What James Harden re-signing with Sixers means

What James Harden re-signing with Sixers means


What James Harden re-signing with Sixers means

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The Philadelphia 76ers and James Harden have finally agreed on a deal for the 13-year veteran to return. He will re-sign with the Sixers on a two-year deal worth $68.6 million with a player option for year two, according to Adrian Wojnarowski. This move could serve as a temporary financial sacrifice from Harden that allows the Sixers to make moves that improve their title odds.

What this means for James Harden

Nick Turchiaro-USA TODAY Sports

When the Sixers traded for Harden, it was originally reported that he planned on exercising his $47.4 million player option as part of the deal. Had he opted in, he could’ve extended with the Sixers for a total of $222.8 million over four years, totaling $270 million over five years. He could’ve also opted out and re-signed for a total of five years, $269.9 million, essentially equivalent to the five-year maximum he could’ve earned in an opt-in-and-extend. He instead opted out and re-signed on a $33 million starting salary, a $14.4 million pay cut. This was done to help the Sixers facilitate other moves to help improve the roster.

With a $33 million starting salary, Harden could’ve locked himself into a maximum of five years, $191.4 million. Instead, he could decline his player option in 2023 and re-sign with the Sixers for up to five years, projected at $270 million next season. While he may not get that full amount, a strong season could put him in a position to earn a near-maximum contract, especially since the Sixers won’t have any way to replace him if he leaves. Alternatively, the player option protects him if he has a down year or suffers a significant injury.

Because Harden re-signed for only one season without an option year, he will have veto rights on a trade in 2022-23. This is because if he agrees to get traded, his Bird rights would revert to Non-Bird. That means if traded, his new team would be limited to re-signing him to four years, $141.9 million instead of the maximum, unless they have enough cap space to give him more.

What this means for the Sixers

Bill Streicher-USA TODAY Sports

Because Harden took a significant pay cut from his $47.4 million amount, the Sixers gained access to the $10.5 million non-taxpayer mid-level exception and the $4.1 million bi-annual exception. They used the non-taxpayer mid-level exception to sign PJ Tucker to three years, $33 million, and the bi-annual exception to sign Danuel House to two years, $8.4 million.

Had Harden opted into his $47.4 million player option amount, they would’ve been limited to just the $6.5 million taxpayer mid-level exception as their biggest means for upgrading the roster. This is because utilizing more than the taxpayer mid-level exception amount or using the bi-annual exception subjects teams to the hard cap. The Sixers would likely be looking at a luxury tax payment in the $15 million range had Harden opted in and they spent the entire taxpayer mid-level exception.

Harden’s pay cut gave the Sixers enough flexibility below the $156.98 million apron to use the entire non-taxpayer mid-level exception and bi-annual exception on Tucker and House. They could’ve signed House with the taxpayer mid-level exception but wouldn’t have been able to offer more money to Tucker than the Heat could’ve with it.

The Sixers are currently $3.5 million over the luxury tax for a $5.2 million tax payment, and are $3.2 million below the hard cap. However, they are effectively at least $4.7 million below the hard cap since they need to get down to 15 players, and that could come from waiving one of their non-guaranteed players. They could easily get below the luxury tax by waiving several non-guaranteed players or trading a rotation player mid-season, but that seems unlikely since they need the strongest roster possible to compete this year.

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