Jalen Brunson is eligible for a contract extension, but should he re-sign or wait?

The most important moment of the New York Knicks’ offseason is yet to come. Even during a summer when the team finally made its star trade, another decision looms.

On July 12, exactly two years after Jalen Brunson first signed in New York, the Knicks can offer their All-Star point guard a long-term extension. Because of rules in the collective bargaining agreement, the deal would not be as lucrative as one he could receive if he were to wait until 2025 free agency to re-sign. Thus, the original assumption was that Brunson, the franchise’s cornerstone, would wait until next summer to re-up with the only organization for which he wants to play.

Of course, you know what they say about assumptions …

There is a world where, instead of gunning for a max contract, Brunson signs the extension for cheaper than his market value.

Since the Knicks’ season ended with a Game 7, second-round loss to the Indiana Pacers, Brunson has mulled over whether he should wait until free agency for the bigger contract or take the money now. The Knicks can’t make their official offer until Friday, but he knows it’s coming. And to this point, according to a league source, signing the extension is still under consideration.

If Brunson were to take it, cementing a deal that would promise him nine figures less than one he could receive as a free agent a year from now, it would do wonders for the Knicks — and not because it places extra dollars in James Dolan’s pockets.

The NBA limits how much players can earn in extensions. Brunson can start at no more than 140 percent of his previous year’s salary. He would play out the 2024-25 season, which is the final year of his current deal. The four-year extension, worth $156.5 million, would kick in after that, taking him through 2028-29.

But if Brunson were to wait until 2025 free agency, he would be eligible to sign a max contract, worth a projected $269.1 million over five years.

That’s a difference of $113 million guaranteed. It’s a $39.1 million average annual value in the extension versus a $53.8 million one in the free-agent contract. And it’s possible the difference in money is too large, and Brunson waits until next summer to earn his quarter-billion. However, he’s considering the other scenario, too.

But why?

The first reason the extension remains on the table, according to a league source, is security. Brunson has no interest in playing elsewhere, according to sources close to him. He has referred to the Knicks as “family” — in some cases, literally. He chose New York because of his deep ties with team president Leon Rose, head coach Tom Thibodeau and his father being an assistant.

Now, he’s winning, venturing only one victory away from the Eastern Conference finals, and doing so while surrounded by his best college buddies. He’s discovered personal success, finishing sixth in MVP voting and sliding onto his first All-NBA team this past season.

He’s become one of the league’s biggest names. Yet, Brunson is a small point guard, the type that doesn’t always have the most fortunate injury luck. He could sign the extension today, ensure he continues to play in the only place he wants and still set up trust funds for his great-grandchildren.

The other reason, as Newsday’s Steve Popper reported earlier this offseason, is more complicated. Brunson understands the NBA’s new financial world, the one with two aprons, where front offices fear compiling too high a payroll and thus losing most of their resources.

Become too expensive under the new CBA and penalties slice away at you. High-rolling teams are now prohibited from making most types of trades. They kiss goodbye to their exceptions — from midlevels to trade ones. They can’t sign attractive buyout candidates, not because there’s no room but because specific regulations prevent it. Their only options for improvement are with draft picks and minimum players (and the new rules even ding teams’ draft capital if they stay too pricey for too long).

Brunson understands the issues the current CBA causes with team building. A league source says it’s one reason he’s considering taking the cheaper extension, which could help the Knicks avoid the second apron in the immediate future, giving the franchise a better chance to win its first championship since 1973.

Salaries on this roster could blow up come 2026.

Brunson will be on a new contract. Julius Randle is due a raise with only one year left on his deal. Mikal Bridges hits free agency in 2026. The Knicks will need to pay a center that summer, whether it’s someone new or re-signing Mitchell Robinson, whose contract is up then, as well. OG Anunoby just re-upped on a five-year, $212.5 million agreement. Josh Hart and Donte DiVincenzo are on the books for eight figures then, too.

If Brunson took less, it could help the Knicks, which see themselves as title contenders after trading for Bridges this summer, out of a jam. It could be the difference in falling short of the second apron in 2025, as well. This new CBA forces teams to discover a sweet spot in their payroll to maintain success. Spend too little, and you won’t employ good enough players. But spend too much, and you lose all the tools that help you improve. And chances are, you will eventually peter out.

It’s not like Brunson turning down the extension would lead to panic. The dollars are not close, and economics aside, the point guard has made his intentions clear: He wants to remain with the Knicks. If he were to decline the extension, there is no reason to believe he’d be a flight risk. It wouldn’t mean he would be bound to re-sign for the max, either. For all we know, there is a happy medium. Maybe the extension number is too low for Brunson, but maybe there’s an amount higher than $156.5 million and lower than $269.1 million that works for Brunson and also saves the Knicks from the second apron.

Stars rarely take pay cuts of more than a sliver off the top, especially in their primes. A 27-year-old Brunson handing this much money back to the Knicks would be unprecedented if it were to occur.

Of course, there is a way he could make some of it back.

Although the gap appears massive, if Brunson were to take the extension, it may not mean giving back $14 million a year. There is a way he could justify the personal finances, even with the optics looking so extreme.

Let’s say Brunson signs the extension. The structure that would make the most sense for him would be a four-year contract with a player option in the final year. The deal would allow him to hit free agency in 2028, following his 10th NBA season.

Not all max contracts are created equal. Players who have been in the NBA for fewer than seven years can sign for up to 25 percent of the cap in starting salary. Seven-to-nine-year vets can sign for up to 30 percent of the cap. And ones who have been in the league for a decade are eligible for the largest max deal: 35 percent of the cap in starting salary, the type of contract commonly referred to as the “supermax.”

In 2025, Brunson would be able to sign the 30 percent max. But in 2028, his 35 percent max, which will come under a higher salary cap, would be worth a projected $417.8 million over five years.

That deal would start with a $72 million salary and end with (yes, we double-checked the math on this) a $95.1 million one. The cap is growing, and money is beginning to look fake with the NBA’s new broadcast deal about to kick in.

So calculate the difference.

If Brunson declined the cheaper extension, waited until next summer’s free agency and then re-signed for the max, he would make $269.1 million from 2025 to 2030. But if he extended for three more years on the team-friendly number, then signed the 35 percent max in 2028 free agency, he could make most of it back, earning $263.1 million from 2025 to 2030.

If Brunson were to opt for the extension, he wouldn’t be the first player to inject this type of strategy into his decision-making.

In 2019, Bradley Beal could have looked forward to free agency as a nine-year veteran but instead extended with the Washington Wizards, who he was committed to at the time, for less than his market value. The contract locked in the dollars immediately while also taking him through his 10th NBA season. Once it expired, the Wizards re-signed Beal to a 35 percent max that had all the bells and whistles.

The Knicks are hoping they can tell a similar story about Brunson. They will offer him the extension on July 12, then cross their fingers that an All-Star point guard will do something extraordinary for his favorite franchise.

(Photo of Jalen Brunson: Nathaniel S. Butler / NBAE via Getty Images)