The world of NBA player contracts is a complex one, with many layers. Things like minimum and maximum salaries are closely tied to the salary cap, tax aprons and all of it is governed by something called the CBA. To simplify it on a single blog post in a way someone could digest would be futile. So at Basketball Noise we have collated all the relevant articles we have written about NBA Contracts over the last 5 years and laid them out below.
We have taken the approach of a player’s life cycle, from pre-draft to retirement. But first we have to start with the NBA’s Collective Bargaining agreement, what exactly is the CBA?
The NBA Owners, the NBA Players Association and the Collective Bargaining Agreement
First of all we need to understand the framework on which all NBA contracts hang. Since 1983 the NBA owners and the NBA Players Association (NBPA) have negotiated the Collective Bargaining Agreement (CBA). This agreement is essentially a labor agreement that lays out what the players rights and pay are in relation to their duties as players in the NBA. We dive into its history below.
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You may even wish to go back a step and learn about the NBPA itself, for that we have a fantastic article available here. Does the NBA have a Players Association?
The negotiations between the NBA owners and the Players Association don’t always run smoothly. Sometimes an agreement cannot be reached ahead of the scheduled season start which can lead to a lock out. This means that there is no agreement on player pay and responsibilities in place, so no games take place. This is essentially a Workers Union strike. We dive into the 2011 lockout in this great article to supply some context.
Now we have laid some foundations about NBA Contracts, we can get into the fun stuff! Starting with what rights basketball players have regarding a career in the NBA before they are even drafted.
Future NBA Players: Pre-Draft
Until they have gone through the draft process players cannot sign contracts with NBA teams. This is a standard North American sports model designed to create parity across the league, distributing the talent, rather than allowing rich or successful franchises to always sign the best player prospects.
There are many rules that govern the age at which players become eligible to enter the NBA draft, currently they are not able to do so straight out of High School and even foreign players are subjected to restrictions. The classic route was for players to head to the NCAA before their draft, however this is changing. We explore the modern routes to becoming an NBA Rookie in our article linked here.
Once they are age eligible and allowed to enter the NBA Draft and hopefully sign their first NBA contract, a player may choose to attend the NBA Draft Combine. This is an opportunity for prospects to showcase their physicality, skill level, Basketball IQ and maturity in front of the best scouts and coaches the NBA has to offer. The draft combine isn’t even mandatory, so in the age of Youtube highlight packages and global scouting networks in every gym, you may ask, what’s the point of the draft combine? Don’t worry, we’ve got you covered with our in depth article about the NBA Draft Combine.
We’re not going to get into too much detail about the NBA Draft here as it’s such a big subject we have a complete guide coming soon. So let’s skip past the Draft and get straight into NBA Rookie contracts.
Rookies: Entering the NBA & signing the first contract
Once a potential NBA player has entered the draft they are close to signing their first NBA contract. Common labels applied to first year players are Lottery Pick, meaning those that go in the top 10 of the draft, 1st rounders, 2nd rounders and undrafted. No matter which label applies to a player, they will probably still have a high chance of signing an NBA contract. We take a look in the article linked below at the length and value of an NBA rookie contract.
Of course, a player doesn’t have to join the NBA. Just because they entered the draft and were chosen by a team, doesn’t mean they have to sign an NBA Contract. However as NBA Contracts are held with the league and not specifically with individual teams, they are still bound by the draft rules. When an NBA team drafts a player, they are essentially drafting the rights to sign that player. This means that a player who chooses not to sign their Rookie contract post draft, would have to wait until the team in question’s rights to sign them have expired before signing for another NBA team. We take a detailed look at this in our article about refusing the NBA draft.
Obviously the choice for most people who have worked hard enough to be offered an NBA contract are going to sign it with a smile on their face, even if they have to play in Charlotte (we kid, we kid). One of the reasons is the massive salaries these players can attract even in the early years of their career. To get context on this we deep dive into Duke phenomenon Zion Williams rookie contract that he signed with the New Orleans Pelicans.
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NBA Contracts: The Basics
Now our imaginary Basketball Phenom is into their NBA career, it’s time to start thinking about what is actually in the contract they have signed. It allows them to play Basketball at the highest level and it pays them millions of dollars. But what else? How does the NBA contract actually work?
The length of a contract is often the most important thing to a player. A long contract gives them security, a short contract gives them flexibility. Depending on their status in the league, their talent level, age or injury history a player and his team of agents and advisors may see contract length in many different ways. The same goes for a franchise. Signing an established superstar to a long contract may be a brilliant idea for the first few years, but what about the back end of the contract? Luckily the NBA has a host of different contract lengths available, some contract lengths are even baked into the NBA by the CBA. We get the details straight in a pair of articles that are linked below.
Sometimes a contract isn’t always as long as it seems. There may well be team or player options built into it. This can often seem like a dark area of contract negotiations, but really they are there so both the player and the team are happy with the sizable commitment they are making to each other. We explore the pros and cons of team options in the NBA here.
The term “opting in” is used a lot during the NBA offseason, particularly ahead of the opening of the official NBA free agency period. This is when NBA players with player options on their contracts have to choose whether to pick them up or not. This can often be a gamble, with players hoping to find more years, more money or a better basketball or cultural fit. Often it will work out well for the player, but many times they may find themselves out of pocket or struggling to find the on court role they want. We take a look at what goes into this decision in the article below.
The contract extension or the player option we talk about in the previous linked article is the opposite end of the NBA contract extension to the Team Option. A team option is where the contract states that a team has the right to retain the player for, usually, another season. With rookie contracts this is 2 seasons and is mandatory. This team option would have been negotiated between the player and the team when the contract was signed. This gives the team the option to retain that player on their current contract, or let them go. It is only after an NBA players contract has expired, including all team options, that they can test free agency. Get a close look at the rules that govern free agency here.
Our free agency article also covers the basics on restricted and unrestricted free agency. This is an interesting quirk of NBA contracts, where teams hold the rights to match any contract offered to one of their players entering “restricted free agency” by another team and retain their services. If a player is entering un-restricted free agency, then their current team would hold no such sway over their destiny.
NBA Players: Job Security
While being a pro-athlete in North America is undoubtedly the dream career for millions of hopeful young athletes, it isn’t always smiles and sunshine. Almost as soon as you decide to turn pro your fate is taken out of your hands. You have little control over where you work or how much you get paid for the first 7 years of your career. If not longer. While the NBA carries guaranteed salary contracts, so the money will keep rolling if you keep showing up to work, it doesn’t mean you are always happy with the city you are working in, the job you are asked to do or your bosses and co-workers. In our series of articles below we look at what kind of Job Security the typical NBA contract provides.
Aside from being kicked out of a team for conduct reasons, players may push a coaching or front office team so far that they need to be moved out. In this case a team only really has 1 option for a player still under contract. Trade their contract to another NBA team. Of course, trades happen for a variety of reasons, not just because a player was a bad fit. Player movement in the NBA is a key part of life in the league. It is important to remember as fans that teams don’t really trade players, they trade contracts. So when your team let’s your cult favorite go when plenty of other seemingly less useful players stay, it is probably down to the contract, not the player.
Sometimes an NBA player is traded so close to tip of time for a game they have to be pulled out of the pre game shooting line and told to go and get dressed. If they are on the road they may be asked to fly directly to wherever their team is, do not pass go, do not collect $200. Do they have a say in this though? Can an NBA player refuse a trade?
While the result is often a player packing up his life and moving states, an NBA trade is much more complex than this. Governed by salary cap and CBA rules, it’s almost a miracle that two teams can ever agree on a trade, let alone when it involves 3 or 4. We take a look at exactly what goes into an NBA trade in a pair of articles below.
Hand in hand with an NBA trade goes the NBA Physical. Although not always make or break they can have a profound impact on a trades success or failure. In the 2022-23 season Portland traded Gary Payton II to Golden State. After the trade was ratified the Golden State medical team found out that Payton had been playing on serious pain meds to help him deal with an elbow injury. This was something the Warriors medical staff would never sanction themselves and the trade was almost reversed. Ultimately given the reasons for the complex multi team trade and the fact that the Warriors believed they’d have a fully fit GP2 back in time for the Playoffs, the trade was left in place. It does raise the question of what exactly goes into an NBA physical, we dive in with our article on NBA physicals here.
More and more NBA players are able to perform at a high level later into their careers. This has meant the introduction of some interesting rules that govern the contracts of veteran players. Do NBA players have to quit at 38?
Do players have to retire at 38? Click the image to find out what it’s all got to do with Chris Paul!
NBA Contracts: Player Salary
The passion for the game, competitive fire, professional pride, natural ability are all good reasons for NBA players to find motivation. But the bottom line is usually the bottom line. With a limited career window, these athletes are in a race to grab as much cash as they can, while they can. The NBA more than many professional sports leagues is set up to look after players through their careers. The standard NBA contract will carry within it at least a large portion of guaranteed money.
We’ve such large sums of money floating around between NBA teams, players and the tax man, it’s easy to think that being an NBA star isn’t like a regular job. Do they actually deliver the money in a Brinks Truck?
The next big question you’re sure to ask about NBA contracts and player salaries is just how much NBA players make. The answer to this is varied and depends on experience in the league, ability, when they entered the league and a large portion of luck! We dive into many different contract types below and try to explain exactly how much and why NBA players earn the money they do.
The above article gives a general overview of the type of money involved in an NBA contract. The two following articles focus on one of the smallest NBA contracts, the 10 day player contract. Small amounts of cash for a big opportunity.
The majority of NBA stars won’t have to face the stress of 10 day contracts and will be drafted and signed straight onto Rookie deals. These contracts are designed specifically to reward the higher ranked prospects, allow teams flexibility and enable salaries to grow as stars are formed. We have a trilogy of articles covering all you need to know.
Once a player is out of their Rookie contract, which is usually the first 4 years plus a 3 year extension they are on the Standard NBA Contract. In order to fit in with the CBA and Salary Cap team building, there are many rules that govern who can be paid what. The two articles linked below cover first the NBA’s Minimum Salary and then the NBA’s Maximum Salary.
Sometimes there are players that hit the NBA court running and it is clear, early in their career, that they are playing on a very undervalued contract. The 2011 MVP, Derrick Rose, was a standout star taking the regular season’s biggest prize in just his 3rd season in the NBA. The NBA implemented a whole rule to better compensate Rose and those young supernovas of talent that would follow him, it is known as the Derrick Rose rule.
Let’s talk about some big numbers. Just how much do these players earn? Below we explore the contracts of some of the highest paid athletes of all time.
Did you work out how many years of work it would take you to earn the same amount as one of those NBA contracts? Do you feel bad? We have a way of cheering you up, let’s look at how much these contracts attract in tax!
Michael Jordan is responsible for destroying a lot of NBA careers, mostly through his play on the court. But did you know he was so good that he inspired the State of California to take vengeance on him by instigating a tax on his earnings every time he played in the state?
NBA Salary Cap: How it impacts NBA Player Contracts
In order to understand NBA contracts it is vital that you have a good understanding of the NBA Salary Cap and the rules that govern it. Bruce Brown was a standout player on the title winning 2023 Denver Nuggets team. In his first year with the franchise he was on just $6million. Given his performance in the season, the playoffs and the NBA Finals, it can be said that he “over performed” his contract. The second year of his 2 year contract is a $6.8 million player option. He has already informed the Nuggets of his intention to decline this, becoming an unrestricted free agent. While the Nuggets will very much like to keep him, they are constrained by the salary cap and how much they can and want to invest in retaining a key member of their bench unit. The chances are Brown will use his current career high point to sign a large contract with another franchise. As much as both parties may want Brown to stay in Denver, it is probably unlikely to work out.
This example illustrates just how complex building and retaining a successful NBA roster is under salary cap rules. The 30 NBA General Manager jobs may be highly coveted, but they are full of pressure, where any decision could handcuff your team for years to come. The trio of articles linked below serve as an introduction to the NBA’s salary cap and how it controls NBA contracts.
Of course, the NBA is a Soft Cap league. Below we explore the different control mechanisms in place to encourage teams to stay around the Salary Cap. Our article below that focuses on the introduction of a second Luxury Tax Apron ahead of the 2022-23 season is a great overall guide to the NBA’s soft Cap and how it affects the contracts teams are able to offer players.
For those big spenders that find themselves paying luxury tax it could be hard to see the money being spread throughout the league, but how does this work?
The luxury tax bill could make it seem unrealistic that an NBA franchise could ever generate profit and compete for the title. How are player wages affordable in the NBA?
While the Salary Cap is in place to attempt to create parity between the teams, it isn’t there to cripple a franchise who makes some bad moves or hits a patch of bad luck with injuries. The NBA has rules in place to allow teams to still field a functional NBA team at all times.
The waiver market, buyouts and stretch provisions are all terms that come up as the Playoffs approach each year. These are all ways teams can maneuver around the Salary Cap rules of either maximize their playoff chances that year or free up space for the summer’s coming free agent market. We dive in below and take a look at this darkest of NBA GM arts. We put together a video explaining how NBA Buyouts Work?
At the end of it all, when the ball gets tipped at the start of an NBA game. The teams with the best players on the court usually win. In order to be standing as winners after the final game of the season a GM needs to pay stars to play in his team. Our deep dive into the 2021-22 Golden State Warriors Championship winning side illustrates just how much contracted money it takes to win an NBA title.
NBA Player Retirement: The end of the contracts
Like all good things, every NBA career eventually has to come to an end. Right, Lebron? This can be a long planned event with a player taking a farewell tour, it can happen in the days and weeks after a significant injury which saw a career cut short or, more often than not, a player simply isn’t able to return to a team in a way they would want after a summer off season. Either way, contracts can get messy and even high flying dunk machines need a retirement package.
In the early years of the NBA Nat Hickey, who still holds the record for oldest NBA player ever, played his last NBA game at the age of 45 years and 363 days old. This record set back in 1948 feels like a long way from being broken. Even with advances in health nutrition, training and play type adaptability 46 still feels a long way off. Udonis Haslem played at the age of 42 in 2023-23, Lebron James is still looking like a top 10 player at the age of almost 39. Steph Curry may be in the richest vein of form of his life at 35 and could surely turn himself into a spot up shooter once his legs slow down. Yet it still feels like playing NBA basketball at 46 is impossible. But when do NBA players actually have to retire?
NBA Player Salary Calculator
NBA players are some of the best paid sports players in the world. However, every sports person has to pay tax, have you ever wondered how much tax an NBA pays on their new contract? What about agents fees or jock tax? Well fear not as we have put together the NBA salary calculator below which will enable you to work out how much an NBA player actually gets paid after tax.
NBA Salary Calculator
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