The first domino has fallen. The Chicago Bulls and Nikola Vucevic have agreed to a three-year, $60 million extension, locking the former All-Star center up through his age 35 season.

The Chicago Bulls and center Nikola Vucevic are nearing a three-year, $60 million contract extension, league sources tell @TheAthletic @Stadium. pic.twitter.com/xYo9vF0Gk1

— Shams Charania (@ShamsCharania) June 28, 2023

Details as to whether either party has an option or if the contract is fully guaranteed have yet to be released.

Signing a three-year extension prior to the new league year means any sign-and-trade or extend-and-trade options are off the table. Vucevic is now unable to be traded for six months.

Vucevic and the team each released a statement, confirming the reports.

Despite some consternation across Bulls nation, this move, at this rate, should come at no surprise.

Arturas Karnisovas has tipped a reunion with Vucevic dating back to last season and given the teams with cap space for Vucevic to walk into, there weren’t a lot of enticing offers out there for him that could really put pressure on the Bulls.

As a result, the Bulls make Vucevic the 13th highest-paid center in the league, by annual average value — more than fair for his level of production.

Vucevic’s value in a vacuum

Lost in the response to the trade and now the extension, Vucevic is a damn good player. Coming off a 17.6 points, 11 rebounds, 3.2 assists per game season while shooting 52 percent from the field, 34.9 percent from three and 83.5 percent from the foul line, Vucevic played all 82 games and anchored a top-five defense.

Vucevic would be the first to tell you he is a limited player. But few centers in the league provide the diversity of skill set he does. He can dribble, pass and shoot. He can play out of the post, at the perimeter or pick-and-roll. Though the Bulls offense suffered, he is can act as the fulcrum that keeps the cogs moving.

In the final year of his four-year, $100 million deal, Vucevic was making $22 million, or just below 18 percent of the salary cap. His projected $20 million is just 14.7 percent of the 2023-24 salary cap. This is a paycut in both dollars as portion of the salary cap.

Retaining Vucevic was the best chance for the Bulls to remain competitive. So even if they overpaid him slightly compared to my projection of three-years, $54 million, there is more at stake than pure dollar value.

The Bulls are not operating in a vacuum

Two things are true: Vucevic is worth $60 million in a vacuum and a $60 million deal hamstrings the Bulls.

The Bulls are not operating in a vacuum.

Given the apparent lack of competition for his services, it seems unlikely a bidder would swoop in with a higher offer. Even if one had, the Bulls should have been ready with a walk away number. Call his bluff. The teams with cap space are headlined by the San Antonio Spurs and Houston Rockets. Not the most idyllic landing spots.

The Bulls had power in these negotiations to give themselves space, but only if they were willing to let him walk for nothing. Though they wouldn’t have opened a max salary slot, they could have cleared enough space below the luxury tax to make way for a specialist option at the mid-level exception, which they may otherwise not use. Re-tool around DeMar DeRozan and Zach LaVine.

I never want to suggest a player isn’t worth his contract, so maybe this $60 million deal is the fabled middleground figure. A discount for the player and a number that gives flexibility to the team. Problem is, this deal doesn’t give the Bulls much flexibility. Any money the team would have been able to give out to free agents would have had to come from savings on Vucevic’s deal, and now there isn’t much left.

Filling out the roster around Vucevic

With Vucevic’s new $20 million deal on the books (this may slightly change depending on the orientation of the deal — it could be front loaded and declining or vice versa), the Bulls are creeping closer and closer to the dreaded luxury tax line.

Having extended qualifying offers to Coby White ($7.74M) and Ayo Dosunmu ($5.2M) this morning (figures below), the Bulls are roughly $17 million below the tax.

This comes with several stipulations:

1. Andre Drummond must decide whether to accept or decline his player option by end of day on June 29. If he opts out, the Bulls will have roughly $3.5 million in additional space, minus the cost of a roster spot.
2. White and Dosunmu’s figures will look different depending on what they decide to do with their qualifying offers. I expect White to decline and enter restricted free agency where he stands to make significantly more money. Dosunmu will likely accept his offer, where he will play out the final year of his contract at the $5.2M figure before becoming an unrestricted free agent
3. Julian Phillips’ contract may come in below the regular veteran’s minimum
4. The Bulls still have to fill out the five remaining roster spots

Taking the above into account, the Bulls are about a million bucks below the luxury tax line, meaning they can afford to bump one of their open roster spots from just under $2 million to about $3 million…not exactly the going rate for impact free agents.

The Bulls missed their stated goal of making the Playoffs. And because they want to remain competitive, they’ll need to improve in order to reach that goal. But without sufficient funds or draft capital to be able to make those improvements, it becomes a question of whether they will spend into the luxury tax and/or make bold trades to do so.

Of course, the Bulls could use one or both of their bi-annual ($4.5 million) or non-taxpayer mid-level ($12.4 million) exceptions and exceed the first apron while steering clear of the punitive second apron. But we’ll believe that when we see it.

Long term outlook

It’s one thing to invest resources into a team that can win now. It’s another to invest into a team that can win down the line. But the Bulls are doing neither. They’re investing in a team that’s not good enough to win now, while removing the ability to improve their fortunes in the present and future.

Here is a multi-year view of the cap sheet. It may be daunting, but the key figure to look at is “tax space” at the bottom. That’s the Bulls hard cap. They’re on a collision course to the same situation with DeRozan next summer. If they extend him ($30 million annually) and Patrick Williams ($20 million annually) to figures that have been estimated for them, the Bulls are above the tax with the same group, just older.

As a note, these numbers are estimates and projections, not finalized figures.

But the point remains. Not only are the Bulls set to run this back, they’re trending towards doing so for the next three years. Three more years! They are investing what few remaining resources they have into their sub-mediocre product, giving themselves less and less flexibility to improve on the fly.

The Bulls are stuck between a rock and a hard place. They have to do something but can’t do anything. As fine of a deal this is for Vucevic, it reduces what little flexibility they had. They missed the Playoffs so they need to make improvements, but have no money to buy them. The only way out is to make a trade, but they don’t want to make one in fear of becoming a worse team.

Something’s got to give.

We’ll have to wait until Friday at 5:00 PM Central Time find out exactly what that is.