How does the contract work for an NBA player?
The National Basketball Association (NBA) is a professional basketball league in the USA. NBA consists of 30 teams (29 in the US and 1 in Canada). It is by far the best professional basketball league in the world, both in quality and revenue. Boston Celtics and Los Angeles Lakers are the most successful NBA teams with 17 NBA titles each. Lakers are also the current champions.
There are many aspects of the NBA which are largely unknown to the general public/fans despite being important. One such aspect which carries an element of mystery is the NBA contract.
NBA Contracts
Similar to most deals in different sports around the world, NBA contracts are legally binding documents. These contracts are complex and unconventional as compared to other contracts. This is the prime reason why the contracts need special attention while negotiating a deal with the player. These contracts ensure that the terms and conditions negotiated by the player and the franchise are protected. A contract includes how much money and the bonuses the player will make for the duration of the deal. It also ensures that the player will not do anything to compromise or jeopardize the franchise’s integrity. It may include some activities the players need to avoid, such as bike riding, drug consumption, excessive drinking, etc.
One of the unique parts of these contracts is that the player will get the entire money and the bonuses agreed as a part of the deal. It doesn’t matter if they were injured for the whole season. They will get every single penny mentioned in their contract.
NBA Salary Cap
A salary cap is a spending limit the NBA enforces to ensure an even playing field. It promotes competitive balance in the league and treats every team as equals, regardless of how rich their owners are. The franchise gets penalized if they cross the salary limit. The rise of some top teams this decade may suggest that these rules are not working, but in the 2010s, 29 out of 30 teams reached the playoffs. The salary cap is determined from the Basketball related income. The salary cap for the NBA 2020-21 season is $109.14 million.
If there’s a cap, there’s a floor as well. The salary floor is 90% of the salary cap. If the franchise somehow doesn’t manage to spend 90% of the salary cap, they have to distribute additional money to the players to cross that limit. 90% equates to $98.1936 million for the 2020/21 season.
Types of NBA contracts for players
Uniform Player Contract
It is a standard contract between a franchise and a player. It is usually 45 pages long and includes non-negotiables, salary, bonuses, prohibitions, compensation protection, etc. All contracts may only cover four years from the date of signature.
Standard NBA Contract
It is basically a Uniform Player Contract which is not a two-way contract. A two-way contract is between a franchise and the player who pays him a two-way salary to play in the NBA and the G League.
Rookie Scale Contract
It is a Uniform Player Contract between the franchise and its first-round pick in the NBA draft. The Rookie Scale Contract must be for two years with an option for a third and fourth year.
Designated Veteran Player Contract
It is a contract between the franchise and the player who is a free agent with eight or nine years of experience in the NBA. After the signature, the player can’t be traded for the next year. The veteran will be eligible for this contract only if:
(i) He played his entire career with the same team (if changed, then did so by trade during the first four years in the league)
(ii) Met at least one of the following max performance-based criteria. Max performance-based criteria – (i) named to the All-NBA first, second, or third team or (ii) named defensive player of the year (iii) The player was the NBA MVP during one of the immediately prior three seasons.
No teams can have more than two Designated veteran player contracts.
Renegotiations
These are amendments or changes to the player’s contract that can only increase their salary. These can’t be renegotiated from 1st March to 30th June.
Extensions
These are amendments or changes to the player’s existing contract that can increase the player’s duration of stay. Some rules related to extensions:
- Contracts duration for 1 or 2 seasons (including any option year) cannot be extended.
- Contracts duration for 3 or 4 seasons (including any option year) may be extended at the end of the second year.
- Contracts duration for 5 or 6 seasons (including any option year) may be extended at the end of the third year.
Various types of extensions include regular rookie scale contract extension, designated rookie scale contract extension, regular veteran contract extension, designated veteran player extension.
Options
There are two types of options permitted:
(i) Option to extend the term duration.
(ii) Option to terminate the contract early.
Option means the contract can be extended for an additional year. The early termination option means the contract can be terminated early. However, an extension can run in favor of both team and player, but the termination option will only run in favor of the player.
Required Tender
It is an offer given by the franchise to a draft rookie. For the first-round rookie, the required tender is given to the player by 15th July after the draft, and the player should accept it before the first day of the regular season. The required tender should satisfy the rookie scale contract requirements. For the second-round rookie, the required tender is given two weeks before 5th September after the draft, and the rookie should accept it by 15th October. The pay should be at least the minimum annual salary.
If the franchise doesn’t make the tender timely or agrees to the withdrawal, the rookie becomes a free agent.
https://www.youtube.com/watch?v=afnBW5Vo4ks
Summer Contract
These contracts don’t get counted in the salary cap of the team. These can be signed from 1st July to the start of the regular NBA season. It includes compensation of $2000 weekly on a pro-rata basis. The teams must terminate these contracts before the start of the regular season. Otherwise, they will be counted towards the salary cap.
10 Day Contract
These contracts are signed for 10 days or 3 games, whichever is longer. They can only be signed after 5th January. The salary cannot be less than than the applicable minimum player salary. A team can sign the same player on a 10-day contract only per season.
Rest-of-the-season Contract
It is the contract signed between the player and the franchise once the regular season starts. The player’s salary is given on a pro-rata basis and can’t be less than the applicable minimum player salary.
Over 38 Contract
These contracts cover deals of four or more years to a 38-year-old player of will turn 38 during the contract duration.
