Cleveland Cavaliers: Right Move to Extend Anderson Varejao?

Future Investments

A rising salary cap has created more financial flexibility than ever before. The Cleveland Cavaliers are making the most of that as they prepare to give new contracts to the likes of LeBron James, Kevin Love, Tristan Thompson and Dion Waiters.

If Love declines his player option and Thompson fails to negotiate an extension, both will become free agents as soon as the summer of 2015.

Cleveland will have to sign Irving, James and Love to new contracts at some point in the future, and all will command max salaries once that day comes. Love will enter negotiations as an unrestricted free agent as soon as the summer of 2015.

He could hypothetically take the same short-term deal as James to prepare for a major payday under the new salary cap, but that’s not guarantee.

That’s where the third-year team option comes in.

Cleveland will set aside whatever money it takes to keep those three in town, but $10 million to an injury-prone center at 32 years old is a massive risk. It limits the available money for both Thompson and Waiters, who will receive big offers from other teams.

Or does it?

Given the team option, the Cavaliers will likely be more willing to go into the luxury tax to keep or acquire players. In the case of Thompson, 23, and Waiters, 22, it elevates the value of restricted free agency.

Thompson is already a nightly double-double, however, and Waiters is a dynamic scorer who thrives in creating his own shot.

Thompson is eligible for restricted free agency in 2015, while Waiters will experience the same fate in 2016. Both players will ask for money in the same range as Varejao.

If either player receives a significant contract offer, Cleveland can confidently match it knowing that it can decline Varejao’s team option for year three and lessen its financial burden down the line.