Grade the deal: Suns agree to re-sign Royce O'Neale for 4 years, $44 million

Royce O’Neale has agreed to re-sign with the Phoenix Suns on a four-year, $44 million contract, according to ESPN’s Adrian Wojnarowski. Per ESPN’s Zach Lowe, there are no player or team options on the deal.

At an average salary of $11 million a year, the Suns are bringing back a top-six player in their rotation from last year, at a price that fits right within the $11-14 million range originally projected here at PHNX Sports.

As we covered in our free agency primer, re-signing O’Neale was an inevitability and the Suns’ top priority, given his two-way importance and their inability to replace him if he walked. As a second tax apron team, Phoenix only has veteran minimum deals to offer outside free agents, so letting him go for nothing wouldn’t have freed up any cap space.

For his part, O’Neale mentioned back in April that these extension conversations would run their course at the proper time, but he sounded fairly optimistic about returning when asked whether he’d want to re-sign with the Suns.

“Yeah, for sure,” O’Neale said. “It’s a great place, team, organization. It’s been great since I’ve been here since day one. I’m trying not to focus on that, that’s summertime. Right now, just focus on the playoffs.”

After the news broke, O’Neale took to Instagram to give his thoughts:

The Suns may not have a mid-level exception to work with, but using his Bird rights, they got O’Neale for an annual amount that’s slightly below the non-taxpayer mid-level exception ($12.9 million), which was his value around the league. In the end, Phoenix saved a few million on his annual salary, while O’Neale got a fourth year tacked on.

Here’s a look at why it made sense both on and off the court for Phoenix to re-sign Royce O’Neale to a deal just like this.

Royce O’Neale’s value on the court

Although O’Neale will turn 31 years old in June, the 6-foot-6 wing immediately filled multiple holes on both ends of the court as soon as he arrived in Phoenix in February.

“It’s hard to narrow it down to one thing, ’cause he just does a little bit of everything while he’s out there,” Devin Booker said. “Defensively, taking on his matchup, just being ready. And then he’s just that great piece where he’s running up, slipping out, moving the ball and then knocking down open shots.”

In 29 appearances for the Suns, O’Neale averaged 8.1 points, 5.2 rebounds and 2.7 assists in 25.1 minutes per game. He only shot 41.1 percent overall, but he made 37.6 percent of his 5.2 3-point attempts per game. He also shot 43.4 percent on his corner 3s, 37.8 percent on catch-and-shoot 3s and 40.3 percent on wide-open 3s.

In the playoffs, he was nowhere near as effective. His numbers dropped to 5.0 points, 4.8 rebounds and 1.0 assists in 26.0 minutes per game, while shooting 31.8 percent overall and 33.3 percent from deep. When Grayson Allen went down with not one, but two ankle sprains, O’Neale was unable to step up outside of Game 1, when he scored all 14 bench points for Phoenix on 5-of-10 shooting. Over the next three games, he put up a combined 6 points on 2-of-12 shooting.

However, pretty much everyone struggled in that four-game beatdown from the Minnesota Timberwolves. During his limited time in Phoenix, O’Neale established himself as a quintessential glue guy on both ends, knocking down open 3s, making the right pass to keep the ball moving, defending multiple positions, and leading the charge on the communication front.

“When I talk about Royce, I just say ‘winning plays,’” general manager James Jones said. “I can’t tell you whether or not they’ll be on the offensive side of the ball or the defensive side of the ball every night; I just know when you stack it up, he’s gonna have a lot of winning plays.”

The numbers backed that up. Phoenix posted a team-best +9.4 Net Rating with O’Neale on the court this season, and a team-worst -4.1 Net Rating when he sat.

Those numbers didn’t hold up in the playoffs, but again, that series was a small sample size where the entire roster got smashed to a pulp. Regardless of how the postseason ended, O’Neale’s time in Phoenix confirmed what the rest of the league has known for years now: This is a solid two-way player who can come in and give any team respectable minutes.

“I would hesitate to call him a role player,” said O’Neale’s former Utah Jazz coach, Quin Snyder. “I’m sure he’d be fine with that, and he probably is that, but that sometimes belittles all the things that someone does. He has a lot of different roles, and I think that’s his greatest strength. His humility as a player and his competitiveness have always set him apart.”

That humility helped him embrace a bench role behind Allen, despite possessing the size and defensive skill-set that should have been tested alongside the other four starters more often. Regardless of where he fits in the rotation, the point is that he fits.

“I try to fit in with any group I’m in,” O’Neale said. “Whether I’m starting or coming off the bench, I’m still gonna play the same way, try to fit in with whatever group I’m in.”

From his switchable, versatile defense to his willingness to launch 3s to the connectivity he provides on both ends as a seasoned veteran and lead communicator, bringing back O’Neale as part of their projected playoff core for next year was a top priority for the Suns.

re-signing Royce O’Neale was a necessity from a financial standpoint

Even if you’re skeptical of O’Neale’s playoff viability, re-signing him was the only logical move from a team-building standpoint.

Not everyone is a salary cap aficionado (or read our offseason primer), so we’ll break this down as best we can. Before O’Neale’s new deal, the Suns had seven players under contract for next season at a combined $194.1 million in salary, per Spotrac:

• Kevin Durant ($51.2 million)
• Bradley Beal ($50.2 million)
• Devin Booker ($49.4 million)
• Jusuf Nurkic ($18.1 million)
• Grayson Allen ($15.6 million)
• Nassir Little ($6.8 million)
• David Roddy ($2.8 million)

Four more players had player options, which they received when they signed with Phoenix last summer:

• Eric Gordon ($3.4 million)
• Josh Okogie ($3 million)
• Damion Lee ($2.8 million)
• Drew Eubanks ($2.7 million)

Eric Gordon and Drew Eubanks will opt out to pursue deals elsewhere. Okogie will opt out, but the Suns are aiming to use his Early Bird rights to re-sign him. Damion Lee was expected opt in, but will opt out instead, with the expectation that he’ll re-sign in Phoenix for slightly more than the vet minimum.

The salary cap for next season is projected to be around $141 million, with the luxury tax threshold at $172 million and the second tax apron at $189.5 million. The Suns were already over the second tax apron with the seven players they had under contract ($194.1 million), and with O’Neale ($11 million) and Lee ($2.8 million) returning, they’re now up to $207.9 million in salary, with potential rookie deals for Ryan Dunn and Oso Ighodaro to come. In other words, they’re certain to be a second tax apron team again.

Under the new CBA, teams in the second tax apron are not allowed to use the mid-level exception in free agency, and their flexibility in trades is drastically reduced:

So what does this mean?

As a team that’s well over the salary cap, they have no cap space to sign outside free agents. As a team that’s also in the luxury tax, they would normally have the $5.1 million taxpayer mid-level exception to offer to an outside free agent, but because they’re a second tax apron team, they won’t have access to the MLE. That deprives them of a vital tool for signing outside players to contracts worth more than the vet minimum.

So as Phoenix looks to fill their remaining roster spots, they can only do so via trade (with strict regulations attached), veteran minimums in free agency…and re-signing their own free agents.

Much like the Grayson Allen extension, re-signing Royce O’Neale was a necessity. Like Allen, the Suns owned O’Neale’s Bird rights, which meant they were allowed to go over the salary cap to re-sign him. Phoenix was already heading for second tax apron territory before these extensions for Allen and O’Neale, so the only drawback to his four-year, $70 million deal was the hefty luxury tax penalty that came with it — and that’s for Mat Ishbia to worry about.

Obviously, re-signing O’Neale to an extension comes with another hefty luxury tax bill, but Ishbia has publicly committed to spending whatever it takes — numerous times.

“The way I look at it is this: We’re trying to win,” Ishbia said back in March. “Signing free agents is what it’s gonna take. And having someone’s Bird rights gives you an advantage to be able to keep those players, even if you’re into the luxury tax. We’re not frivolous with money and just spending money to spend money; what we’re trying to do is win a championship and build the best team possible, and it’s not just players, it’s culture. It’s team members, and Grayson and Royce are two great guys.”

This is not a case of “new owner syndrome” or making the Suns’ salary cap situation worse; Phoenix would’ve been a second tax apron team regardless, and because they owned O’Neale’s Bird rights, they could re-sign him to a deal that properly compensates him while also retaining a key role player. The only entity negatively affected here is Ishbia’s wallet, in the form of a whopping $116 million luxury tax bill:

Remember, as a second tax apron team, if Phoenix had let O’Neale walk for nothing in free agency, that would not have freed up any cap room to pursue other free agents. They would only have been able to try and replace his two-way production on the wing with vet minimum deals, which was improbable at best, because as last summer’s slew of vet minimum additions proved, it’s hard to hit on those margins.

Long story short: There was no financial or basketball incentive to let O’Neale walk, regardless of whether one feels his annual salary is “inflated.” This wasn’t a case of “bring him back as long as the price is fair”; this was “bring him back, period, even if he makes a couple extra million above market price, because Ishbia’s bank account the only entity negatively impacted by this.”

O’Neale was only eligible for a two-year, $20.5 million deal if he had signed an in-season extension like Allen. By waiting until the summer, he was able to sign a larger deal, with a higher annual salary. Something in the $11-14 million annual range always made sense — not just to entice him to stay, but also because the Suns needed to structure some of their contracts for future trade flexibility.

Remember, as a second tax apron team, Phoenix can’t take back a single dollar more than they send out in any trade, and they can’t send out multiple players in the same trade. Without being able to aggregate salaries or make any trade where they take back additional salary, Phoenix’s only trade avenues this summer will revolve around bringing back salaries that are just under what guys like Jusuf Nurkic ($18.1 million) Nassir Little ($6.8 million) and David Roddy ($2.8 million) make.

Allen ($15.6 million) and O’Neale (approximately $11 million) will join that club later, since Allen isn’t trade-eligible until Oct. 15 and O’Neale won’t be trade-eligible for months after he officially re-signs. Regardless, if the Suns have to make moves down the road, they’ll need salaries in that middle tier for future trade flexibility. Signing O’Neale to a four-year deal at around $11 million a year makes sense on that front too.

Grade: A-