Gay was a restricted free agent, which means Memphis could have matched any offer sheet Gay signed with another team. Restricted free agency essentially allows the market to set values on players before incumbent teams are forced to make a decision. It is seen as a pretty powerful tool in the franchise toolbox. The Grizzlies had the option of waiting for another team to present a max offer; if no such deal materialized, Memphis could have continued to wait for the market to settle while negotiating with Gay. The only way Gay could have gotten away from Memphis without the Grizzlies getting an opportunity to keep him was if he signed with a club in Europe, something not even close to the radar.
Time, essentially, was on the Grizzlies' side.
Instead, Memphis caved on the first day, inking Gay to a contract close to the maximum allowable under league rules. The Grizzlies forfeited their negotiating power in exchange for quick defeat, more or less.
Ignoring the advantage of Gay's restricted status is like a jockey forfeiting a two-second head start. Or a NASCAR driver winning pole position, then telling the race director, "Naaah, I'll start in the back." Or a home team down 3-2 in the middle of the ninth deciding to skip the bottom of the inning. Or a team electing to start its drives from the 10-yard-line after every touchback. Or a bowler intentionally guttering two balls in the 10th frame while hanging on 240.
Not that Gay isn't a worthwhile player -- he's a 20-point scorer, a young kid who seems to mesh well with co-stars O.J. Mayo and Marc Gasol. But he's not an All-Star and may never be. When you hand over a full quarter of your payroll to one player, you need him to be great. Gay simply isn't there, hasn't improved terribly much over the last three seasons, and as such may never get to greatness.
This week, until the Grizzlies pulled this trigger, everything had gone right for Memphis. New York and New Jersey, teams with designs on Gay and buckets of space, made their pitches to the superior small forward, LeBron James. Two other top contenders, Chicago and Cleveland, would have had neither the need or means of chasing Gay should LeBron have gone to an NYC team or Miami. Paul Pierce, a great small forward himself, entered the market and didn't meet quick resolution. Minnesota, a projected bidder for Gay, used up most of its cap space building the greatest Serbian-Montenegrin frontline in the history of post-independence Serbian-Montenegrin basketball.
Contenders for Gay were tied up, and the small forward market had expanded. Things were heading the right way for Memphis.
Until the team blew its advantage by giving Gay the keys to the vault.
Some reports argue that the team feared Gay would sign a front-loaded offer sheet that would give Gay a $20 million salary in his first year. Those fears are completely overstated. The teams with space, as mentioned, are chasing a bigger fish. LeBron reportedly won't make a decision until Monday, July 5. And if a franchise had tried to turn Gay's contract toxic, as Portland did with Paul Millsap last summer, Memphis would have been in prime position to take it without much pain. The Grizzlies are in no danger of drifting deep into luxury tax territory; furthermore, the signing bonus clause used to facilitate these front-loaded deals spreads the cap/tax pain over the length of the contract, which means a front-loaded deal would have count as $14 million on the cap/tax ledger, just as the deal Gay will sign does.
The only impact would have been on Memphis' 2010-11 cash flow. In this business, with these stakes, if you are basing these grand, impactful decisions on the difference between paying $6 million now instead of $6 million over the following three years? You might as well just set the rest of your money on fire, because you can't win like that.
With his pre-emptive strike, Heisley basically looked at his hand, saw the pair of kings, and folded. You want to know why only one team (Minnesota) has more losses than the Grizzlies over the past four years? It's because Heisley refuses to be rational when the biggest decisions are made.