Jrue Holiday did not sleep long on the New Orleans Pelicans offer. Adrian Wojnarowski reported at 5:40 AM this morning that Holiday has agreed to a 5 year, $126 million contract to return to New Orleans.
Free agent guard Jrue Holiday has reached agreement on 5-year, $126M deal to stay with New Orleans, agent Jason Glushon tells ESPN.— Adrian Wojnarowski (@wojespn) July 1, 2017
Figuring in maximum 8% raises this means Jrue Holiday’s first year salary will be around $21.75 Million in 2017-18 (importantly, less than Anthony Davis) and up to $28.71 million in 2021-22. It’s a lot, and certainly a massive offer considering what other point guards were signing for just hours before. Jeff Teague signed for three years, $57 million for an average annual value of $19 million. Jrue’s average annual value is $25.2 million.
But wait, there’s more! Jrue Holiday also has a player option on the fifth year, giving him an out if things head south or if he wants one last big payday and incentives that could push the deal to being worth $150 million if reached. I will withhold judgement on that last value because if these incentives are anything like Omer Asik’s incentives Jrue Holiday is going to be worth it if he hits those goals.
However, on it’s face this is an overpay. Our own Nico Baguio wondered in March if Jrue Holiday was worth $17 million a year and was on the fence. Five Thirty Eight estimates Holiday’s value at $87 million over the next five years, right around Nico’s $17 million figure. $25.2 million is a substantial overpay if those estimates are correct.
Again, the Pelicans were not negotiating from a place of significant strength even with the point guard market closing. New Orleans needed a point guard and their options if Holiday left were slim especially with Ricky Rubio already traded while Teague and Mills signed at the very start of free agency. They might have been able to push for a more palatable deal, at the possible cost of Holiday leaving and possible replacements already agreeing to contracts elsewhere.
Now New Orleans tries to work the salary cap. Does a Justin Holiday agreement at some portion of the mid-level exception come next? It’s doubtful they operate below the salary cap and the luxury tax is certainly in play. With current contracts on the books they are already at $109 million with Jrue at $21.75 million this season and the luxury tax is $119 million. Can they afford to use their exceptions, sign Frank Jackson, and bring back Dante Cunningham? Will they clear space below the tax by trading away Alexis Ajinca and/or Omer Asik? Is a waive and stretch on the table to avoid the tax?
More questions lie ahead. For now Dell Demps has his big three under contract in Anthony Davis, DeMarcus Cousins, and Jrue Holiday. Can he build a playoff worth roster around them?