Milwaukee Bucks: The financial implications of Jrue Holiday’s extension
It truly was a happy holiday for both Jrue Holiday and the Milwaukee Bucks this weekend.
Easter morning brought the news that Holiday had signed a four-year extension that can be worth up to $160 million, which obviously commits Holiday to the Bucks for the long-haul several months after first arriving via trade,
More from Bucks News
- Bucks 2023-24 player profile: Can MarJon Beauchamp take a leap?
- Piecing together the Milwaukee Bucks’ dream starting 5 in 5 years
- Predicting Thanasis Antetokounmpo’s 2023-24 stats for the Bucks
- Grade the trade: Bucks land reputable backup guard in swap with Pacers
- New workout video should have Milwaukee Bucks fans excited
While it wasn’t on the level of seeing Bucks superstar Giannis Antetokounmpo commit to the Bucks before the start of the 2020-21 season by signing his supermax extension, there’s no question all Bucks fans breathed a sigh of relief knowing the star guard has taken to his new surroundings wonderfully so far.
Now locked into this four-year extension that runs until the 2024-25 season, with the final year of the deal containing a $36.9 million player option, will earn him at least $134.9 million as Yossi Gozlan of HoopsHype detailed in light of the news.
Jrue Holiday’s maximum allowable extension base amount is four years, $134.9M with a $30.1M base salary replacing his $26.8M player option for 2021-22.
— Yossi Gozlan (@YossiGozlan) April 4, 2021
He can earn more through incentives since his annual base salary is well below his maximum allowable salary (35% of cap).
As was the case with the contract that Holiday signed with the New Orleans Pelicans in the summer of 2017, his newly inked extension contains incentives. Per The Athletic’s Eric Nehm (subscription required), $4.1 million of the bonuses included in Holiday’s deal are deemed likely while the remaining $20.9 million are deemed unlikely.
The Milwaukee Bucks’ roster will surely get expensive in light of Jrue Holiday’s extension.
There’s no question that the Bucks and all Bucks fans are overjoyed knowing they have a worthy core in place for the long-term future. But there will be a hefty price to pay with having all of Antetokounmpo, Holiday and Khris Middleton under contract at their high prices, respectively.
With both Antetokounmpo and Holiday’s extensions kicking in next season, the Bucks will owe $104.9 million to their top three players. Add in Brook Lopez and his $13.3 million salary for next year and the Bucks will be over the $112.4 million salary cap set for next season with $118.2 million owed to their top four players.
With all of that in mind, Bucks ownership is set to enter the luxury tax starting next season and will stay there for the foreseeable future.
The topic of the luxury tax has been one of great debate, considering it is intrinsically tied to the Bucks’ decision to move on from Malcolm Brogdon nearly two summers ago. While viewing Brogdon as a luxury at the time, Bucks co-owner Marc Lasry made it known that he and the team’s ownership had no issue paying the luxury tax in the next couple of years.
During today's media session with the owners, I asked Marc Lasry about the Bucks' luxury tax situation.
— Eric Nehm (@eric_nehm) October 4, 2019
He and Jamie Dinan responded. Here is the entire three-minute exchange: pic.twitter.com/UoFmdcuF8s
While the Bucks made moves on the margins ahead of this year’s trade deadline to go under the tax this season, the time has finally come for the Bucks’ ownership to pay big money upon entering the luxury tax starting next year.
So while the Bucks have their core locked in, there will be plenty of maneuvering to maintain their roster and certain sacrifices may have to be made, especially if they are to fall short of their ultimate goal this season and beyond. That’s certainly part of the risk that’s involved with trying to maintain a championship-caliber core as the Bucks hope to achieve during this time.
It’s that risk, though, that forced them to make such a massive decision to acquire Holiday for the sizeable haul of draft capital they dealt to the Pelicans in the first place. With most of their future first rounders tied up to Houston and New Orleans until 2027 as well as having secured Antetokounmpo’s prime through his extension, the Bucks’ best contending years are happening right before our eyes.
No one wants to think about whether the Bucks fall short of winning a championship with all three in place nor how and what Holiday as well as Middleton look like on the back end of their deals. Especially as Holiday is nearing on turning 31 years old in June and Middleton will turn 30 years old in August.
Yet, given the position the Bucks are in, they were left with no better choice but to go all-in with Holiday, a player who has clearly found his footing in Milwaukee and makes their championship quest that much more achievable. This is the core the Bucks are locked into and they will likely see it out all the way through as Antetokounmpo, Holiday and Middleton are under contract together until the 2023-24 season, which Middleton possesses a $40.3 million player option.
Next. 3 reasons why Giannis deserves MVP consideration. dark
With Holiday declaring himself to be a Buck for life, these are the Bucks’ best years to chase a championship and hopefully, they can truly spend them wisely.