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
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
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.
Basketball, Business, Free Agency, NBA, NBA Salaries, Payroll, Sixers, Apron, bi-annual, Danuel House, Hard Cap, James Harden, Luxury Tax, Mid-Level Exception, P.J. Tucker, Philadelphia 76ers, Salary cap