By Bryan Toporek
In case you’ve been away from civilization for the past few days, the NBA and the National Basketball Players Association announced Wednesday night that they reached a tentative agreement on a new collective bargaining agreement. Though it still must be ratified by the players and team owners, that’s viewed as all but a formality at this point.
A full copy of the new CBA has yet to emerge, so at this point, analysis can only go off what the likes of ESPN.com’s Marc Stein and Brian Windhorst, The Vertical’s Adrian Wojnarowski and Bobby Marks, the Washington Post‘s Tim Bontemps, Basketball Insiders’ Eric Pincus and others have reported. (Albert Nahmad of HeatHoops has compiled the major details.) The three biggest additions/changes to the CBA are as follows:
- A new “designated veteran player exception,” which allows teams to sign incumbent players who have one year remaining on their current contracts to a five-year extension worth up to 35 percent of the salary cap if they meet certain criteria. Said player must either make one of the three All-NBA teams or be named Defensive Player of the Year or MVP the previous season; otherwise, he needs to have made an All-NBA team or been named DPOY in two of the three previous seasons or been named MVP once in the previous three seasons, per Bontemps. He also must be on the team that drafted him or traded to another team while on his rookie deal. As Bontemps noted, “that means players like Stephen Curry, DeMarcus Cousins, Russell Westbrook, John Wall and Gordon Hayward are eligible for this exception, while Kevin Durant is not.”
- The creation of “two-way contracts,” which allow teams to shuffle two players back and forth between the D-League and the NBA without having them count against the 15-man roster limit. According to Stein, “those contracts stipulate that a player’s salary is based on NBA minimums when the player is ‘up’ and an estimated $75,000 when the player is on assignment” in the D-League.
- Rookie contracts, veteran-minimum deals and other exceptions (namely the mid-level and bi-annual exceptions) will all increase by 45 percent next year and will be tied to the salary cap from that point forward. Under the current CBA, all of those were a fixed amount through 2020-21, which made rookie deals and players signed to exceptions a mammoth bargain once the influx of income from the new television deals led to a drastic rise in the salary cap.
Beyond that, normal extensions can now be four years rather than three, per Bontemps, and the first year of the extension can be 120 percent of a player’s previous salary compared to 107.5 percent in the current CBA. Additionally, players on three- or four-year deals can sign an extension after the second year of their contract under the new CBA, per Pincus, whereas currently, only players on four-year deals can sign extensions after their third season. The “Over-36” rule will also now become an “Over-38” rule (more on that later), matching rights on restricted free agents will shrink from 72 hours to 48 hours, per Stein, and max contracts are now tied directly to the salary cap rather than the slightly lower figure the current CBA used, according to Windhorst.
So, who figures to benefit from the new CBA once it’s ratified? The following teams and players, in particular, stand out.
Teams with two incumbent stars
The designated veteran player exception could be a game-changer for teams with two homegrown stars. Had it been in effect last summer, the Oklahoma City Thunder would have been able to offer Kevin Durant far more money than any other free-agent suitor, as he would have been eligible for such a deal by virtue of having been named MVP in 2013-14. Whereas the Golden State Warriors could only offer him a max deal worth 30 percent of the salary cap (since Durant was a nine-year veteran at the time), OKC could have offered the full 35 percent using the exception, making it far more financially unpalatable to join Golden State.
According to Bontemps, said exception can also be given to free agents as well as players eligible for an extension, which is why Stephen Curry will be eligible to sign such a deal next summer. That’s welcome news for the Los Angeles Clippers, who will be attempting to retain both Blake Griffin and Chris Paul once free agency begins in July. If both earn a spot on an All-NBA team—that’s no sure thing now that Griffin will miss the next few weeks after undergoing knee surgery, per The Vertical’s Shams Charania—the Clippers could theoretically retain both of them using that exception. Better yet, Lowe reported that the first-year salary of a player signed using the designated veteran player exception can be up to 35 percent of the cap even if their team doesn’t have the salary-cap space to accommodate such a deal.
Bontemps also reported teams can give a five-year max extension to two players coming off rookie contracts, whereas the current CBA only allowed teams to sign one such player to a five-year max extension. That new feature should be music to the ears of front-office personnel in Minnesota and Philadelphia, as the Timberwolves can now retain Karl-Anthony Towns and Andrew Wiggins on five-year max extensions, if so desired, while the Sixers can do the same with Joel Embiid and Ben Simmons.
As Bontemps tweeted, however, the focus on the new designated veteran player exception may be overblown given how restrictive the criteria is. At most, only around 15-20 players will meet the requirements in a given year—many of whom will already be signed to long-term deals—so it’s not as though the league is about to see a dramatic uptick in such contracts. In the rare cases where teams do have two All-NBA-caliber players, however, the new CBA will give them a better chance of keeping both in place.
Those drafted between 2014 and 2016
Since rookie deals in 2017 and beyond are set to spike by 45 percent and will be tied to the salary cap thereafter, those currently on rookie contracts were poised to become even more of a bargain than they were already. According to Bontemps, the league and players’ union took that into account, ensuring the current class of rookies, sophomores and juniors would benefit from the new windfall, too:
In the 2017-18 season, all players under a rookie scale contract from the past three drafts (2014, 2015 and 2016) will see their salary increase for that season by 15 percent. In 2018-19, players still under rookie deals from the 2015 and 2016 drafts will see their salaries increase for that season by 30 percent. Finally, in the 2019-20 season, players in the fourth and final year of their rookie contracts will see their salary that season increase by 45 percent.
Let’s put that in practical terms: Philadelphia 76ers point-forward Ben Simmons, the No. 1 overall pick from this past year’s draft class, was originally slated to earn roughly $6.2 million in 2017-18, $6.4 million in 2018-19 and $8.1 million in 2019-20. Under the terms of the new CBA, he’ll earn nearly $7.1 million next year, almost $8.4 million in 2018-19 and more than $11.7 million in 2019-20, the final year of his rookie deal. That’s still nowhere near what he’d likely command on the free-agent market—remember, Evan Turner just signed a four-year, $70 million deal this past summer, and the salary cap is only set to go up further in the coming years—but it’s a marked increase regardless.
Though this sounds bad for teams building around a number of players on rookie contracts—such as the Minnesota Timberwolves, Denver Nuggets and Philadelphia 76ers—the increases will not be part of the salary-cap figures for said players, according to Bontemps and Pincus. (Marks, meanwhile, suggested there may be some form of an additional cap hit, so the devil will be in the details here.) However, the loophole which the Detroit Pistons and San Antonio Spurs exploited with Andre Drummond and Kawhi Leonard, respectively—delay signing someone on a rookie deal to an extension to keep their smaller cap hold on the books—will be less in play.
According to Bontemps, the cap holds for first-round picks coming off their rookie deal are rising to 250 percent of their previous year’s salary if they are over the league’s average salary and 300 percent if not, an increase from 250 percent and 200 percent, respectively. If a mid- or late-first-round pick emerges as someone deserving of a max deal—think Giannis Antetokounmpo or Jimmy Butler—their teams can still take advantage of that loophole, but Simmons’ cap hold, for instance, will now be more than $30 million.
Players in line for max deals
Under the current CBA, players with 0-6 years of experience in the league could theoretically sign contracts worth up to 25 percent of the salary cap; those with 7-9 years of experience could receive up to 30 percent of the cap; and those with 10 or more years could receive up to 35 percent of the cap. However, the calculation wasn’t quite that simple.
According to salary-cap guru Larry Coon, the two sides negotiated a different formula for the salary cap versus maximum salaries when concocting the 2005 CBA, which carried over to the 2011 version. The salary cap was based on 44.74 percent of the league’s projected basketball related income, whereas maximum salaries were calculated using 42.14 percent of projected BRI. In 2016-17, the max-salary tiers were $22.1 million, $26.5 million and nearly $31 million, respectively, rather than $23.5 million, $28.2 million and $32.9 million.
In the new CBA, max salaries will now be tied directly to the salary cap, according to Windhorst, which is welcome news to those in line to sign such contracts in the coming years. Nahmad detailed how max-caliber players stand to benefit from the new rule next summer:
As a result of the change, max salary projections for 2017-18 will increase from $24 million to $26 million for a 0-6 year veteran, from $29 million to $31 million for a 7-9 year veteran, and from $34 million to $36 million for a 10+ year veteran, respectively.
Players who sign max contracts starting next summer will thus earn at least $10 million more than they were otherwise slated to under the current CBA. In turn, it will become more difficult to construct superteams, as two max-salary players will gobble up a full 70 percent of a team’s salary cap in a given year.
As mentioned earlier, the new CBA changes the current “over-36” rule—which prohibited teams from signing players to four- or five-year deals if they turned 36 before Oct. 1 on any of the years in the deal—to an “over-38” rule. Accordingly, the likes of LeBron James, Carmelo Anthony and Chris Paul, all of whom are on the NBA Players Association’s executive committee,
According to ESPN.com’s Brian Windhorst, the change may net James a cool extra $100 million, depending on circumstances. He broke it down as such:
James’ health, the overall player market and other factors make it impossible to know what he might sign for in 2018, but projections show he could sign for up to $210 million if he stays with the Cleveland Cavaliers and signs for five years at the maximum number. Before the rule change, he would have been able to sign for only three years and an estimated $90 million to $100 million less at age 33.
Paul, meanwhile, is now eligible to sign a five-year contract with the Los Angeles Clippers this coming summer worth up to $210 million, per Windhorst, a raise of roughly $50 million “depending on how the deal gets put together.”
This isn’t anywhere near as notable as some of the other changes in the new CBA, as few players will be deserving of such a hefty investment as they enter the twilight of their careers. That said, it does heighten the chances of teams signing players to albatross contracts in the coming years, perhaps increasing the probability of an amnesty clause being included in the next collective bargaining agreement. (This new CBA does not contain an amnesty.)
Restricted free agents
As mentioned earlier, once a restricted free agent signs an offer sheet under the new CBA, his incumbent team will only have 48 hours to decide whether to match it, compared to 72 hours under the current agreement. In theory, that may make teams less hesitant to sign restricted free agents to offer sheets (especially once the biggest fish in the free-agent pond make their decisions), as they’ll have that cap space tied up for one less day.
According to Nahmad, the new CBA also includes another major change for restricted free agency:
Restricted free agents will reportedly now be eligible to sign offer sheets as early as July 1st. This figures to be nearly a week before teams can start signing unrestricted free agents, essentially removing the time risk associated with tying up cap space on a restricted free agent offer sheet that could be matched.
Under the current CBA, this wouldn’t be possible, as the actual salary cap amount is determined following the July Moratorium, not on July 1. In other words, teams don’t know exactly how much cap space they have to offer when contacting restricted free agents on July 1 in the current structure. However, according to Pincus, the new CBA stipulates that the salary cap for each season will be set before July 1, so teams will know their precise salary-cap figure heading into free agency.
Though restricted free agents can now sign offer sheets on July 1 under the new CBA, teams won’t be on the 48-hour matching clock until the moratorium ends at noon ET on July 6, per Pincus. Regardless, teams who have little shot at landing one of the top-tier free agents may now be enticed to dip their toes into the restricted-free-agent pool earlier, forcing those players’ incumbent teams into difficult decisions early in free agency. Both rule changes may not make a material difference in terms of how many incumbent teams decline to match a signed offer sheet, but it could lead to an increase in how many players sign offer sheets in the first place.
Stephen Curry and the Golden State Warriors
When Stephen Curry reaches free agency next summer, he’s now set to hit an even bigger jackpot thanks to the new CBA. According to Stein and Windhorst, he’ll be eligible for a deal worth “an estimated $207 million” over five years, which would blow past Mike Conley’s five-year, $152.6 million pact for the richest in NBA history. As the ESPN duo noted, Curry can sign this deal via the designated veteran player exception since he’s been named MVP within the prior three seasons, meaning he’s eligible to receive up to 35 percent of the salary cap rather than the 30 percent he would otherwise qualify for.
Stein and Windhorst elaborated on how that affected Golden State’s chances of retaining Curry:
The widespread expectation in league circles is that rival teams had virtually no shot anyway at luring Curry from the Warriors in free agency in July, but now the finances are stacked against his departure even more. If Curry were interested in changing teams this summer, interested suitors could only offer an estimated maximum contract in the $135 million range over four years, giving Golden State unprecedented ability to retain next summer’s co-No. 1 free agent alongside Durant.
In other words: Curry’s staying put.
Complicating matters, though, is Kevin Durant. The Warriors cannot offer KD the designated veteran player exception since they did not acquire him when he was on his rookie contract, meaning they must open salary-cap space to retain him. Since he’ll be a 10-year veteran come July, he’s likewise eligible to sign a deal worth 35 percent of the cap, which, per Stein and Windhorst, would start at roughly $36 million.
Though Klay Thompson and Draymond Green are already signed long-term, maxing out both Curry and Durant could restrict Golden State’s ability to retain Andre Iguodala and Shaun Livington, both of whom will be unrestricted free agents next summer as well. As Stein and Windhorst noted, the Warriors could also ultimately be forced to choose between Thompson and Green when it comes to using their other designated veteran player exception a few years down the line.
That isn’t to say Golden State’s superteam is doomed to be one-and-done, regardless of whether it wins a ring in June. As Bontemps noted, Durant could sign for the non-Bird exception—which would be for about $4 million less than his max—which would allow the Warriors to maintain the rights to Iguodala and Livingston. (They’d likely go soaring into the luxury tax to retain both, but when you’re printing money like the Warriors are, team owner Joe Lacob likely wouldn’t mind.) However, keeping a competitive core around the Big Four long-term will be a challenge, which CBS Sports’ Matt Moore delved into Friday.
Considering how contentious CBA negotiations were in 2011—the two sides were so dug in on their respective positions, it led to the cancellation of 16 games that season—having labor peace assured through 2023-24 is no small victory. Kudos to NBA Commissioner Adam Silver, NBPA executive director Michele Roberts, team owners and players for meeting in the middle and recognizing the league has too much momentum to scuttle over business disagreements.