The Indiana Pacers, as expected, locked up David West, reaching an agreement on a three-year, $36 million contract. The third year is a player option.
David West returns to Pacers for fair price, but concerning future financial implications exist
The Indiana Pacers had to keep David West, and doing so for three years and $36 million is fair in a vacuum. But the signing also exposes some future luxury-tax implications that are worth exploring.
This is a sizable commitment to a player that will be 36 years old by the end of his deal, but it's also the price of doing business. West's importance to a Pacers team that was one game away from the NBA Finals was too great to run the risk of losing. He had all the leverage, and the Pacers simply couldn't lowball him and potentially see him go elsewhere. Losing him would have been a devastating setback for a Pacers team that is still very young elsewhere.
The good news is that West’s game ages well. With the exception of a brief stretch early in 2011-12 as he was recovering from a torn ACL, West has given his teams the same steady production on both ends of the floor for the last eight years. He’s averaged between 17 and 21 points and 7.5 and 8.5 rebounds a game in seven of the last eight years. His PER has fluctuated between 18.9 and 20.4 over that same time frame in every year except 2011-12. He’s a reliable low-post scorer, a proficient jump shooter, an excellent passer, an underrated assassin late in games and a locker-room leader. Very little of that should change over the next three years.
That said ... $36 million is a lot of coin for a player in his mid-30s. The Pacers have limited flexibility to fix their abysmal bench beyond signing C.J. Watson this year, and they'll be pushing right up against the luxury tax in future years. Assuming Paul George gets a maximum contract extension that begins at around $14 million this summer, the Pacers could owe close to $60 million to eight players (George, West, Roy Hibbert, George Hill, Gerald Green, Ian Mahinmi, Miles Plumlee and Solomon Hill) in 2014-15. That's not including Danny Granger or Lance Stephenson, who will be free agents and may be in Indiana's future.
It’s going to be very difficult to improve the team given that little flexibility. Indiana may need to surrender assets to get Green and Mahinmi, who will make a combined $7.5 million in 2014-15, off their cap.
The Pacers probably can’t fix that problem either by fiddling with West’s contract value. Indiana has three choices: they can frontload the contract (West makes $13 million this year and $11.2 million in his player option season), backload it (the reverse) or give West the same rate in all three seasons. No matter what, though, $12 million is the cap hit in Year 2, when the Pacers have the most luxury-tax problems. (Obviously, those number are dependent on West’s new deal being worth exactly $36 million. In reality, it’ll probably be slightly more or less). The only question is whether Indiana wants to save some space under the luxury tax this summer to upgrade their bench or elect to prioritize future savings in 2015-16.
All this is to say that keeping West is a necessary, but expensive endeavor for Indiana. This isn't West's fault -- blame the ill-fated summer 2012 mini-splurge for Green, Mahinmi and D.J. Augustin -- but re-signing him brings the dilemma into focus. The Pacers knew they had to keep West, and they surely knew the future financial implications of that re-signing. Now, it's time for Larry Bird and company to figure out a creative way out while still improving the team.
GRADE: B
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