2013 Free Agency

Maximum Contract Values

In General NBA on April 18, 2010 at 6:17 am

There are three types of maximum contracts

  • Zero to six season veterans = 105% of previous contract or 25% of salary cap, whichever is greater.
  • Seven to nine year veterans = $105% of previous year’s pay or 30% of salary cap, whichever is greater.
  • Ten plus year veterans = 105% of previous year’s pay of 35% of salary cap, whichever is greater.

A team that holds a player’s full bird rights can then sign a player for up to six seasons and for maximum annual increases of 10.5%.

A team without bird rights to the player can only offer five seasons and annual increases of up to 8%.

Salary Cap

David Stern recently announced

NBA commissioner David Stern said on Friday that the league is projecting the cap to come in at about $56.1 million. The actual number won’t be determined until early July, before teams can begin officially signing players.

Though that figure would still be lower than this season’s $57.7 million cap, it’s far better than estimates from last summer, when the league sent a memo to teams warning them of a potential sharp drop to between $50.4 million to $53.6 million.

Note: The league uses a different figure to calculate a maximum salary. The cap is configured to 49.5% of BRI but in calculating the max contracts they use a figure of 48.04% instead. That figure is $54.45 million.

Edit: Hat-tip to Julien for catching an error — the 49.5% figure is outdated and hasn’t been used in five years, the figure now is 51%. The cap is 51% of BRI. This gives us a new figure of $52.58 million. The figures below have been re-calculated.

Zero to Six Seasons

Eligible Players — Rudy Gay

  • Twenty five percent of the salary cap = $13.145 million
  • Annual increases at 8% = $1.052 million
  • Annual increases at 10.5% = $1.38 million

Total value of a non-Bird maximum contract (five years, 8%) = $76.245 million

Total value of a Bird rights maximum contract (six years, 10.5%) = $99.57 million

A difference of $23.33 million between the non-bird and bird rights offers.

Seven to Nine Seasons

Eligible Players: LeBron James, Dwyane Wade, Chris Bosh, Amare Stoudemire, Joe Johnson, Carlos Boozer, Yao Ming

Okay, so this one is a little more complicated because some of these players are able to sign contracts greater than 30% of the cap because 105% of their previous salaries is the larger figure.

30% of Cap — Joe Johnson and Carlos Boozer

  • Thirty percent of the salary cap = $15.774 million
  • 8% annual increases = $1.31 million
  • 10.5% annual increases = $1.72 million

Total value of a non-Bird maximum contract (five years, 8%) = $91.97 million

Total value of a Bird rights maximum contract (six years, 10.5%) = $120.44 million

A difference of $28.47 million between the non-bird and bird rights offers.

LeBron, Wade and Bosh

All three players entered the NBA the same year and signed maximum contracts after their rookie deal expires. They each earned the same amount of money this past season.

  • Thirty percent of the salary cap = $15.774 million
  • 105% of previous contract for LeBron, Wade and Bosh = $16.57 million
  • 8% annual increases = $1.33 million
  • 10.5% annual increases = $1.74 million

Total value of a non-Bird maximum contract (five years, 8%) = $96.15 million

Total value of a Bird rights maximum contract (six years, 10.5%) = $125.52 million

A difference of $29.37 million between the non-bird and bird rights offers.

Amare Stoudemire and Yao Ming

Amare entered the season a year before the above trio and has been paid more as a result this past season.

  • Thirty percent of the salary cap = $15.774 million
  • 105% of previous contract for Amare = $17.2 million
  • 8% annual increases = $1.38 million
  • 10.5% annual increases = $1.81 million

Total value of a non-Bird maximum contract (five years, 8%) = $99.8 million

Total value of a Bird rights maximum contract (six years, 10.5%) = $130.35 million

A difference of $30.55 million between the non-bird and bird rights offers.

Ten+ Years

Eligible Players: Dirk Nowitzki

  • Thirty five percent of the salary cap = $18.40 million
  • 105% of previous year’s pay = $20.79
  • Annual increases at 8% = $1.66 million
  • Annual increases at 10.5% = $2.18 million

Total value of a non-Bird maximum contract (five years, 8%) = $120.55 million

Total value of a Bird rights maximum contract (six years, 10.5%) = $157.44 million

A difference of $33.86 million between the non-bird and bird rights offers.

Analysis/Notes

  • LeBron James, Dwyane Wade and Chris Bosh are all certainties to be offered maximum contracts. There difference between those contracts is just under $30 million. No way those players give up a guaranteed $30 million if they don’t have to. So if any of those players leave their respective teams, it is a near certainty that they will do so through a sign and trade.
  • Atlanta was uncomfortable with a four year $60 million contract extension for Joe Johnson this summer so it’s hard to believe they’d now be willing to pay him $120 million over six seasons. Given the free agency landscape, the talent available and the number of teams looking to acquire a max contract free agent, Joe Johnson is very likely (but not certain) to get a max contract offer from somebody … but that will likely be a non-Bird offer. It’s hard to see Atlanta or any non-Knicks team giving Joe that type of money.
    • Atlanta would be able to offer a lower starting salary (say $15 million) or to limit the annual increases (cap of $18 million per season) + offer a sixth season and still out-bid another prospective team who is offering Joe a non-Bird maximum contract. That will likely be their best option when fending off opposing bidders.
  • Amare Stoudemire is unlikely to get his full maximum contract offer but he does have a slight chance at getting that payday, especially given his strong finish to the season. Amare will be offered a starting salary in the $15-17 million range though so it’ll still be very close to a maximum contract.
  • Carlos Boozer probably didn’t deserve to be mentioned here. He is looking at a $12-15 million per annum contract rather than a max salary. Anyway, thought it was a quick note in case some desperate team decides to overpay him (after all, just look at Rashard Lewis’ contract!).
  • Dirk Nowitzki has said that he is unlikely to opt out and will instead look to negotiate a contract extension similar to the one Kobe Bryant signed a few weeks ago once the season has ended.
  • Yao Ming has said he is not opting out.
  • It looks like the Grizzlies will match any offer sheet given to Rudy Gay with a starting salary below $12 million. At that point things start to get cloudy as Memphis’ willingness to pay is uncertain. So a team that is hoping to pry Gay away from Memphis will likely have to pay a max contract or something very close to it in order to have a chance of getting him out of Memphis. Also, since Gay is a restricted free agent, the Grizzlies will sit back and likely refuse to offer a sixth season … so Gay’s likely maximum offer will be the non-Bird five year deal.
  1. Hi Dave

    Me again. Thanks for this article interesting. I have one remark.

    You mention “The cap is configured to 49.5% of BRI but in calculating the max contracts they use a figure of 48.04% instead”. My understanding is that the value used for payroll cap in now 51%. 49.5% was used the first year of the 2005 CBA.

    That would give a $52,80m max contract salary cap.

    Do you agree ?

  2. Hey Julien,

    You are right, it is 51%, my mistake.

    It was only 49.5% for that first year of the CBA. It has been 51% since.

    I need to change some of those numbers.

    Correct Figure??

    Last year, the cap was set at $57.7 million. The maximum for an 0-7 year player (25%) was $13.52 million. Four times that is $54.08 million. If the cap is 51% of BRI and a figure of 48.04% of BRI is used instead of a cap, that gives us a figure of $54.35 million. They are off by a couple of hundred thousand.

    Ahh, it’s probably just my lousy math. I’m half asleep at the moment.

    ————————————————–

    $54.08 million is to $57.7 million (2009/10) as $52.58 million is to $56.1 million (2010/11)

    So the figure is either your number of $52.8 million (which is the figure I get also) or $52.58 million (which is the figure in line with Larry Coon’s numbers). So give or take $200k or so. Anyway, not an important difference. Numbers will be accurate enough.

  3. Hi

    I have another a little bit more complicated way to find a figure, and supposed to be more accurate. It’s not interesting for the figure itself, but for the calculation.

    In fact salary cap is not BRI * 51% / 30. It is, if we ignore adjustments : ((BRI * 51%) – projected profits) / 30

    So I we try to guess BRI for 10-11 from salary cap, using 100k as projected profits (quite of with Q15 of Larry Coon FAQ, with last figure from 08-09 season)

    BRI = (30 * 56,1 + 100) / 51% = 3 496

    Now let’s get max salary salary cap the same way

    (BRI * 48,04% – 100) / 30 = $52,65m

    That is closer to $52.58m

    Please note that using a $135m projected profits, we get the exact figure of $52,58m. However, I suspect this figure would be too high, as in 08-09 the (team cap, 51%) salary cap was $58,68m and profits $130m.

  4. I just came across this website. Am a fan now, nice analysis and interesting reading all around. Tracking your RSS now. Keep up the good work.

  5. Thanks John W and Welcome to the site!

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