Andy Larsen: Looking ahead at Lauri Markkanen’s future with the Utah Jazz

The All-Star forward’s contract is one of the best values in the NBA, and that should give the Jazz flexibility over the next few years.

(Rick Egan | The Salt Lake Tribune) Utah Jazz forward Lauri Markkanen, answers questions during the Utah Jazz Media Day, on Monday, Sept. 26, 2022.

Lauri Markkanen’s contract is one of the best — if not the best — in the NBA.

An All-Star starter last season who also nearly made All-NBA, Markkanen finished 13th in the league in Estimated Wins while being paid $16.5 million. But it’s not just that: Markkanen’s deal includes all of the 2023-24 and 2024-25 seasons for roughly $17 million and $18 million, respectively. That makes him the league’s 95th best-paid player, a veritable bargain.

Heck, that final season is even only partially guaranteed for $6 million if they somehow choose to cut him — though it’s an incredibly safe bet that the Jazz will want to keep him around given how productive he’s been. Markkanen has also really enjoyed his time in Utah. Head coach Will Hardy and his system have pushed Markkanen into his best-ever basketball, and his young family enjoys the state’s lifestyle.

The question isn’t a dramatic one, but a strategic one: How will the Jazz choose to try to keep him while following the rules of the NBA’s Collective Bargaining Agreement? Markkanen’s cheap contract gives the team flexibility — but it also gives them a choice they’ll have to make in building the team.

Option 1: Sign Markkanen at the end of his current deal

This is the most straightforward choice. The Jazz could simply let Markkanen’s remaining two years of his contract play out. If he’s able to keep up last season’s level of production, the analytics show he’d be bringing more than double his salary in value to the team.

It would also allow the Jazz to use the cap space they could be spending on Markkanen instead on a second star to join him in free agency — or to build out the roster in other ways. Right now, they’re projected to have roughly $41 million in cap space in 2024′s offseason, as Kelly Olynyk, Talen Horton-Tucker, and Simone Fontecchio’s contracts expire.

That $41 million could be pretty powerful. It’s a little bit less than a standard NBA maximum contract is projected to be in 2024 (about $44 million), but close enough that accommodations could be made to reach a full max.

Would the Jazz have the ability to go after the best free agents of that 2024 class?

It’s not a very strong list — the obvious max-level unrestricted free agent is Pascal Siakam, with Buddy Hield, James Harden, and DeMar DeRozan rounding out the top of a relatively weak class. Paul George, Kawhi Leonard, LeBron James, and Jrue Holiday all have player options for that summer and would need to decline those to be free agents.

Of course, Utah’s not a traditionally very strong free agent destination anyway, but the near-max cap space could still be useful in a trade to acquire a team that wants to dump a star, or by signing a smaller group of free agents. It would allow the Jazz to take advantage of Markkanen’s below-average deal to build strength elsewhere on the roster, with the goal of contending in 2025.

The downside is risky: by waiting, the Jazz could risk losing Markkanen if he were to choose to play elsewhere. After all, he would be an unrestricted free agent. Fans of the Gordon Hayward-era Jazz can tell you that even a player in a good team situation can yearn for greener pastures.

For Markkanen, this option brings both upsides and downsides. If he consolidates his improvements from last year and becomes a top-20 player in the league for the next two seasons, he opens himself up to a true max contract: one that would start at around $49 million per season in 2025. If he were to further improve and become an All-NBA player, his contract could become a supermax, and start at $57 million per season.

There’s risk for him, too, though. He’d be passing up the opportunity to sign the contract renegotiation and extension offered in Option 2.

Option 2: Renegotiate and extend Markkanen

Or, the Jazz could do a renegotiation and extension of Markkanen’s contract, all in one fell swoop. In the NBA’s CBA, teams are allowed to give additional money on the final year of a current contract in order to incentivize an extension of the contract that follows.

The Jazz just did this with Jordan Clarkson’s contract: the Jazz gave up an extra $9 million of their 2023-24 cap space in order to have Clarkson’s signature for two seasons after that. They pay him $23 million in all in 2023-24, then $14 million per season in 2024-25 and 2025-26.

But unlike Clarkson’s contract, Markkanen’s salary would rise instead of fall after the renegotiated year, likely to maximum or near-maximum levels. Furthermore, the CBA says that extensions are limited to 140% of their previous salary. If Markkanen wanted to get to the projected max of $49 million in the 2025-26 season, they’d have to pay him roughly $35 million in the 2024-25 season.

That’s an increase of $17 million over his current $18 million contract for that final year, and would take away $17 million of the Jazz’s spending money in the 2024 offseason — likely taking them out of the max-contract running. That might mean more of a slower build, targeting the last half of the decade to become contenders.

There are middle grounds here, because a maximum raise isn’t required. The Sacramento Kings did this with Domantas Sabonis, who just signed a four-year, $187 million extension by tacking on an additional $8.6 million to his final season. It’s not quite a max, but Sabonis gets paid big-time money and the Kings lost some cap space to make sure they keep one of their stars.

To be sure, Option 1 or Option 2 isn’t a decision the Jazz have to make immediately. In fact, they’re prohibited from officially renegotiating and extending Markkanen’s deal until August of 2024 by the CBA. That means they could go into 2024′s July free agency with aggression, see if they can sign anyone to a max, and if not, default back to Option 2 to keep Markkanen.

Deciding ahead of then would probably be best, though. Doing so would allow them to be more informed in the trade market, knowing whether they want to open up the remaining room for max cap space in 2024 or if they’re okay with acquiring longer-term salaries.

Markkanen’s play will matter here, too. If he comes into training camp and the initial months of this season as strongly — or even stronger — as he did last season, he may prove to be worth building around as the potential best player on a contending team. At just 26, further improvement is certainly possible. On the other hand, if he reverts to his Cleveland or Chicago productivity, then the Jazz’s priority will be finding that new lead star.

The flexibility is nice, actually. Generally, the Jazz’s front office has avoided putting a public timeline on their hopeful rebuild to championship contention, precisely so they don’t have to be influenced by those timelines in making their decisions. This is one example.

But that doesn’t mean that this decision isn’t a big deal. Markkanen’s emergence was the single biggest Jazz story of the 2023-24 season. Getting the details right in keeping him would drive their momentum pushing forward.

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