Jrue Holiday and the Boston Celtics have agreed to a four-year contract extension worth $135 million.

Holiday, who will turn 34 in June, has become a major influence for the Celtics, since being acquired last summer, having lifted their defensive intensity, while providing a reliable three-point shooting element.

While specific year-to-year salaries are still unknown, Holiday’s extension is worth less than his current salary, meaning the Celtics will save money in luxury tax payments, even if the specific number is not yet known.

Holiday, who is earning $36.8 million this season, is likely going to start his extension in the range of around $30-31 million. With the salary cap estimated to increase by at least 4.4%, and Holiday seeing a pay decrease, his overall individual cap hit will go down, meaning Boston’s ultimate luxury tax bill in 2025 should lessen.

According to Keith Smith of Spotrac, a rough estimate of next year’s luxury tax savings for Boston could amount to $38 million.

It’s a large deal for a player of Holiday’s age. The contract concludes just days before his 38th birthday, and it’s reasonable to wonder if Holiday will remain as effective as he currently is.

The good news for Boston is that Holiday’s role on offense isn’t a major one. He’s playing off of Jayson Tatum, Jaylen Brown, Kristaps Porziņģis, and Derrick White, functioning as the fifth-option in Boston’s offense.

Over the season, he’s averaging 12.5 points, 5.4 rebounds, 4.9 assists, and hitting a whopping 62.7% of his three-pointers from the corners – a shot that should be there for him long-term if the Celtics manage to keep everyone around.

Theoretically, Holiday could see his offensive role diminish even further down the line, which would allow him to fully transform into a 3&D point guard, which should make him more durable, thus making sure the Celtics get the best bang for the buck on his deal.

It also helps that the NBA is likely to sign a new TV deal, which could force the salary cap to increase by 10% every single year, further lowering Holiday’s cap hit from a percentage perspective.

Finally, even if that extension is expensive, Boston’s logic is simple. If the presence of Holiday brings them closer to a championship, they’ll be fine paying him into his late 30’s. The Celtics are certainly committed to winning, seen by the extension they gave to Brown, which is estimated to cost them $286 million over the next five years.

So yes, $135 million for a player in his mid-30’s is on the surface a lot. But at the end of the day, the ultimate cost is lower, and allows the Celtics more flexible as they compete for a title. If nothing else, that’s exactly how you would want a championship caliber team to operate.