They're already very likely a playoff team if 2015 is any indication (in a Western Conference that was stronger than last year) and Russell Westbrook is a top 5 player at the very worst. This idea that it's impossible to make moves to improve how competitive they can be next year is silly.
They can do what they've done in the past and make trades. They have a ton of intriguing young players. They have draft picks if they're willing to risk them. We're not talking about turning the Nets into a title contender.
And if other small markets like Milwaukee and Memphis have been able to experience free agency success in recent years, I'm calling foul on the idea that OKC can't do the same so long as they're successful/promising enough. Al Horford was contemplating going to OKC, but ultimately didn't just because he didn't get a commitment on KD and/or Westbrook staying there long-term.
And he's not losing his flexibility; it's misleading to state it as such an absolute. He's not going to sign a maximum extension; he'd merely be guaranteeing that his contract runs for another year. In exchange, he gets another $8 million next year, becomes a 10-year vet the year after, and gives the team more stability, allowing them to build around him -- all while he's still in his prime. Sounds like a worthwhile tradeoff to me.
Clearly Better - Golden State, San Antonio, Los Angeles
Most Likely Better - Portland, Houston, Utah, Dallas, Memphis
Fighting For # 8 - OKC, Minnesota, New Orleans, Phoenix, Sacramento
I think they're a fringe playoff team that will be fighting for the last spot in the playoffs all season long, so I think it's a little too bold to say they're very likely a playoff team, especially with as much change as they're going to have to deal with this season.
PG - Westbrook, Payne
SG - Oladipo, Morrow, Abrines
SF - Roberson, Singler
PF - Ilyasova, Sabonis, McGary
C - Adams, Kanter, Collison
Yes, Westbrook is an MVP-type talent in that group, but that's not exactly a playoff-caliber roster. Further, there's clear spacing and fit issues all around the roster. And I'm not sure what assets that you're talking about they can improve with - Sabonis, Oladipo, Adams? Those three are essential parts of their future, so they can't really trade them. Thus, Payne, Kanter, and McGary are the only real assets that they have, which isn't exactly going to turn them into a contender.
And he's absolutely losing flexibility. He'd be gaining $8M to be forced to stay there another year, which isn't really justification for that if he's wanting to actually compete, an assumption that is pretty sound and consistent with Westbrook's attitude and character.
I think it's clear that the Thunder's best route forward is full-blown rebuild by selling Westbrook for as much as he's worth. They're not putting a contender around him any time soon, and he won't stay long enough anyways. They should convince him to make this extension and make Ainge or Buss sell the farm for him, which they absolutely should do. With the extension, Westbrook could easily command at least two of the following - the Brooklyn picks/Smart/Brown or Russell/Randle/Ingram.