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Are NBA Contracts Guaranteed Money?

We have heard one particular question popping up a lot lately in all sorts of professional sports leagues. This question is regarding players and their contracts that they sign. In the NBA, we have seen this same question and it is regarding how much if any of the players money is guaranteed.

Are NBA Contracts Guaranteed Money? Yes, the overwhelming majority of NBA contracts have some form of guaranteed money attached to it to keep the player financially secure no matter the circumstances that fall upon him that season. Some smaller contracts might not have guaranteed money in the deal and a lot of it will rely upon their health or play on the court. Again though, most players in the league today will certainly have nearly all of their contract money guaranteed before signing.

Guaranteed money isn’t a straightforward thing to explain. There are a lot of different factors that go into each contact, and it is almost always different from player to player depending on their circumstances. The majority of it is governed by the CBA, so NBA players are sure to get a great deal.

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Types of NBA Contracts

This first one is pretty simple, it is the standard league contract. Simply put, any signed contract in the NBA that isn’t considered a two-way deal is going to be marked down as a standard contract.

Another type is the rookie scale contract. This type of deal only applies to a player that was selected in the first round. The deal will cover two years with a team option in the third and fourth. A player’s money in that specific contract will be determined by when they are drafted and in what round. For example, a number one draft pick would make a lot more money than somebody who was taken 26th overall.

Now we have a designated veteran player contract. This is a deal that goes to a free agent player with at least eight years of experience in the NBA. If a player signs this deal, they can’t be traded for a full year. The total salary can’t be over 30 percent of the team’s salary cap for that year and no team is able to have more than two players on these types of contracts at one time.

The NBA also has a two-way contract. This deal doesn’t last for more than two seasons. It isn’t able to be extended or renegotiated similar to other contracts. This is a player that has less than four years of experience in the league with a standard NBA contract conversion option. The player is usually playing in a different league with the potential to be called up to an NBA roster if injuries or other trades plague the 15 man roster. If they play well, the conversion option helps shift the deal to a standard league contract. The amount of games they can play for the NBA Franchise is limited and if the team want them to exceed this, their contract must be converted from a 2 way.

What is guaranteed money in the NBA?

When people refer to guaranteed money in the NBA, they mean what portion of a player’s salary is guaranteed to be paid to them, regardless of performance or injury. It means the contract cannot be canceled early, by either player or team, as long as both parties act within the basic conduct parameters set out. Sometimes teams will enhance a contract with performance bonuses, such as games played or collecting a certain stat line. However, there is a minimum amount of each NBA contract that is guaranteed to the player as set out by the CBA.

Two terms we will use as we go forward are team option and player option, let’s take a look at what they mean.

  • Player Option – This is often included for the Final year of a high level players contract, It simply means that if the player wants to opt into it, they can. In essence salary owed on a player option is guaranteed as long as the player wants it. The benefit for the player here, is that if the situation they are in doesn’t look good. They can choose to reject the player option year of the contract and move into unrestricted free agency.
  • Team Option – As you can guess, this works the opposite way to a player option and is more commonly attached to young or unproven players contracts. Teams may add a couple of years of team options to the end of a contract. This means the team has the right to reject it and not sign the player for those years. In that way the contract is not guaranteed money for the player. The benefit for the team here is they can take a chance on a player developing or recovering from an injury. If it doesn’t work out they aren’t obliged to commit to the full contract.

Are Rookie Contracts Guaranteed?

Now that we know what a rookie contract in the NBA is, we can ask if these contracts have guaranteed money attached to it. Simply put, the first two years of the deal are fully guaranteed. That means that no matter what happens to the player, he will be entitled to the amount of contract money he signed for in those initial two seasons. However, the third and fourth year are a bit of a different story. If the team picks up these next two options ahead of the deadline to do so, they are likely going to be guaranteed their money. These years depend upon a number of different scenarios that could impact the amount of guaranteed money that they can get moving forward. For the most part, rookies in the NBA get more money in their third and fourth season than they did in the first two years. That is just the way that the league sets up their contracts for new players entering the draft.

Largest Guaranteed Contract in NBA History

The largest guaranteed contract in the history of the league belongs to Steph Curry (as of April 2022). Curry has a ridiculous amount of money locked into place for his deal. In total, Steph is guaranteed $261,134,628 of his contract. For those that don’t know, that is literally his entire deal outside of any incentives that were added on to help him make more money. Right behind him is Kevin Durant. Durant is sitting at $229,997,220 in guarantees. This may be surprising considering that Giannis Antetokounmpo signed a deal that was slightly larger than Curry’s not too long ago. However, his contract doesn’t have as much guaranteed money at the moment. Such money wasn’t even in the realm of possibilities a few decades ago. You should expect another superstar player to come around and eventually take up a larger amount of guaranteed money than Steph Curry. As the NBA grows and revenue increases the Salary Cap goes up, so the next mega star to sign a big contract will almost certainly overtake Steph. My tip is that reigning 2021 and 2022 favorite for MVP Nicola Jokic will be signing a pretty big deal in the summer of 2023.

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