O'Connor declined comment until a 2 p.m. news conference today, but according to sources on both sides of the negotiation, Williams signed for the maximum allowed by the NBA's collective bargaining agreement.
The exact value of Williams' extension won't be determined until the NBA sets its salary cap next July. But Williams, who turned 24 last month, will earn nearly $50 million the first three years and as much as $70 million should he exercise the fourth-year option.
Even with the option, Williams will be under contract to the Jazz through at least the 2011-12 season, as the franchise's unquestioned cornerstone. The Jazz, however, will face pressure in future seasons to win or risk losing their star point guard as a free agent.
"I know everybody has worked very, very hard toward reaching an agreement," said Bob McClaren, Williams' agent. "It'll be fun to talk about it [today]."
Had he agreed to the full extension, Williams would have earned an additional $21 million in guaranteed money for the fifth year. But Williams will return to the free-agent market sooner with the shorter deal, at either age 28 or 29.
In recent summers, James, Wade and Paul all chose three-year extensions with fourth-year options while Dwight Howard and Carmelo Anthony signed for four years with fifth-year options.
Although the Jazz had hoped to convince him to sign the longer extension, Williams did express a strong desire to stay in Utah during negotiations, sources said. He was drafted No. 3 overall by the Jazz in 2005 and greeted by the enormous expectations of following John Stockton.
Williams recently bought a house in the area and has spent much of the summer in town. He has worked out all week with the Jazz's summer-league team, including Thursday morning, and is expected to attend tonight's Rocky Mountain Revue opener.
As he weighed his options with the extension, Williams was concerned about the Jazz's direction with Carlos Boozer, Mehmet Okur and Kyle Korver all capable of opting out of their contracts next summer and becoming free agents.
There were questions concerning Jerry Sloan's coaching future beyond this season as well as added uncertainty with Jazz owner Larry Miller having been hospitalized since June 10 with complications from diabetes.
The clock was ticking with Williams set to leave Sunday for Las Vegas, but the Jazz were able to finalize a deal.
Although Paul reached agreement earlier this month with New Orleans in a matter of days, Williams' negotiations dragged on for more than two weeks. The Jazz said Miller's health wasn't an issue. Williams also did leave on a vacation to Mexico.
The extension will be the latest celebration in a summer filled with them for Williams. He was one of 12 players selected last month to the Olympic team, taking his place alongside the likes of Kobe Bryant and Jason Kidd, Williams' favorite player growing up in Dallas.
Williams, who has missed four games in his three-year career, is coming off a season in which he was selected second-team all-NBA. He averaged 18.8 points and 10.5 assists as the Jazz advanced to the conference semifinals before losing to the L.A. Lakers.
The small-market Jazz, meanwhile, could have luxury-tax concerns for the 2009-10 season, when Williams' extension kicks in. Boozer ($12.7 million), Williams ($15 million) and Andrei Kirilenko ($16.4 million) are owed more than $44 million combined.
They have approximately $65 million committed to s ix players - a number that could change depending on whether Boozer, Okur and/or Korver decides to opt out - with the NBA's luxury-tax threshold this season set at $71.15 million.
The Jazz would pay a dollar-for-dollar penalty for the amount they were to exceed the luxury tax. Th ey also will have to make decisions as early as next summer about signing Ronnie Brewer and Paul Millsap to extensions.
By the numbers
The exact value of Deron Williams' contract extension won't be determined until the NBA sets its salary cap next summer. Williams' extension also doesn't kick in until the 2009-10 season, with Williams set to earn $5.1 million this season in the final year of his rookie contract.
According to the NBA's collective bargaining agreement, Williams can earn as much as 25 percent of the salary cap in 2009-10 with annual raises equal to 10.5 percent of the first-year contract value. The NBA's salary cap was set at $58.68 million this season. Assuming it increases to $60 million next summer, Williams' extension would pay him the following: 2009-10 $15 million 2010-11 $16.575 million 2011-12 $18.15 million 2012-13
*Option $19.725 million (option) Total $49.7 million first three years, $69.5 million (all four years)
**All four years ($49.7 millino first three years)
Andrei Kirilenko: $16.4 million
Deron Williams: $15 million (approx)
Carlos Boozer: $12.7 million*
Mehmet Okur: $9 million*
Matt Harpring: $6.5 million
Kyle Korver: $5.2 million*
Ronnie Brewer: $2.7 million**
Kosta Koufos: $1.2 million
Morris Almond: $1.2 million**
Kyrylo Fesenko: $870,000**
*Player option **Team option