drops dramatically. If the Spurs win the title he walks away; if we come close but no cigar, he comes back at lower salary for one last attempt.

  • http://dawnoftheweak.com Wes

    Rob, of all the bad spelling and grammar in your post you choose to correct “lifelong”? ;)

    I have a dream that in Duncan’s last assist he’ll opt to be traded to another team like the Suns to do one last bit of damage for us, they’ll cut him (salary reasons) and he’ll retire. Phoenix will have a whole new reason to hate us.

  • rob

    Aaron

    “A Duncan ETO doesn’t matter worth a darn anyway, guys…it won’t help.”

    Under current conditions regarding player salaries I can see your point.

    Spurs are obligated to pay (including Antonio McDyess) next season $73,514,658

    Taking into consideration IF Duncan ETO’d…accepted to break out his 2011 salary of 21 mil. throughout 4 years and graciously accepted 10 mil per year after 2011 for the next 3 years through 2014…that would pay Duncan 12.75 mil per year for the next 4 years. That’s 8.5 mil from the 73.515 mil. next year or approximately 65 mil. committed.

    If the Spurs do not guarantee McDyess next season, that’s 5.22 mil. off the books as well or approximately 59.8 mil. in total salary.

    You are correct considering salary cap. But again we don’t know what that will be as we also don’t know how the new CBA will effect realistic salary compensation in it’s new structure.

    Players making 10 mil per season now may not be able to realistically receive 7 mil. per season after the new CBA.

    Agreed it would be difficult to say the least until all the parameters are defined. But I wouldn say it wouldn’t be worth a darn until we know for certain.

    What I don’t know for certain is…Does Not exceeding the cap situation only apply to teams already over the cap? And/Or…can teams under the salary cap pursue a player that would put them over the cap?

  • DieHardSpur

    @DorieStreet – I completely agree…

    I think he would like to retire on top – the same way Big Dave did.

    While I am sure that most every NBA player would like to go out on top, but doesn’t have the chance. I am happy that our front office has been able/willing to spend the money to build a team such as this one, to give Timmy a legitimate shot at going out on top…

    Now all we need is that one transcendant player to pair with Timmy… Blake Griffin anyone?

  • BOSS

    Timmy has the right to get every penny that is promised to him he has already restructured his contract once and has played well beyond expectations i wont him to get paid the full 21 million just to let him know how much we really appreciate him. Best power forward ever get ya money Timmy!!!

  • Shifty

    Is this scenario possible?

    Timmy opts out and resigns for less with the Spurs’ promise of once he is retired, they would hire him for a phantom front office position that in the long run, makes up for the money he is leaving on the table.

    If any player/franchise can do this is Timmy and the Spurs.

  • rob

    Oh Well.

    http://members.cox.net/lmcoon/salarycap.htm#Q20

    Answered my own question through investigation.

  • Eric

    “Hey Tim, bet you can’t crowbar an early church father reference into your basketball blog.” “Bet I can.” “Extra credit if you mention Gregory of Nazianzus.”

  • TD = BEST EVER

    Timmy should get paid EVERY bit of that 21million. He has given so much to this city and franchise. Hell SA is 1 of 12 remaining WNBA Teams…….. And that’s a credit to Timmy and those 4 titles……. SO he needs to take his money (because we all know he could have had way more to go elsewhere) and retire a SPUR rich and with 5 rings

  • Will Siv

    I agree with BOSS and TD + BEST EVER. He deserves the $21m considering all he has done for SA.
    And lets not forget that when he signed his extension he could have signed for $50m. But he took a pay cut so that Pop/RC could use the extra room to do some maneuvering to get top talent. He already did the Spurs a solid.

  • http://www.48minutesofhell.com Timothy Varner

    Eric, I try to keep things fun. Next week, it’s Basil and I’ll rhyme something, not sure what, with Cappadocian.

  • badger

    I know this sounds really naive, but hear me out…I’ve always thought that Duncan doesn’t give a damn about the money. No, really! Here’s why.

    He comes into the league as the show stopper, the undisputable Number 1, THE man. What does he do next? He stays as far away from the BIG endorsements, stays away from the PIMP DADDY lifestyle, and he buys a big piece of land out in the country so he and his wife can have as “normal” a life as he can make it, given his star status. He even dressed like a guy who didn’t give a damn about status. If not for his height, typical Duncan attire would have allowed him to blend in at a high school, at the beach, or at the mall. No need to impress anyone. I suspect that along with the need not to impress anyone is the good sense not to blow money on shit he doesn’t really want or need.

    Further proof that he’s not a Michael Jordan/Tiger Woods/ Kobe Bryant is this…After he’s shown that he really was the real deal, the dream No. 1 pick, THE MAN, he stays married, has 2 kids, still shies away from the press, the cameras, endorsements, etc. and makes a shitpot of money for 14 straight years. Sure, he could have gotten more $$, but he grew to love Pop, love the small market, the winning organization, the stability and comfort of it all.

    Tim Duncan will take less money, because he knows that winning and being in the hunt for NBA rings is WAAAAY more fun than making money that he no longer deserves. Those who say he should be overpaid late in his career because of the things he’s done previously don’t understand that this guy LOVES to win, he LOVES to compete and be competitive. He loves that stuff a lot more than he’s ever loved money.

    He’ll take 12-14 mil/year for a 3 year deal, and he’ll go down in Spurs history, and NBA history for that matter, as the BEST and WINNINGEST power forward of all time. Then, he’ll drive back out to his place in the country, and try to get the normal life even more normal, and he’ll raise his kids with his wife instead of traveling all over creation for 8-9 months of every year.

  • rob

    I haven’t seen one person say he doesn’t deserve to get his 21 mil for next year. Being suggested is he waits 4 years plus another 10 mil per year for the next 3 years after next season to get it.

    Whether that helps the Spurs or not regarding getting somebody (another big) who can produce consistently while Duncan steadily declines in the ability to produce consistently is another story.

    The truth will become the truth…the only thing Duncan will do consistently from here on out is steadily decline from performing consistently. And the Spurs (whom I support more than any single player on this team) will need another “consistent” big along with Duncan to have any future shot at being competitive for a title.

    IMO, Blair, Splitter or Bonner will not be one of those. It will take somebody else along with them and Duncan to keep the front court playoff competitive in the near future.

    And …after next season…if Duncan still wants to play…how much does anyone think he will realistically get if he steadily declines and the new CBA doesn’t favor paying players equivilent to what they get paid now? ETO’ing next season just may be his best shot to make more money in the next 4 years than just taking the 21 mil next year.

  • gary

    Ok let’s say he’s gonna do that.. and yes, I must admit If would be him; id do it! (cuz I think 80% of the ppl here are like me and got a stone carved spurs heart)

    let’s say he do it.. it’s all gonna happen in the same 24h, so just STFU and wait

  • Gary

    @Boss

    You DAMN RIGHT, best POWER FORWARD EVER, get the money and go johnny go!

  • irongiantkc

    Excellent Chrysostom reference, you made me look him up. I think I’m going to study him some more. Sounds like an amazing man.