NEW YORK, NEW YORK - JUNE 24: Braden Smith is drafted 38th overall by the Chicago Bulls and traded to the Indiana Pacers in Round Two of the 2026 NBA Draft at Barclays Center on June 24, 2026 in New York City. (Photo by Caleb Bowlin/Getty Images)

Getty Images

INDIANAPOLIS – The Indiana Pacers selected former Purdue guard Braden Smith with the 38th pick in the NBA Draft on Wednesday, a selection Indiana acquired thanks to a draft-night trade with the Chicago Bulls.

Smith, who turns 23 later this month, spent four years in college, all with the Boilermakers. He holds the NCAA Men’s Division I record for career assists and averaged 14.3 points 8.8 assists per game in his most recent season. Smith’s passing and intangibles played a big part in getting drafted by Indiana.

Early second-round picks like Smith come with some contractual advantages for NBA teams. They can start at a low salary while signing a longer contract, a boon for the drafting franchise. Yet the Pacers, who have a total team salary that is rubbing right up against the projected luxury tax line for the coming season, currently plan to sign Smith to a two-way contract.

Players who sign two-way deals typically spend time going back and forth between their NBA team and G League affiliate – in the case of the Pacers, that’s the Noblesville Boom. Such contracts give players more chances to develop, but they are in turn limited to just 50 active games in a season while on a two-way deal.

Two-way contract signees aren’t eligible to play in the playoffs, either. They are most often used as a player development tool, though teams sometimes use them to add another lightly-proven veteran depth piece.

“We wanted to get a two-way potential player [at the] point guard position. After what we’ve gone through the last couple years with our point guard spot, you feel like [we] need another guy there if at all possible,” Pacers general manager Chad Buchanan said of his team’s goals in the draft.

When asked later for more details on the two-way contract element of this, Buchahan noted that no contract was finalized. But he did share that the Pacers wanted to increase their flexibility going into the offseason, and putting Smith on a two-way agreement would do that. Two-way deals don’t count against the salary cap and aren’t a standard roster spot – now, the Pacers have an additional spot on their 15-man roster and more spending power.

That’s because in order to get Smith, they sent away a player on a standard contract. Kam Jones, the 38th pick in the 2025 NBA Draft, went from Indiana to Chicago in the trade along with draft assets and cash considerations. Jones departing gives the Pacers more optionality, and that is even more true with Smith heading toward a two-way deal.

Players on two-way contracts are paid half of the minimum salary for a player with zero years of NBA service. In 2026-27, that will be just over $679k. Teams are permitted to sign three players to two-way deals at the same time.

Last year, Indiana ended the season with Taelon Peter, Ethan Thompson, and Jalen Slawson on two-way pacts. Thompson and Peter signed two-year contracts with the Pacers and are still currently on a two-way agreement while Slawson is set to enter free agency. The Pacers have a few days to decide if they want to make him a restricted free agent or not – regardless of their choice, one of those three players is set to be replaced by Smith.

Jones was the 38th pick in 2025, and he signed a four-year standard contract that came with over $2 million guaranteed to him. The year before, Ajay Mitchell was picked in that draft slot by the Oklahoma City Thunder – he, too, started his pro career on a two-way contract.

Jones may earn even more money if not waived by the Bulls this week. And Mitchell signed a three-year deal worth at most $8.7 million last summer with the Thunder. Smith will hope to follow a similar financial path and will have to earn it with the Pacers.

“He’s a leader who impacts winning. He does a lot of things that makes everybody else around him better,” Buchanan said of Smith. “When the ball’s in his hands, your team usually gets a good shot.”

Smith was the only draft pick for the Pacers this year. He will wear jersey No. 3 for the franchise. Should his contract be converted to a standard one mid-season, the Pacers could still ink him to a rookie minimum deal and get the benefits of the lower salary that the second-round provides.