Personally, I don't like the contract either. But by the second season, a $7M salary will be less than an MLE salary (if it isn't already this upcoming season). If they pick up the 3rd year, a $7M salary will be closer to a veteran bi-annual salary than it will be the MLE. I'd have pursued other options to back up Drummond, preferably a guy who could also play some PF with Drummond. But the amount doesn't bug me. As soon as after next season, the contract will be a nothing contract under the increasing salary caps.
Van Gundy probably realized he couldn't lure any significant free agents to the team. He's made a couple of trades to acquire players. And in free agency, he's just filling holes. Even with Baynes, they still have close to $20 million in cap space this off season. They're going to spend the money somewhere.