A Grayson Allen extension was inevitable for the Phoenix Suns. The only question was when it would happen, and how much it would cost Mat Ishbia in additional luxury tax payments.

Monday morning, the day after the Suns secured the 6-seed in the Western Conference and a first-round matchup with the Minnesota Timberwolves, Allen reportedly agreed to a four-year, $70 million contract extension with the Suns, per ESPN’s Adrian Wojnarowski.

The deal comes with a player option, and it’s slightly cheaper than the max amount (four years, $75 million) that he was eligible for in-season.

Allen was set to become an unrestricted free agent this summer, but rather than test the market, he and the Suns agreed to lock it down for the long-term. Phoenix would’ve been able to offer him even more in free agency using his Bird rights, but Allen clearly wanted to secure his payday now and stick with a Suns core that’s helped him realize his full potential.

Let’s take a quick look at the financial ramifications for the Suns, why this deal was the only option for Phoenix, and why it made sense for Grayson Allen to stay in the Valley.

Why the Grayson Allen extension made sense for Suns

On the court, Allen’s value is obvious. He averaged 13.5 points, 3.9 rebounds and 3.0 assists per game on 49.9 percent shooting, and he made a blistering 46.1 percent of his 5.9 3-point attempts per game, yielding an impressive 67.9 true shooting percentage. Every single number you just read represented a new career high for Allen.

The sixth-year guard led the league in 3-point percentage by a full percentage point, and his 205 made triples represented the second-most in a single season in Suns history. He was fifth in the NBA in effective field goal percentage, trailing only big men who primarily shoot near the basket (Daniel Gafford, Obi Toppin, Rudy Gobert and Ivica Zubac).

According to Stathead, Allen joined Kyle Korver (2014-15) and Joe Harris (2020-21) as the only qualified players in NBA history to attempt at least 5.9 3s per game while making 46 percent of them. Couple that with his improved finishing at the rim and ability to attack closeouts, and he’s been a terrific complementary piece to the Suns’ Big 3.

“He knows his role in our system, he knows if he has any airspace, we want him to shoot it, and he’s a great shooter,” coach Frank Vogel said last month. “Everybody knew he was a good player when he was coming in, but he’s a great player, and he’s playing phenomenally for us. I joke around with him a lot, but I just grabbed him and just told him how much I appreciate what he’s done for our team this year, ‘cause it’s been phenomenal.”

But Allen’s importance extends beyond his on-court performance for this particular team. He could shoot 0-for-100 from 3-point range in the playoffs and it wouldn’t matter; for the short-term and the long-term, re-signing him was the only choice.

The reason for that is the Suns will be in the second luxury tax apron again next season. That means they won’t have any cap space to work with in free agency, and even worse, they won’t have access to the mid-level exception — a useful tool for teams to go above the salary cap while landing outside free agents by offering them extra money.

Without the MLE, Phoenix only has vet minimum deals to offer. They probably wouldn’t have been able to replace what Allen brings to the table even if they did have access to the MLE, but they definitely weren’t filling that void if they let Grayson Allen walk and tried to build out their roster with vet minimums.

Even better, Allen’s contract represents a steal from a value perspective. He’s 28 years old, so he’s in the prime of his career. He’s only five months older than Cam Johnson, and the Suns just got him on a deal that’s $24.5 million cheaper than what the Brooklyn Nets will pay Johnson over his four-year deal.

Plus, if the Suns should need to retool or “blow it up” in a few years, Allen’s salary is in a helpful range where they can move him for one or two players. That flexibility is particularly important for a second tax apron team that won’t be able to send cash out in deals, aggregate contracts in trades, or use trade exceptions.

This extension comes with significant luxury tax implications, as ESPN’s Bobby Marks highlighted:

Allen’s $15.6 million salary for next season, the first year of his extension, will cost $79 million in payroll and luxury tax payments. Marks projects the Suns’ total payroll for next season to be around $206 million, which would cost an additional $104 million in luxury tax payments. That’s not nothing!

The good news is this only affects Mat Ishbia, who continues to make good on his promises to spend whatever it takes if it helps this team. Back in March, the Suns owner was asked about the second tax apron that he’s so willingly blown right past.

“Yeah, so I don’t know what the second tax apron is, what is that?” Ishbia joked.

His response was symbolic of his entire approach: Why dip a toe into the second tax apron pool when you can just cannonball right in? Even with hefty luxury tax penalties involved, Ishbia asserted that the Suns wanted to keep Allen and Royce O’Neale beyond this season.

“The way we’re looking at it is we’re trying to win the championship,” Ishbia said. “And we’re gonna try this year, and then we’re gonna try to figure out how to do it next year, and signing free agents is what it’s gonna take. 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. Royce is new to the organization, has done an amazing job [in] everything you could think of, and Grayson’s been here all year and has been a phenomenal part of the team and the organization. So we hope and expect to have both those guys back, along with keeping this core team together, ‘cause we love our team, and we’re gonna go compete at the highest level.”

O’Neale is technically eligible for a two-year, $20.5 million extension between now and June 30, but it might make more sense for him to wait until free agency to re-sign so he can earn a few extra years and additional salary. That will once again come with hefty luxury tax implications, but as Ishbia has proven with the Grayson Allen extension, he’s willing to do what it takes to keep vital role players around.

Why this extension made sense for Grayson Allen

For those wondering why Allen didn’t hold out until free agency to either re-sign with the Suns or join another team on a larger contract, the answer is two-fold: He wanted to secure his payday now, and he wanted to remain in Phoenix.

The first part is pretty straightforward. Allen has been a solid role player for years now, but this season, he truly blossomed at the perfect time. For a guy who’s only earned $28 million combined in his career to this point, accepting a $70 million payday over the next four years makes sense.

Allen has also spoken publicly — multiple times — about how much he enjoys being in Phoenix and playing on this Suns team. When his name popped up in trade rumors before the trade deadline, he took it in stride but made it known he wanted to stay in the Valley.

“I think my name has been in someone’s tweet every year since I’ve been in the league, so I hardly pay any attention to it,” Allen said. “Usually it brings a smile to my face ’cause it’s a little funny. But I’ve loved playing here this season, I love playing with this team. I don’t want to be traded. So not worried about it.”

Allen is a smart guy, and he understands the immense advantages that come with playing next to Kevin Durant, Devin Booker and Bradley Beal as a shooter. According to NBA.com, 357 of his 422 3-point attempts have been catch-and-shoot looks, and a whopping 343 of those have been “wide open,” with the nearest defender 6+ feet away.

That’s 81 percent of his 3-point attempts being wide open!

“I can’t give enough credit to Kev, always has his head up when he’s getting doubled in the post, Brad on his drives always has his head up to find me, Book when he’s operating the pick-and-roll,” Allen said. “So I have to give a lot of thanks to those guys continuing to find me and trusting the pass there.”

Allen has joked a few times throughout the season about thanking members of the Big 3 personally for finding him on his hot shooting nights, but there’s some truth behind those jokes, as he explained back in March when he admitted he’s still a little surprised when defenses “pick their poison” by leaving him open.

“There are certain teams that have a game plan that they try to get into a full rotation,” Allen said. “It’s tough to do when we have four really good shooters out there, so when the ball just gets swung around, it’s gonna end up in somebody’s hands, and tonight it was mine. Other times I just try to space. Sometimes I’m spacing out to 30, 35 feet just to see how far the man will come out and see how much space he’ll give the guy with the ball, whether it’s Book, Kev or Brad. And if he tries to shift at the last second, it’s an even longer closeout.”

What Allen touched on is the mutually beneficial relationship he has with the Big 3. If they double-team or over-help on Book, KD or Beal, Allen is going to feast on wide-open 3s. If they run him off the line, he’s capable of driving and either kicking it back out or finishing at the rim. And if they pay too much attention to Allen when he starts heating up, then things open up for the Big 3 again. It’s a balance he first experienced playing in Milwaukee with Giannis Antetokounmpo and Khris Middleton, but now he’s mastered it in Phoenix.

“It makes it easy, man,” Beal explained. “G, his ability to shoot, we love it, man. And we need it. We just need him to just don’t think about nothing else. Don’t even look to pass, shoot the damn ball. He’s shooting at a very high level, and it’s our job of trying to find him for sure. He makes our life easier, gets our flow going, makes defenses have to respect him and makes driving lanes open. Guys don’t want to help as much anymore, so it helps.”

This symbiotic relationship has helped Grayson Allen enjoy a career year while also helping the Suns post a +11.1 Net Rating with their preferred starting lineup. Phoenix had no hope of replicating even half of what Allen brings to the table armed only with vet minimums, and Allen wasn’t going to enjoy this type of spacing and freedom elsewhere. On a team-friendly extension, both sides should continue to benefit.