Chet Holmgren officially signed a five-year contract extension with the Oklahoma City Thunder on Wednesday, potentially worth up to $250 million. While this figure is considerable and secures Holmgren’s financial future, it is slightly lower than the extension recently signed by his fellow draft class member Paolo Banchero, who agreed to a deal that could reach as high as $287 million.
Both Holmgren and Banchero enter this new phase of their careers as four-year veterans, making them eligible for contracts at 25% of the salary cap with an 8% annual raise. This standard calculation sets their current maximum potential at about $239 million over five years. The reported extensions exceed this baseline due to specific league contract provisions.
How the Derrick Rose Rule Influences Contract Sizes
The reason behind the elevated contract numbers lies in the Derrick Rose Rule, designed as a form of supermax contract for certain young players. Under this rule, players who have earned an All-NBA Team selection, Defensive Player of the Year, or MVP within recent seasons become eligible for contracts worth up to 30% of the salary cap. This adjustment explains Banchero’s higher $287 million figure.
Although Holmgren is a strong Defensive Player of the Year contender with potential All-NBA selections looming, his extension does not reflect the full Rose Rule increase to 30%. The exact terms and incentives of Holmgren’s deal are undisclosed, but it appears he did not push for the maximum allowed rise in his contract’s percentage.
Reasons Behind Holmgren’s Contract Strategy
Holmgren’s choice to accept a contract below the full Rose Rule threshold may involve several factors. It is unknown if the Thunder were prepared to offer the full 30% cap value or how negotiations might have progressed if Holmgren delayed signing until restricted free agency next summer. Importantly, Holmgren acted quickly in early July to secure his extension, likely prioritizing roster and cap stability for the team over maximizing his immediate earning potential.
This approach protects the Thunder from severe salary cap complications associated with supermax escalators, which can limit a team’s flexibility when building around their stars in future seasons.
Learning from Other Teams’ Salary Cap Challenges
The Cleveland Cavaliers offer a cautionary example. Evan Mobley signed a contract that included full Rose Rule escalators. After winning Defensive Player of the Year, his salary cap hit increased significantly, pushing Cleveland towards the costly second luxury tax apron. To manage this, the Cavaliers made substantial roster cuts and absorbed huge tax expenses to maintain their competitive core.
This financial strain demonstrates how the 30% cap escalator, while rewarding exceptional players, can create issues that harm team depth and limit roster construction options in the long term. The difference between Mobley’s base 25% max and his escalated 30% max salary equates to significant expenditures that could otherwise support valuable role players.
Orlando Magic Face a Parallel Dilemma
The Orlando Magic find themselves in a similar predicament with Paolo Banchero. Currently, their salary commitments hover near the second apron line for the 2026-27 season, and a potential jump to the 30% Rose Rule contract would push them well above it. To field a true championship contender, Banchero would likely need to play at an All-NBA level, triggering the escalator and forcing Orlando to make further salary adjustments.
This leaves the Magic with a difficult choice: accept the financial consequences of Banchero’s elevated contract or risk underperformance without the full strength of their roster. One likely candidate for salary relief is Jonathan Isaac, whose non-guaranteed contract and defensive importance present a painful but possible trade-off for managing the cap space.
Thunder’s Cap Flexibility With Holmgren and Core Players
The Thunder are also strategizing how to manage future tax and apron concerns, especially given that they have yet to re-sign Jalen Williams, who earned All-NBA honors last season and may qualify for full Rose Rule escalators. Holmgren’s extension, along with Shai Gilgeous-Alexander’s recently signed supermax deal, offers a crucial financial foundation without weighing the team down excessively.
This careful contract structuring could allow Oklahoma City to retain most of its supporting cast and maintain roster depth while navigating the increasingly complicated luxury tax thresholds in today’s NBA.
The Value of Player Cooperation in Roster Building
In today’s salary cap environment, where surpassing luxury tax aprons can severely limit team-building options, player willingness to accept contracts below maximum amounts plays a vital role in sustaining competitive rosters. Some of the league’s top franchises benefit from players who prioritize team flexibility over maximum individual contracts, smoothing long-term championship pursuits.
Examples include Jalen Brunson signing a below-market deal with the New York Knicks and Alperen Sengun agreeing to less than his max with Houston to avoid restricted free agency competition. Every dollar saved on the core trio of Holmgren, Williams, and Gilgeous-Alexander can be reinvested in strengthening Oklahoma City’s supporting players.
Balancing Financial Decisions with Championship Ambitions
The reigning champions and promising teams like the Thunder face tough financial decisions ahead as they aim to build sustainable success. Holmgren’s $250 million extension is far from a below-market contract, but it is a deal that avoids the pitfalls of immediate supermax escalators, granting the Thunder strategic flexibility.
This approach presents a win-win: if Holmgren does not qualify for the Rose Rule increase, the Thunder retain cap freedom without losing a key talent. If he does earn it, the contract structure minimizes the financial damage, arguably allowing the team to keep its competitive pieces intact without painful sacrifices.
“The Rose Rule, especially for expensive, win-now teams, can tangibly impact a team’s depth.” —Anonymous analyst
“Every dollar the Thunder save on the Holmgren-Williams–SGA core is a dollar it can spend on someone else that matters.” —Anonymous analyst
“If he doesn’t earn Rose Rule eligibility, well, that likely doesn’t bother the Thunder much because they already know they can win the championship with him at his current level. And if he does? He’s not hamstringing them so much financially that it necessarily costs them a key piece.” —Anonymous analyst
Our Reader’s Queries
Q. What happened to Chet Holmgren?
A. Chet Holmgren missed the whole 2022-23 season for Oklahoma City because he tore a Lisfranc ligament in his right foot. This injury took place during a pro-am game, and he had surgery for it in August. The Thunder, therefore, knew well in advance that he wouldn’t play that season.
Q. What happens to Chet Holmgren?
A. Last winter, Chet Holmgren followed a routine he hopes to never experience again. During a game, he fell and broke his hip in six places. He had to stay in bed for weeks so his bones could heal. While his body was recovering, his mind struggled with the situation.