Indiana Pacers and Aaron Nesmith agree to two-year contract extension

INDIANAPOLIS – Indiana Pacers wing Aaron Nesmith has agreed to a two-year, $40.5 million extension that will give Nesmith a contract that now lasts a total of four years.

Nesmith, who turned 26 last Friday, is about to enter the second season of a three-year, $33 million contract he signed in 2023. That deal was a safe bet for the Pacers, and the rising wing has dramatically exceeded that deal in recent seasons. He’s a great three-and-D player who averaged 12 points per game last season while shooting over 43% from long range.

Those numbers continued into the postseason when Indiana reached the NBA Finals and came one game away from a title. Now, with just hours to go until the deadline to reach an agreement, Nesmith has agreed to an extension. He was eligible to add as many as three seasons to his contract, but opted for two years at the maximum value he was allowed to receive based on the NBA’s average annual salary.

“Yeah, we’ll look at all that stuff… They’ve both had good years,” Pacers President of Basketball Operations Kevin Pritchard said when asked about possible contract extensions for Nesmith and Bennedict Mathurin earlier this season. “Those guys, in my opinion, still have levels to go up. And that’s what I love about this team… Our players have developed an incredible culture. And I’m not going to take an over-talented guy who doesn’t feel like he fits into the culture. We’d rather have guys like that who can grow into our culture. And that’s our job now.”

What Aaron Nesmith’s Pacers extension means for the team

The additional years bring Nesmith’s contract to four years and a total value of approximately $62 million. It runs through the 2028-29 season – the same year Pacers star Tyrese Haliburton’s contract expires.

Now the Vanderbilt product can become a free agent at age 29 with nine years of service. That could be a good time for Nesmith to hit the market again, though he will be eligible for a new contract extension in October 2027.

“He’s a strong, athletic wing who shoots the ball and moves and runs and can defend. He rebounds pretty well at his position,” Pacers head coach Rick Carlisle said of Nesmith last season. Later that evening, after Carlisle said this, the young wing returned from injury and immediately reminded everyone why he is valuable to the Indiana roster.

He has continually improved in the blue and gold, going from a bench player to a key starter for one of the NBA’s best teams. Last season he would have qualified for the 50/40/90 efficiency club had he played in enough games to qualify for the league standings.

Overall, Nesmith has averaged 11.7 points per game while shooting 40.2% from deep over the past three seasons with the Pacers. He came to the team via a trade from the Boston Celtics in the summer of 2022.

From a salary cap perspective, it’s difficult to pinpoint exactly what this extension for Nesmith does to the Pacers. Since it doesn’t start for another two years, an incalculable number of things could happen between now and then from a transactional perspective. Currently, the Pacers have roughly $169 million in salaries committed for the 2027-2028 season and could be under the salary cap in the summer of 2027, but there are two NBA Drafts and numerous players eligible for extensions.

But this expansion does give the Pacers clarity, making planning other moves much easier. Myles Turner has left the franchise, but the team’s other four starters from their NBA Finals run are all under contract for the next three seasons.

“He’s Aaron Nesmith. He’s going to defend at a high level, get open shots, play the right way… he can fit anywhere,” Haliburton said of Nesmith last season.

Mathurin was also eligible for an extension with a Monday deadline, but neither he nor the Pacers did had a good reason to wait when it comes to his contractual future and no agreement was reached. With Nesmith locked up for a few years, the only remaining item on Indiana’s offseason checklist is what to do with rookie-scale team options for Jarace Walker and Ben Sheppard.

The Pacers and Nesmith begin the regular season on Thursday when they host the Oklahoma City Thunder in a Finals rematch.