Jrue Holiday Signs 5-Year Deal With Pelicans

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Published: July 1, 2017

The New Orleans Pelicans signed Jrue Holiday to a 5-year deal. The fifth year is a player option, and the deal is worth between $126m and $150m total, depending on incentives being met. Holiday just turned 27, is a one-time All-Star, and has 8 years of service in the NBA. He was drafted 17th overall, and the Pelicans effectively traded two first-round picks to acquire him from Philadelphia.

Holiday is not an elite guard, but the Pelicans are in a position of needing to keep their best players around. This is in part due to a lack of flexibility with cap space and other assets along with the need to hang on to their two best players in Anthony Davis and DeMarcus Cousins. Not only are they elite players at their positions and among the best in the NBA overall, the League is moving to one where stars gather. This makes is very difficult to get one star, much less two. This would prove even more the case for a team like the Pelicans who lack a legacy of winning.

If the deal has the standard structure, it puts his guaranteed salary below that of Davis. This is, in theory, of some value, but Cousins’ deal will exceed Davis’, and that’s just cap reality. I don’t see it as a big deal either way, but it’s possible it matters, so I mention it.

Here are some things to keep in mind (updates from initial post included):

  • Structure of Jrue’s Deal: Starting salary and raises or decreases over the life. The starting salary could be as low as ~$21m guaranteed with raises of about $1.7m, or the starting salary could be as high as about ~$30m, which is about Jrue’s maximum salary, with incentives with a maximum annual decrease of about $2.4m. Either way, the average salary seems to be about $27.6m depending on incentives.
  • Salary Figure: Before the Holiday deal, their salary figure ranged from about $82m to about $87m. With his deal in place, that ranges from about $105m to about $117m. That’s a big range. With the NBA’s hardcap at about $125m, they are likely to be able to get to 15 players using the players and exceptions available to them. It’s not assured if the deal is front-loaded, however.
  • Nonguaranteed contracts: The Pelicans have 3 non-guaranteed contracts in Cook, Crawford, and Toupane. Those could be moved off the books or kept as cheaper talent. They total about $4.5m.
  • Roster spots: The Pelicans have 9 guaranteed contracts, 3 nonguaranteed, and have 3 slots they can fill. Roster Charges do not matter since they are already over the cap, but the cheapest possible contract this season is $815,615.
  • Remaining Free Agents: Motiejunas is likely out of town for a few reasons, and this seems to be confirmed. Cunningham can be signed using Bird Rights, so he’s someone to keep an eye on. He may get offers that lure him away. May depend on Pelicans,
    may not.
  • Use of the MLE. If the Pelicans don’t offer 4y deals to free agents and keep the starting salary at around $5.2m max, it’s possible the Pelicans can avoid being hardcapped by having their deals consistent with the Taxpayer MLE, which only allows deals no longer than 3y rather than the larger non-taxpayer MLE worth about $8.4m and allowing 4y deals. If you don’t think the Pelicans are willing to exceed the tax line at about $119m, you are wrong. They will for the right reasons, and being able to exceed the hard cap is worth something . . . just in case.
  • Use of Bi-annual exception: Using this hardcaps a team. The deals are not large, but it’s an asset. It is worth about $3.3m and can be used to sign 1y or 2y deals. If they use it this season, they can not use it next.
  • Trades, including picks: The Pelicans have undesirable contracts that can be dumped or swapped for other undesirable contracts in positions of need rather than nothing. At least in that case, you get overpaid talent above replacement level. Salary dumps won’t add real space to make major deals, but if the team is hardcapped and uses the entire nontax MLE, the hardcap could prevent minimum contract signings, depending on the Jrue’s deal and other moves.
  • Sign-and-Trade: If the Pelicans receive a player in a sign-and-trade transaction, they will be hardcapped.
  • Trade Exceptions: The Pelicans have trade exceptions from the Cousins deal they can use to absorb salary. They have 2:
    one worth about $3.5m, another worth about $2m. These can be used to grab cheap players from teams looking to shed salary or roster spots.
  • Luck and Starpower: Stars like to plays with stars, and sometimes you are in the right place at the right time.

The Pelicans are seeking shooting. Likely they will want some ability to pass . . . just enough to reset a play . . . and the best defense they can get among their shooters. They’ll need willing shooters and competent shooters at least. Of course, better is better, but the best may not be necessary. I look for them to saturate on shooters, keep the guys that work, and churn through the others to help fill in the next need.

Aggression would behoove them in the current climate on the team, in the franchise, and around the NBA. They have a rare combination of talent, but they have to convince players they can turn that into wins. It may just work itself out for a variety of reasons, or the top talent may require some proof before committing. If that is the case, the pressure to start the season will be enormous.

We have crossed the Jrubicon, once more unto the breach, and on to Boogie Hill.

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