Tyler Herro’s Massive Extension Forces Difficult Decisions for the Warriors

Tyler Herro’s four-year, $130 million contract extension will have a defined effect on the Miami Heat and the Golden State Warriors, two of the premier franchises in the NBA.

The Miami Heat have doubled down on their trio featuring 33-year-old superstar Jimmy Butler, all-star big Bam Adebayo, and Herro with this agreement. This trio has made it to the conference finals twice in the past three years yet managed to do it without going into the luxury tax in any of those seasons.

Herro’s extension already pushes them into the luxury tax for next year. Couple that with the contract being about $26 million in excess of the market-setting Jalen Brunson contract, and questions begin to arise regarding how this number was reached by the Heat and Herro’s representation.

Herro’s camp likely heavily leveraged his Sixth Man Award. The only other player under the age of 25 to win the Sixth Man Award in the past decade was James Harden in 2012, a comparison that was probably brought up in the negotiation.

Alongside Harden, there are many other relevant comparisons that likely increased Herro’s value after his breakout season. FiveThirtyEight’s strongest comparables to Herro include guards like Jamal Murray, Devin Booker, and Zach Lavine, all of whom are currently on maximum contracts. If Herro can play up to this level, his extension will be a steal for the Heat.

The defending champion Warriors have about two more weeks to extend their own spark plug guard Jordan Poole. The Herro extension definitively increases Poole’s market value, which will cause even more tribulations to the Warriors’ already complicated cap situation.

Poole likely would’ve been in the conversation with Herro for the Sixth Man Award if not for Klay Thompson’s injury which moved Poole into a starting role. In fact, while in a sixth-man role during the Warriors’ title run, Poole was nearly a 50–40–90 performer. For that reason, Poole played himself into the same market that guards Brunson and Anfernee Simons (four years, $100 million) took advantage of in the offseason. However, after the Herro signing, Poole’s market value is now significantly higher than the slightly older Brunson and the less proven Simons. In fact, Poole’s playoff performance may make him more valuable than Herro, especially to young teams with cap space looking to make a leap like the Rockets or Hornets.

This causes a multitude of tough decisions for the Warriors, who face similar decisions with all-stars Draymond Green and Andrew Wiggins. Should they re-sign all three, the Warriors will have nearly a decade of among the highest luxury tax bills in league history and an unprecedented five players on star-level contracts. Their total outlay for contracts and luxury tax in 2023–24 alone could be nearly $600 million, especially given Poole’s recently inflated market. Luckily, the Warriors have a wealth of riches on team-friendly rookie deals including James Wiseman, Jonathan Kuminga, Moses Moody, and Patrick Baldwin.

Though Herro’s massive extension muddies the water for the Warriors’ top brass, the decisions the Warriors face are primarily budgetary. Within the rules, the Warriors could bring back Wiggins, Poole, and Green (should he opt-out) next offseason, and bring back Wiseman, Kuminga, and Moody over the course of the following two offseasons. However, this would garner an astronomical tax bill that might disrupt the performance of the Warriors as a larger business. Thus, Herro’s extension will shine a spotlight on how the NBA’s top franchise trades off between business and basketball.

Much of the research for this article was conducted in preparation for the Tulane Pro Basketball Negotiation Competition. I’d like to thank Madeline Raster and Ashwin Bala for their contributions to these efforts.