Rudy Gay was not extended. At first I couldn't believe it and poked around a few sites to see if it really was true, but it's true. The treetop flyer will be entering restricted free agency in the summer.
If we believe Octagon's (Gay's agency) story then if the Grizzlies want to keep Gay, this almost certainly won't be the cheapest way to do it. Apparently Rudy was willing to take five years $50 million if the offer was on the table; matching an offer sheet in the summer will almost definitely be more expensive. While I don't believe a rebuilding team will confuse Rudy for LeBron or Wade and pass him a ma level contract, he could very easily be a complementary player for a team that resigns or steals away another team's superstar.
If we believe ESPN's report, then the Grizzlies offered the same contract listed above, and Octagon decided to hold out for closer to $65 million. Their argument was based on the LaMarcus Aldridge extension, which isn't quite warranted in my opinion. I do believe Rudy is worth that much, but I don't believe he'll be offered any more in restricted free agency. In that case the Grizzlies had no reason to lock up Rudy for that long, since there is always the chance that he won't draw much interest because of his deficiencies, a la Josh Smith two offseasons ago.
As one potential ray of hope, if the Grizzlies don't want to keep Gay, by my estimation they're now players in the market for other lower tier free agents. For instance the Grizz could easily make a play for a player like Joe Johnson or Dirk Nowitzki if they're willing to well overpay in comparison to the market -- read, give them a max contract. This isn't desirable, but it's not the worst thing ever.
It's no secret that I thought the Grizzlies should keep Rudy, especially at the $50 million price tag -- at $65 million, maybe not so much. I am definitely dismayed by the news, though I would never say never. It's very likely that the Grizzlies could still have interest in matching on any offer sheets. Still, not such a happy day.