Monday, November 5, 2007

John Paxson's Approach to Restricted Free Agents

Since the latest Collective Bargaining Agreement took place, the idea of "restricted" free agents is one that I believe many teams have struggled to manage correctly. John Paxson, the Chicago Bulls general manager, clearly has a philosophy to this.

Here is a generic procedure to explain how a player evolves from being drafted to entering into the restricted free agent process:

Player A is drafted
Player A plays three NBA seasons
Before the first game of Player A's fourth season, they have the opportunity to sign an extension with the team.
Once the first game begins in Player A's fourth season, they cannot sign an extension until the end of that season.
After Player A's fourth season, he can either:
a) Accept his current teams' one-year qualifying offer
b) Sign a long-term extension with his current team
c) Sign an offer sheet with another NBA team (current team has 10 days to match the new NBA teams' offer, decline the offer sheet and allow him to sign with the new team, or work out a sign-and-trade between the teams)

Now, most teams once they become a restricted free agent after the third season look around, get impatient, and sign the player to a new contract - often for an exorbitant amount of money.

Paxson's approach is much more patient and sensible. After that third season, Paxson offers the player a long-term contract that is non-negotiable. The player and his agent must choose to simply take it or leave it. In the case of Kirk Hinrich, he took the long-term agreement. With Luol Deng and Ben Gordon, they decided against accepting the agreement.

Paxson's way of thinking is that if they accept it, then he probably is saving himself money on the backend. If they decline the first offer, then he has another season to evaluate that player before deciding whether to sign a long-term agreement. In addition, once the player finishes his fourth season, then he still holds their rights as a restricted free agent. This means that no matter what, he will not simply lose the asset.

Even if he decides that they are not worth the money they are looking for, he still holds that players' rights and can work out a trade to receive compensation. Additionally, he allows that player and their agent to find out if a better contract is out there from another team, but still has the ability to then match that offer and bring that player back. Now that Paxson's philosophy on this is known around the league, the player frequently does not receive any offers from another team because it is assumed that the Bulls will simply match the offer so that player is not worth their time and effort.

Ben Gordon stated his groups negotiation with Paxson and the Bulls best when he said, "It was never really a negotiation. It was kind of like take it or leave it. I didn't sign it, so I guess it's safe to say I never considered taking it."

Although this hardball-type stance may not be appreciated by some players, it is the most sensible financial and business stance.

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