Throughout Kevin Durant's free agency saga, most analysts agree that the smart move for Durant would be to sign a two-year deal, with a player option on the second year (AKA a "one-and-one" deal). By signing a deal like that, Durant could opt out next season and sign a bigger five-year max contract than he would if he signed a five year max this summer.
Why? Because max contracts are determined by a percentage of the cap in the season they sign, and since the cap is expected to go up another $15-20 million next season, Durant would get a share of a bigger pie next summer. Also, because he'd be a 10-year veteran at that point, he'd be eligible to sign a max deal for 35 percent of the cap instead of 30 percent he could sign for this summer.
The financial advantages to signing a short deal are pretty clear. You'd think because of that, it makes it easier to other teams to get in the chase for Durant, since a short deal negates the advantages the Thunder can offer with long-term contract incentives.
Problem is, if Durant signs with anyone else this summer, that team won't get his Bird Rights, a mechanism that allows teams to go over the cap to retain players. According to NBA rules, players need to play at least three seasons with a team before the team can go over the cap to retain them for a full max deal.
As CBA FAQ details, if a team other than the Thunder signs KD this summer, they still have something called a Non-Bird Right Exception they can use to retain players they've only had for one season, but it's not quite as appealing:
This exception allows a team to re-sign its own free agent to a salary starting at up to 120% of his salary in the previous season (not over the maximum salary, of course), 120% of the minimum salary, or the amount needed to tender a qualifying offer, whichever is greater. Raises are limited to 4.5% of the salary in the first year of the contract, and contracts are limited to four seasons when this exception is used.
It might not seem like much when we're talking percentages, but the totals add up over time. If Durant signed a one-and-one and then signed a five-year max next summer, he'd make over $235 million over the next six years. If he signed a one-and-one and then signed a four-year max using those Non-Bird Rights, he'd make a little over $168 million over the next five years. That's a $67 million difference, assuming the NBA's cap projections hold to form and don't shoot up more between now and 2017.
If the Wizards were able to clear enough cap space to sign Durant to a max without exceeding the cap, he could make more in Washington (a little under $193 million over four seasons) but still not nearly as much as the Thunder can offer because they can offer a fifth year, higher year-over-year raises, and they wouldn't have to carry around a bunch of guys on one year deals next season to keep cap space open for next summer.
It's anyone guess what's going through KD's mind and what will factor most into his decision this summer. Hopefully, playing in his hometown and avoiding the Western Conference Meat Grinder factors heavily into his decision. But whatever happens, it's impossible to escape the reality that Kevin Durant is going to have to leave money on the table to join the Wizards or anyone else this summer.