The Donatas Motiejunas Contract Examined

On Friday, the Houston Rockets and Donatas Motiejunas agreed to a four-year contract for him to return to Houston. Much has been written over the past several months (and especially over the past couple of weeks) about the protracted negotiations between Rockets GM Daryl Morey and Motiejunas’s agent (BJ Armstrong), so there’s little reason to re-hash that here. This article will focus solely on the terms and salary cap impact of the contract Motiejunas has signed.

Trade Restrictions

Because Motiejunas signed a new contract with the Rockets, rather than the Rockets matching his offer sheet with the Brooklyn Nets, the Rockets are not bound by the one-year restriction that would not have allowed them to deal Motiejunas without his consent. Still, the three-month waiting period must expire before the Rockets can trade Motiejunas (as with any newly signed or re-signed free agent). And since that three-month period will not expire until after the February 2017 trade deadline, the Rockets cannot trade Motiejunas until after the season. But the team is now free to trade Motiejunas this June (including in connection with a draft night trade) without his consent. (Also, since Motiejunas signed an offer sheet with the Nets but ended up re-signing with the Rockets, it appears that he cannot be traded to Brooklyn for one year.)

Salary and Incentives

To the extent it is guaranteed (more on that below), Motiejunas will receive a base salary in each year of his deal as follows:

• 2016-17: $8,300,000
  
• 2017-18: $7,926,500
  
• 2018-19: $7,553,000
  
• 2019-20: $7,179,500

That base salary figure is subject to increase based on certain incentives. Incentives in player contracts are categorized as being either “likely” or “unlikely” to be achieved. For statistical incentives, this is usually based on whether the goal of the incentive was accomplished in the prior season. Each year of Motiejunas’s contract includes the following incentives:

• A $1,000,000 incentive that was reported as being based on strength and conditioning. According to Marc Spears, Motiejunas can achieve this incentive by getting four body scans each year before the end of the regular season. This incentive is categorized as “likely” and should easily be achieved each season.
  
• A $250,000 incentive if Motiejunas’s 3-point percentage exceeds 37% (based on some unknown minimum number of attempts). This incentive is (currently) categorized as “unlikely”.
  
• A $250,000 incentive if Motiejunas reaches certain defensive rebounding levels. While those exact levels are not yet known, this incentive is (currently) categorized as “unlikely”.
  

For purposes of determining the amount that Motiejunas counts against the salary cap, the team must count his base salary plus all (then) “likely” incentives. This means that Motiejunas’s cap hit currently looks like this:

• 2016-17: $9,300,000
  
• 2017-18: $8,926,500
  
• 2018-19: $8,553,000
  
• 2019-20: $8,179,500

These figures can be adjusted upwards (by up to $500,000, if Motiejunas reaches all of his “unlikely” incentives) or downwards (by $1,000,000, if Motiejunas does not reach any of his “likely” or “unlikely” incentives). For instance, if Motiejunas achieves his “likely” incentives and also shoots better than 37% on three-pointers this season (meeting the minimum number of attempts) but fails to achieve his rebounding incentive, then (1) Motiejunas’s 2016-17 salary would increase to $9,550,000 and (2) Motiejunas’s 2017-18 cap figure would increase to $9,176,500.

Guarantee Dates

Motiejunas’s salary is only partially guaranteed. There are several key guarantee dates throughout the life of the contract. While it has been reported that only $5,000,000 of Motiejunas’s salary is guaranteed on Day 1, for purposes of this article we will assume that he is not waived by early January and (as with every other NBA player contract) his 2016-17 salary will be fully guaranteed.

Gone is the March 1, 2017 guarantee date from the Brooklyn Nets offer sheet for the 2017-18 season. Also gone are the July 7 guarantee dates in 2018 and 2019. In their place is one guarantee date for each of the second, third and fourth years of Motiejunas’s deal: July 15.

Obviously, pushing the 2017-18 guarantee date back all the way from March 1 is a key difference for the Rockets that allows them to more accurately ascertain Motiejunas’s physical condition and skill before a final decision must be made on his second year salary. But don’t sleep on the distinction between the July 7 date and a July 15 guarantee date.

Currently, July 7 falls inside the scheduled July Moratorium for each of the next few years. However, if this past summer’s shortened July Moratorium ends up being used in the new CBA, July 7 could end up being the very first day that teams can go back to “full business” signing players and making trades. Even then, in order to move Motiejunas in a trade that would allow the receiving team to waive him without guaranteeing his salary (let alone allowing the Rockets to conduct any physicals or other diligence on their acquired players) could be a tight squeeze.

Meanwhile, a July 15 guarantee date gives the Rockets more time to survey the free agent landscape and to determine whether they want to open up additional cap space by waiving Motiejunas or trade him for additional assets. That extra week also opens up additional waves of free agency to the Rockets, once the big fish are all snatched up. By that time, the Rockets might be in a position to determine whether they’ll be able to acquire a quality free agent with their Mid-Level Exception (believed to be increasing to $8 million or more), thereby allowing them to keep Motiejunas and operate above the cap. Those extra 8 days in July are a huge benefit for the Rockets’ front office.

Bottom Line

The Houston Rockets have managed to retain a quality seven-footer with a unique skill set on an extraordinarily team-friendly contract and at a very reasonable salary. If Motiejunas can stay healthy and continue to improve in the manner he was prior to his back injury in 2015, that contract could turn into one of best (non-superstar and non-rookie scale) values in the league. Even if Motiejunas can never regain his prior level of play and is beset by further injuries, the Rockets will be able to move on from his contract with minimal long-term consequence. A lot can be said about how Motiejunas and the Rockets got to this point, but moving forward, the Rockets look like they’re in great shape.