@Capt. Factorial can come in over the top and clean this up if I have it wrong.
If we decline Ellis' option this offseason, he becomes a Restricted Free Agent. And considering he would have only been under contract for 2 seasons with us, we will only have his Early Bird rights. I say "only" but this actually is a good thing for us. With Early Bird rights, you can offer a max of 175% of their previous salary or 105% of the league average salary from the previous season (whichever number is higher).
Playing out both of those calculations as it relates to Ellis...
- 175% of Previous Salary: Ellis is only making $2,120,693 mil this year which means we could offer him a max of $3,711,213 in the 1st year of his new contract.
- 105% of Previous League Average Salary: The 2024-25 league average salary is reportedly $11,910,649 so that would would mean we could offer him a max of $12,506,181 in the 1st year of his new contract
Since the 2nd figure is higher, that would mean the max we could offer him in his 1st year of his new contract would be
$12,506,181. And Early Bird rights allow us to resign him for 4 years with 8% raises which means the max contract offer we can give him would be
$55,085,977 over 4 years. I realllly like that deal for Ellis.
Now someone could technically offer him a larger contract, but him being a RFA, we'd have the ability to match. However, Ellis would fall under the Arenas provision (similar to Herb Jones, Austin Reaves, etc.) which forces them to structure the contract in a way so that it is backloaded. This is the max contract a team could offer Ellis and how it would be restructured (not saying someone would actually offer him this though)...
- Year 1: $14,105,000 (the non-taxpayer MLE)
- Year 2: $14,810,250 (5% raise)
- Year 3: $46,780,750 (25% max salary)
- Year 4: $51,458,750 (25% max salary)
So Ellis could technically be offered a max of
$127,154,750 over 4 years. If Ellis is offered a backloaded contract like this and we match it, the cap hits would be exactly how it is laid out above. However, if we don't match the contract, the competing team would have the luxury of smoothing the $127 mil across all 4 years (vs. having the huge jumps in year 3 and year 4).
I would definitely be in favor of declining his option. Trying to resign him as a RFA vs. a UFA is huge, and being capped by what we can offer extension wise is sort of a plus as well. It would be similar to Monk's situation ("sorry Monk! We wish we could offer you more but this is the max the CBA allows us to give you"). We can offer Ellis that max extension before FA and see if he is bold enough to test the restricted free agency market. For a guy who has made less than $3 mil for his career, it would be pretty bold to turn down a $55 mil contract staring you in the face and risk restricted free agency. And for us, having Ellis locked up on a 4 year $55 mil deal seems like really solid value.