It simply means the the Celtics will have more cap room next year. His cap hold next summer is approximately $7.7 million. If they had offered him a deal of more than about 4 years for $34 million, his salary would have been larger than his cap hold. The Celtics need every penny to have room for a max free agent (it's why James Young didn't get his option picked up), and accordingly they would have had a difficult time increasing his salary for next year beyond his cap hold. Olynyk and his agent both knew this, and no one expected a deal to be reached.
Unless he's terrible this season, I expect he'll re-sign with the Celtics next summer for somewhere between $16-18 million per season.
Here is another great example of Danny getting the "small" stuff/details right. For a lot of people on this blog not extending Young for 2.8 mil next season was no big deal - who cares about peanuts (2.8 mil)? We are more concerned about the games on national TV this week, working the trade machine for a big trade before the deadline or dreaming about signing FA Blake or Gordon next July. But it is all these wonderful little moves that set up and make the big FA signings possible.
By waiving RJ (next summer cap saving 1.2 mil) and not picking up Young's option (2.8 mil) Danny got closer to being able to offer a 7 -9 yr max contract next summer. He's not there yet, but he got closer. When you factor in the cap hold (.5 mil) for Young's slot on the roster, the net cap savings was close to 3.5 million for both these guys. Neither RJ or Young was going to get meaningful minutes with the C's, so the loss from a roster point of view is very minimal.
So Young becomes an UFA next July. Theoretically, if C's wanted him back and he had no other offers, C could sign him for the veteran's minimum at a big savings over the 2.8 mil option. Lots of moving pieces between now and next summer , but I just wanted to acknowledge the great forward looking work that Danny's team does. So glad he is our GM.