As of this afternoon, Jrue Holiday has signed his 5 year, $126 million contract extension with the Pelicans. Holiday verbally agreed to this extension less than 12 hours after free agents were first allowed to negotiate with NBA teams on July 1st, but was only allowed to sign his contract at noon eastern time Thursday. The deal will presumably make Jrue the Pelicans’ second highest paid player (on an annual basis) behind Anthony Davis, but that will only be confirmed when contract details emerge.

This evening, the Pelicans conducted a press conference to formally announce the signing. Overall, there were no real surprises during this conference – Scott Kushner of the New Orleans Advocate gave some of the highlights via his Twitter account. Holiday joked about how both he and DeMarcus Cousins have been recruiting each other to re-sign, as Cousins will be a free agent next summer. Jrue also mentioned his comfort with playing either guard position, which may be pivotal for the Pelicans’ rotation depending on how the rest of the off-season goes. He also made it clear that he hasn’t felt any setbacks in his knee injury in any of the past two seasons, a comment supported by his performance on the court: the only games that Holiday has missed due to injury over the past two years were due to an eye fracture and a sore toe.

Though Holiday signing his contract with the Pelicans has been a foregone conclusion since July 1st, the fact that he signed it today has significance. It means that, almost without a doubt, the Pelicans will operate as an “over the salary cap” team this summer rather than try to create room under the cap. If Dell Demps was still considering the latter option, the prudent move would have been to keep Jrue’s cap hold $17 millon cap hold on the books and wait to sign him until all other off-season moves were completed. Signing Jrue now adds roughly $4.5 million to the Pelicans’ cap sheet (assuming his maximum annual raises of 8%), bringing their total to about $109 million if all non-guaranteed money is included (Crawford, Cook, Toupane). Also including Dante Cunningham’s cap hold would bump that number up to $115 million, about $4 million below the luxury tax line.

It would make little sense for the Pelicans to exceed the luxury tax this season. If Demps finds a trade that he likes which would result in the Pelicans crossing that line, he has a relatively easy move to get back under it – waive Omer Asik and stretch his contract. This scenario is now the only one for which it would make sense to do so; Jake Madison perfectly outlined how this would work earlier this week. Because the Pelicans are going to be over the salary cap, his contract effectively does not matter for that purpose. Other players could be waived, but Asik’s contract is the largest among players receiving lesser minutes, so he is a natural candidate. Waiving a player with a smaller contract would affect future seasons to a lesser degree in terms of dead money on the cap that can not be removed.

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