What Kelly Olynyk’s extension means for Raptors’ offseason ambitions

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The Toronto Raptors announced a two-year extension for Kelly Olynyk on Monday. It was not a surprise. The Raptors aren’t going to make the playoffs this year, but they still beat the February trade deadline by trading for the veteran big man who turns 33 in April — even though he was scheduled to become an unrestricted free agent in July.

The Raptors acquired him with a pretty good idea that Olynyk, who was born and raised in Toronto before moving to Kamloops, B.C., as a teenager, would have interest in remaining a Raptor. In his introductory press conference, Olynyk said in an ideal world, he would end his career in Toronto.

The two-year extension could allow that to happen, although, as we have learned over and over, he could be traded before that deal expires. The deal has been reported to be worth $26.25 million by ESPN. Notably, that would put his salary for 2024-25 at about $12.8 million, less than the $18.3 million cap hold he would have had as a free agent.

The term “cap hold” is important here for several reasons beyond Olynyk specifically. A cap hold is the amount of money a free agent is on a team’s books for in the offseason before he signs with a new team or re-signs with his most recent team. Cap holds exist so that teams cannot manipulate the cap, signing a bunch of free agents from other teams before re-signing their own free agents. The exact number of a cap hold depends on several factors, including the player’s previous salary. In this case, the Raptors will have $5.3 million of potential extra room under the salary cap for the Raptors to use in free agency.

So, how much money will the Raptors have to spend in free agency? Well, this is where things get complicated.

• As of now, the Raptors have about $92.9 million guaranteed to eight players: Olynyk, RJ Barrett, Jakob Poeltl, Chris Boucher, Scottie Barnes, Jalen McDaniels, Gradey Dick and Ochai Agbaji. The projected salary cap is $141 million.

• The Raptors have a club option on Bruce Brown for next year worth $23 million. The deadline for the Raptors to exercise it is June 29. They can trade him in the offseason, including before the NBA Draft, but they cannot trade him to a team that then declines his team option. That means to keep Brown’s money off the books for next year, the Raptors would have to either a) decline his option, making him a free agent; or b) trade him to a team that will have cap room in the offseason, bringing no players with guaranteed salaries back (or players earning less money).

• The Raptors have three unrestricted free agents: Gary Trent Jr., Garrett Temple and Jordan Nwora. Trent is the most important of the three and has a $27.8 million cap hold. So, even if the Raptors declined Brown’s option, they would still be up to $120.7 million in salary before agreeing to a new contract with Trent. The Raptors could renounce Trent’s rights and claim that extra space, but they would then lose the ability to use Trent’s “Bird exception,” which allows teams to exceed the salary cap to re-sign their own free agents. You will see why that is important below.

• The Raptors’ first-round pick will go to San Antonio if it is seventh or worse, but stay with the Raptors if it is sixth or better. That will not be determined until the draft lottery, scheduled for May 12. For a moment, let’s assume the Raptors will not have that pick. They will have the Indiana Pacers’ first-rounder (unless the Pacers end up missing the playoffs and then move up to the top three in the lottery). The Pacers’ pick would currently be slotted 15th, coming with a cap hold of $4.27 million, further diminishing the Raptors’ available money. The Raptors also own Detroit’s second-round pick, although that does not come with a cap hold.

• Finally, the Raptors have one restricted free agent — Immanuel Quickley. This is where the Raptors can take advantage of their situation by ordering their moves in a certain way. Like any free agent, Quickley has a cap hold. However, as he is coming off a rookie-scale contract, that hold is just $12.5 million, or about half of what the guard can reasonably expect to make as his starting salary next year. That number stays on the books until Quickley either: a) signs an offer sheet with another team, which the Raptors would have the right to match; b) signs a new deal with the Raptors; or c) accepts the $6.13 million qualifying offer the Raptors must extend to him to make him a restricted free agent rather than a free agent. The Raptors, then, could use their cap space on a free agent or in a trade before re-signing Quickley to a bigger contract that would take them above the salary cap.

• I have not factored in the contract of Javon Freeman-Liberty, who had his two-way contract converted to a standard contract last week, because I have not seen the amount guaranteed for his second year. He could make nearly $1.9 million, but I would expect only a fraction of that to be guaranteed and for him to have to fight to make the team next season in training camp.

That is a lot of information. Let’s put it into practice.

Scenario 1: Let’s say the Raptors want to maximize their cap space while also retaining Quickley and their draft pick. That means they could decline the option on Brown, and allow Trent (and Nwora and Temple) to leave in free agency. If you add the cap holds for Quickley and the Pacers pick to their committed salary, the Raptors would have $109.7 million committed to 10 players, or $31.3 million in potential cap room. (Remember, a team has to have at least 14 players on standard contracts once the season starts.)

Scenario 2: The Raptors could pick up Brown’s option and re-sign Trent (let’s keep him at his current salary of $18.56 million). In addition to the cap holds of Quickley and the draft pick, the Raptors would have about $151.3 million committed to 12 players — before agreeing to a new contract with Quickley that would make that closer to $164 million. The projected luxury tax threshold is $172 million.

Scenario 3: How about an in-between option? The Raptors keep Brown and let Trent leave. They then have $132.7 million allocated to 11 players before agreeing on a new deal with Quickley. In that case, the Raptors could operate as an over-the-cap team and also use the full non-taxpayer mid-level exception (about $12.8 million as a starting salary, projected) to add a piece in free agency. The MLE can also be split up and used on multiple players.

Essentially, the Raptors’ only way to create significant cap room is by letting go of both Brown and Trent. This free agency class looks weak, especially considering the Raptors would be targeting younger players in line with their core, so that isn’t the end of the world. However, cap space can also be used to acquire a player in a trade without sending back a matching salary. Accordingly, if they find a team dangling a useful player — ironically, the Raptors could use a 6-foot-8 defensive-minded wing right now — because they need to duck the dreaded second apron, the Raptors could decide that forgoing the opportunity to bring back Brown and Trent is worth it.

As for the Olynyk contract itself: He is a player on a reasonable contract with a skill set that will help head coach Darko Rajaković continue to build his movement-heavy offence all while being happy to play in Toronto. It is hard to argue with it.

(Photo: John E. Sokolowski / USA Today)

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