Whenever draft season rolls around, it’s understandable for NBA fans to wonder whether low first and second round picks really hold any value for their team. After all, spending all your salary cap space on proven stars and role players seems to be the best path to success. However, rookies are the important life blood of the league, but how tied to teams are rookies really?
Are all NBA rookie contracts 4 years? Not all NBA rookie contracts are 4 years. Players selected in the first round of the NBA Draft (picks 1-30) are signed to a 4 year “Rookie Scale” contract. This 4 year rookie contract is 2 guaranteed years, with the final two years as a team option. Players selected in the second round of the NBA Draft (picks 31-60) can be offered standard contracts of any length (up to 4 years). Although for a team to retain the rights to a second round draft pick they have to offer them at least the “Required Tender” which is a 1 year contract, after which the player can enter free agency. Undrafted players can be signed to any available contract by a team, ranging from 10 days to 4 years.
Let’s get into the details on the 3 main types of NBA Rookie. 1st round, 2nd round & undrafted, we look at how many years their contracts might last for and how much they get paid.
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How long are First Round NBA Draft picks Rookie contracts?
For players that get selected in the first round of the NBA Draft and go on to perform to their expected potential, the NBA rookie contract can actually suppress their earnings vs what they might get in a truly open market. For those that underperform or suffer injuries the rookie contract can offer some protection. For first round NBA draft picks the contract is 4 years, with the first 2 years guaranteed and the second 2 years as team options. This means that it is the team’s decision to retain the player for years 3 & 4. If the team exercises this option the player doesn’t have a choice.
The salary attached to an NBA Rookie Scale contract for first round picks is pre-determined on a sliding scale with the most for the 1st overall pick and the least for the 30th overall pick. Salary for first round players can be taken on, regardless of a teams salary cap position, although it does most definitely count against the salary cap once signed.
Below is a table showing the Rookie Scale Contract Salaries for the 2023-24 season. It is important to note that teams can offer players between 80% and 120% of the value listed. It is common practice for the majority of first round picks to be offered the maximum 120% though.
NBA Rookie Scale Contract Salary – 2023-24 season.
|2023-24 NBA Rookie Scale Contract Salaries|
|Pick||1st Year Salary||2nd Year Salary||3rd Year Option Salary||4th Year Option Salary|
How long are Second Round NBA Draft picks Rookie contracts?
Players that are drafted in the second round are not subject to the Rookie Scale Contract. This means that teams don’t have to offer them a contract at all. If a team wants to retain their draft rights, then they have to at least offer them a “Required Tender” which is a 1 year contract at the league minimum salary. Which for the 2023-24 season will be $982,000. This is around half of what the lowest first round pick can expect to earn and is only a 1 year contract, instead of having the second year guaranteed.
Second round picks do not usually sign the Required Tender. Instead they will usually be offered a standard multi year contract that will often include a second year guarantee. Second round NBA Draft picks may even be offered an annual salary higher than the league minimum, but with years 3 and 4 being team options. The advantage of this for the franchise is that if the player does well, then they have them tied into a longer term contract with a lower salary than they might otherwise command for years 3 and 4.
In 2014 the 76ers drafted KJ Mcdaniels with the 32nd overall pick, at the top of the second round. Mcdaniels declined the usual four-year deal, first two years guaranteed; second two years team options, typically offered to rookies. This would have had the first year guaranteed at $1.2million. Instead he signed the Required Tender, gaining him a first year Salary of $507,000. Importantly though, this is where his contract ended. Once that contract was up he would be an unrestricted free agent, able to sign with any of the 30 teams who wanted him.
The risk for KJ Mcdaniels was that if he didn’t play, got injured or wasn’t rated by the league in general, he would have given up a huge amount of salary over his first 2 years and potentially have no NBA team to sign with.
This didn’t happen for Mcdaniels, he signed a 3 year fully guaranteed, $6,523,127 contract with the Houston Rockets. Taking his total 4 year earnings to over $7million, ahead of most of even the first round picks in his draft class. In addition he was a free agent again at the same time their rookie contracts were ending. (this didn’t work out that well for him though, he signed a contract with the Toronto Raptors for just $100,000 and failed to make a regular season appearance. He has not played in the NBA since 2017.)
How long are Undrafted NBA Rookie contracts?
Falling past the second round and going undrafted in the NBA isn’t always the worst thing in the world. The biggest advantage undrafted players have over low second round picks is that they are able to sign with any of the 30 teams that might want them. As we discussed earlier, just because an NBA team drafts you in the second round, it doesn’t mean they have an obligation to sign you to a contract.
An undrafted NBA rookie can sign any type of contract a team might offer them. They will have 0 years of experience, so on the sliding scale of contract value, they will be on the bottom end. For the 2023-24 season that will be $982,000 for the first year. Teams could offer them between 1-4 years, with team options if the franchise chooses.
In addition an undrafted Rookie could take advantage of Summer Contracts, Non-Guaranteed Training Camp Contract & Exhibit 10’s, that allow them to train with a team hoping to impress them enough to earn a longer contract.
They could also look to get a two-way contract allowing them to play for an NBA team while also participating in games with their G-League affiliated team, can be a maximum of 2 years, but are usually non-guaranteed. Failing that, a 10 day contract which allows a team to play them in up to 3 regular season games over 10 days and see how they fit with the squad.
All of these types of contract will be short term, non guaranteed and carry a pro rata wage based on the league minimum salary for that year.
In theory all types of NBA Rookie could sign a 4 year contract. However, the further you fall down the draft, the less likely it is that will happen, or if it does, that the team will ultimately take up all 4 years. There are only around 450 NBA players at any given time, so places in the league are at a premium and only the best of the best of the best of the best of the best should expect to stick around.