The whole point of signing a player after the third year is to pay them less than if you wait until after the fourth year. Look at the those idiots in Memphis with Rudy Gay.
Ideally a player should be signed after the third year but for exceptions. This unfortunately for the Raps. is one such exception. The player(Demar in this case) has not proved to management that he should be locked up to a sizable contract. It's crazy to think that his agent hasn't been spoken to. I'm sure that if they could've extended him for around 5 mil. a season they would've. Understandably his agent should feel that Demar would fetch a lot more at the end of season. A mid season trade involving him wouldn't surprise me at all. This is my observation, not my opinion. Personally I think he should be re-signed.
Memphis I agree made a big mistake with Gay. A costly one.