James Harden’s free-agency decision will determine the Sixers’ offseason direction

After losing to the Boston Celtics in the Eastern Conference Semifinals yet again, the Sixers are now heading into a pivotal offseason that could determine whether Joel Embiid ever wins a championship in Philadelphia.

James Harden’s long-term future is the pivotal swing point in that regard.

Rumors have been swirling since before Christmas about Harden’s interest in reuniting with the Houston Rockets in free agency. That feeling appears to be mutual, as longtime NBA writer Marc Stein recently reported that Houston has “already convinced numerous rivals that it is serious about the plan to become a summertime bidder for The Beard.” Jake Fischer of Yahoo Sports said a number of people around the league are treating Harden’s return to Houston “as a foregone conclusion,” although others believe “it’s all leverage to hold over the Sixers’ decision-makers” as they weigh whether to re-sign him to a long-term deal.

Harden is a lock to decline his $35.6 million player option for the 2023-24 season to become an unrestricted free agent this summer, as it’ll likely be his final chance to lock in a multiyear megadeal. The Sixers can offer him no more than $210.4 million spread over either four or five years because of the Over-38 rule, while other teams can offer him a four-year, $201.7 million max deal. The lack of state income tax in Texas alone could help make up some if not all of the difference between what the Rockets and Sixers can offer Harden in real-money terms.

Looming over these upcoming negotiations is the NBA’s new collective bargaining agreement, which cracks down on the highest-spending teams throughout the league. It introduces a new second salary-cap apron set $17.5 million above the luxury-tax line, which the Sixers would likely cross if they’re able to re-sign Harden this summer.

Teams above the second apron will lose access to the taxpayer mid-level exception and be limited to taking back no more than 110 percent of the salary they send out in a trade beginning this summer, according to Yossi Gozlan of HoopsHype. Additional restrictions will go into effect in 2024-25, including limits on which first-round draft picks they can offer in trades and no longer being able to aggregate salaries in trades.

The Sixers already have $117.1 million in guaranteed salary on their books for next season, and the salary cap is currently projected to land at $134 million. If they gave Harden his maximum salary for next season ($46.9 million), they’d already be $2 million over the $162 million luxury-tax line and only $15.5 million below the second apron. If they re-signed any combination of Shake Milton, Georges Niang, Jalen McDaniels and Paul Reed (restricted), they’d likely go over the second apron and be far more limited in their ability to round out their roster.

The best-case scenario from the Sixers’ perspective would be Harden taking a below-max salary for the second straight season, however unlikely that might be. The Sixers shouldn’t necessarily balk at giving him a long-term max deal given the alternative of losing him, but every dollar will count both next year and in future seasons regarding the second apron.

If Harden’s reported Rockets interest is just an attempt at leverage, the Sixers might have a chance at something along those lines. But if Harden is genuinely torn between staying in Philly and going back to Houston, the Sixers might have to bite the bullet and offer him a full four-year max deal.

Even if they do, there’s no guarantee that Harden would accept it instead of returning to the Rockets. In that scenario, the Sixers would have a few critical decisions to make.

Since the Sixers are already within $17 million of the salary cap, they’re likely to operate as an above-the-cap team this offseason regardless of what Harden decides to do. At most, they could open only $11.4 million in cap space this summer, and that would require renouncing all four of Milton, Niang, McDaniels and Reed. They’d be far better off keeping all of their rights and operating with the $12.2 million non-taxpayer mid-level exception as their primary means to find external help.

With Tyrese Maxey and De’Anthony Melton both becoming eligible for extensions this summer, their negotiations may hinge on Harden’s decision as well. If Harden re-signs on a max or near-max deal, the Sixers will need to be mindful of future cap projections and how long they’re willing to be above the second apron. Maxey is likely looking for a max or near-max deal of his own, while the Sixers can offer Melton no more than a four-year, $73.9 million extension. (They would have been limited to $63.4 million under the current CBA.)

If Harden leaves, the Sixers will have a few main options. They could seek to trade Tobias Harris’ $39.3 million expiring contract to break him into a few depth pieces instead, or they could start angling for a moon shot in 2024. If they convince Maxey to hold off on signing an extension until he becomes a restricted free agent that summer, they’d have his cheap $13.0 million cap hold in place instead of a salary that could be north of $35 million. Depending on the other moves they made in the interim, they might be able to carve out a max contract spot the summer when players such as Kawhi Leonard, Paul George or Pascal Siakam can/will become free agents.

In the interim, the Sixers would likely take a substantial step back. Melton would presumably slide into Harden’s vacant spot in the starting lineup, leaving their guard depth perilously thin on the bench unless Milton returns next season. (Unless it’s finally Jaden Springer time?) If the Sixers couldn’t get past the second round with Harden, it’s hard to imagine them faring much better without him in 2023-24.

We’ll dive deeper into both options in the coming weeks, as there isn’t a clear or obvious answer to this dilemma. Either way, hold on to your butts for the next six weeks.