One of the reported highlights of the NBA’s tentative new collective bargaining agreement is a change in contract extensions for star players.
The “designated player” contract rules allow teams to extend a designated star player to a five-year contract extension (it was previously four) when they’re in the final year of their deal, keeping them on the team for six years.
The new rules are meant to encourage players to stick with their teams and could benefit small-market teams at risk of losing a star player.
According to ESPN’s Zach Lowe and Yahoo’s Adrian Wojnarowski, players who meet certain criteria, like making an All-NBA team or winning awards like MVP or Defensive Player of the Year, can make as much as 35% of the salary cap (the maximum possible) in Year 1 of the extension. Players who don’t meet the criteria will have lower ceilings for what they can make in Year 1 of the extensions, according to Lowe.
The problem with these criteria is one the NBA has run into before — it puts potential player earnings in the hands of the media. With MVP, Defensive Player of the Year, All-NBA teams, and others being voted upon by media, these incentives are contingent upon votes from media members.
The NBA has seen this problem before. Last season, Anthony Davis, due to the “Rose rule” — a contract stipulation allowing players to earn bigger raises if they meet certain criteria — had $23 million riding on making an All-NBA team. (He didn’t make any of the three All-NBA teams).
The difference between making 35% of the cap in one year or a lower figure may not be seem monumental, but it creates an external force in charge, partially, of a player’s future earnings. This rule could potentially affect a player who gets injured or simply under-performs one year. For instance, last season James Harden failed to make an All-NBA team after a disappointing season (by his standards). Under normal circumstances, if Harden was eligible to for an extension, he would clearly be deserving of the full max. However, if Harden was up for an extension this season, under the new rules, he could not make 35% of the cap in Year 1 of his extension.
According to a source familiar with the term sheet, there aren’t competitive incentives for players — for example, making the playoffs or reaching a certain amount of win totals during the regular season.
There hasn’t been much controversy with the media’s voting for awards in the past, though with public votes and money on the line for certain players, there are potential pitfalls to this rule.
Players and team owners still have to ratify the agreement, though Wojnarowski referred to the ratification as a “formality.” With the deal not official yet, there could still be time to consider the possible outcomes of having these criteria attached to player salaries.
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