NBA Contracts – A Complete Guide


Estimated Reading Time: 11 minutes

Basketball players who play in the NBA earn incredible amounts of money from which any normal person simply cannot quantify. The most valuable contract in the history of the league is over 220 million dollars, while some earned over 40 million dollars last season alone.

Players earn huge money on and off the court by signing fantastic sponsorship deals. When they finish their careers, if they have played for at least three years in the NBA, the players are entitled to a pension, although that amount is certainly much smaller than the sum of money they earned during their career. NBA teams have a certain budget each season that is earmarked for player salaries, but it can be exceeded by paying certain fees. Contracts that players sign clearly stipulate all their rights.

There is so much interesting information that sheds light on how NBA contracts really work. This includes how much money players earn, and a handful of other interesting facts from the strongest basketball league in the world.

How do NBA contracts work?

Given that NBA contracts bring players incredible amounts of money, it is quite expected that these will not work in a very simple way. Of course, it is clear that each contract implies how many years will be signed and how much money a certain player will earn for the duration of his contract. What is a very important detail, the player is guaranteed the money that is written in the contract, regardless of whether he played the whole game or just one minute. Contracts in the NBA can be very complex. Contractors are often prohibited from doing certain things that could possibly jeopardize their careers, and players can suffer severe sanctions by violating those details from the contract. Contracts can often specify certain privileges for the player himself, his relatives, friends, agents, etc. Often, clauses are included in the contracts, according to which players receive certain cash bonuses. For example, if they appear in an All-Star game, or they achieve a certain number of victories, or if the team qualifies for the playoffs or becomes a champion, etc. All these outcomes can be contractual incentives. Contracts that players sign can be as long as 45 pages. In addition to standard contracts, as we have seen, there are also short-term contracts of ten days, summer contracts, two-way contracts or the contract buyout option. For more granular detail on the in’s and outs of NBA Contracts then read our article How do NBA contracts work?

NBA 10-day contract – What is it and How does it work?

Of course, it should not be too difficult to understand what it means when a player signs a ten-day contract with a club. As the word itself says, the contract lasts for ten days, i.e. usually three games played. With one player during the season, teams can sign contracts for ten days twice. Signing a ten-day contract is only possible after January 5 in each season. Not every team can sign a larger number of contracts for ten days concerning the number of players who are currently unable to play for the club. Ten-day contracts are generally signed with free agents who are supposed to serve to help out teams with injured players. The season lasts a long time and injuries happen often. They are sometimes of a lighter nature and it is then an ideal opportunity to hire players who do not have a contract at that time. If they meet the criteria of the expert staff, the contract with them is extended, otherwise, they are waived (we have a complete article on what happens when an NBA player is waived). This is actually a great opportunity to check the qualities of certain players and then eventually sign long-term contracts with them. Last season we had the opportunity to see DeMarcus Cousins ​​in the role of a player who signed a ten-day contract with the Clippers, and in the past in that role were players like Isiah Thomas, Shaun Livingston, Iman Shumpert.

What does a contract buyout mean in the NBA?

As for the so-called buyout, it concerns players who are in the last year of their contract in the NBA, although an exception was made last season regarding Blake Griffin. When a player is in the last year of the contract, the club can decide to pay him a certain amount of money from the last year of the contract and terminate the contract with him, which will make him a free agent who will then be able to sign a contract with another NBA team. We saw that this option was put to good use last season by the Brooklyn Nets who signed two big stars as free agents and similarly, the LA Lakers who hired a top league rebounder, Andrew Drummond who had a contract of over $28 million in Cleveland and received just under $800,000 from the Lakers. Unfortunately, it often happens that in this way, small teams lose their big stars in which they invested a lot of money, and in the end, they do not get much in return. If you want to learn more about contract buyouts, then click the following link on contract buyout to get even more details.

What is Bird Rights in the NBA?

This is another rule that has significantly changed the NBA. Were it not for this rule we would probably never have had a chance to watch this NBA as it looks today and in the past 3 decades. The name of the rule hides the last name of the legendary basketball player Larry Bird, and it concerns the NBA clubs exceeding their salary cap, which then allows them to create and reflect truly amazing teams together. We talked about what the salary cap represents and that it can be exceeded if clubs pay certain fees. For wealthy owners, this is not a problem at all, so they consciously exceed the salary cap in order to have fantastic bands together, such as the Boston Celtics, LA Lakers, Chicago Bulls, and Golden State Warriors. There are several variants of Bird Rights when clubs want to extend contracts with their players. There are Full Bird rights for players who have spent three years at the club, then early-Bird rights for players with two years in the club, and Non-Bird rights for one-year contracts without the players becoming free agents.

What was the biggest contract in NBA history?

This season’s edition of the NBA ended with the triumph of the Milwaukee Bucks, who defeated the Phoenix Suns in the final playoff series to win the NBA league title for the first time in 50 years. The Finals MVP of the new NBA league champion is Greek Freak Giannis Antetokounmpo, who in the history of the NBA, will not only be known as someone who won a title in Milwaukee after five decades of losing, but also as the player who signed the biggest contract in NBA league history late last year. The contract he signed in December last year is worth 225 million dollars and lasts for five years. He earned as much as $27,500,000 last season. He seems to have fully justified all the money invested in him and if he continues with games like this, Milwaukee could very easily become a dominant team in the NBA that could win another championship in the coming seasons. Behind him in terms of the largest contract in the history of the NBA is Russell Westbrook, who earned $207 million with a five-year contract in Houston. In third place is Rudy Gobert who signed a five-year contract with Utah Jazz worth $205 million dollars. We have looked at the biggest contracts in the NBA down to the last nickle, which can be read here.

How much can you go over the NBA salary cap?

In all basketball clubs, including those in the NBA, it is assumed that the team has a certain budget that can be set aside for the salaries of its players. The NBA salary cap is exactly the amount of money that NBA teams can set aside to pay their basketball players. The salary cap was introduced to give all teams an equal chance to become champions in the league, not just the richest clubs. Can the salary cap be exceeded? Yes, it can, but additional fees must be paid for this option. There are no limits on how much you will exceed the budget provided for player earnings, we have looked at all the rules of the NBA salary cap and condensed the detail into this article. Last season, the salary cap was $109,140,000. The salary cap was introduced to the NBA during the 1940s but was then abolished and returned in the 1984/85 season when the limit was $3,900,000. Given that in the NBA, the so-called soft salary cap is in effect, this again enables some teams to bounce concerning other teams by paying luxury taxes. If the situation were not like that, we would never have had the legendary generations of LA Lakers, Chicago, or Golden State Warriors from a couple of years ago.

What is NBA salary arbitration?

Disagreements are an integral part of our lives and they are always present. They are certainly inevitable when we talk about the world of sports. We all know that money is something we all live on, and of course, basketball players in the NBA also live off money. The agreement on the money that certain players should earn in the NBA can be very problematic, so it can often be heard that players and clubs want to go to arbitration, which as a neutral party should estimate how much it should be for a certain basketball player in his upcoming game or season. To go to salary arbitration, certain conditions must be met, and those conditions imply that the player has played for a certain team in the NBA league for at least four years. What is the problem with salary arbitration in the NBA is that it did not come to life in the right way because there is the already mentioned salary cap system. These two things simply clash with each other. Adequately conducted NBA salary arbitration would then make it impossible for certain teams to create amazing lineups that would bounce off the rest of the league like the ones we already mentioned such as the Golden State Warriors a couple of seasons ago, which despite large contracts in Curry, Thompson and Green, they also signed Kevin Durant.

How much money do NBA players make in a year?

One should not waste too many words when it comes to the earnings of basketball players in the NBA. The money that players earn in the league is much more than in other leagues. We often have the opportunity to see how basketball players enjoy the many benefits of life that have just provided them with playing in the NBA. We can see basketball players enjoying expensive yachts, wearing precious watches, or driving ultra-fast cars, and how could they not when the average salary of an NBA basketball player is $8,000,000 per year? Of course, it should be added that players do not only earn on the court. Most players also have great sponsorship deals from which they earn extra and huge amounts of money. In addition to the guaranteed earnings, there is additional bonus money that players can earn if they achieve certain achievements, such as a certain number of games played, the number of points scored, games won, etc. Some players earn less, some earn more money, but it is mostly money that solves the existence of all these guys, especially if it is invested wisely, considering that we have witnessed certain basketball players ingloriously pass after their careers because they directed their earned money on the wrong things. When everything is added up, we can freely say that there is no limit to how much money an NBA player can earn. Read our in-depth analysis to find out more.

Who is the richest NBA player?

We have mentioned several times how much money NBA players earn. We also mentioned a great pension plan according to which players earn money and when they finish their careers. Of course, one should be honest that players earn so much money that they probably don’t even need a pension, and compared to the money they earned in their career, it seems really funny. We mentioned again that on the other hand, there are basketball players who did not use the money they earned in the best way, so they literally live on the edge of poverty, such as player Delonte West, who went bankrupt. Let’s look at some brighter examples though. For years, the data concerning the richest NBA basketball player has not changed. If we are talking about former basketball players, the number one is, of course, Michael Jordan, to whom no active basketball player can actually evaporate with the money he earns. After finishing his career, he became a businessman and his fortune is estimated at around $1.5 billion dollars. Jordan has been a trademark of NIKE for years and earns fabulous sums of money from that sponsorship agreement. Of the active players, Lebron James is estimated to have the greatest fortune at just under $450,000,000. Find out who else is classed as the richest NBA player here.

What is the average NBA salary in 2020/21?

We have concluded that there is a huge amount of money in the NBA and it will certainly increase from season to season. If we were to look back at the just-concluded season, we could present the following data regarding the earnings of players last season. We have already mentioned that the salary cap of all clubs for last season was a little more than $109,000,000. It is clear that not all players earn the same amount of money, and that largely depends on how many years they spend in the NBA, and how they perform. Newcomers to the league certainly cannot expect to earn the same amount of money as veterans and seasoned NBA stars. Some players earn less than a million dollars a year, while some big stars earn over 40 million dollars per season. The average salary of NBA basketball players in the previous season was around 8 million dollars, or if we would be precise, that amount was $7,818,572. The highest-paid player last season was Golden State Warriors star Stephen Curry, who earned $43,000,000. Behind him in terms of earnings were Russell Westbrook and veteran debuting in the NBA Finals this year, Chris Paul, who earned $ 41,000,000. We have looked at every teams average NBA salary and identified the average paid player on those teams, check out our article here.

Do retired NBA players still get paid?

We all know that basketball players in the strongest league in the world earn a huge amount of money during their playing career, and when you add the money earned from sponsors, we really come to incredible numbers that can objectively be in our heads. What many people are interested in is what happens to famous basketball players when they finish their careers, or when they retire. Will the basketball players still be paid then? The answer to this question is affirmative. During the 1960s, a fantastic retirement plan was formed that concerns players who end their careers in the NBA. This plan has undergone many modifications to date, and some of the famous players LeBron James and Chris Paul are responsible for that. To receive a pension, the condition is that you have played in the NBA for at least three years. In addition to retirement, players also receive benefits related to health insurance or the opportunity to finish college, which they mostly neglect due to their earnings from their basketball career. All players over the age of 50 can receive a pension, but they mostly use that privilege after the age of 60, because then the salary is higher. The money that retired players can earn ranges up to $200,000 annually.

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James

A basketball court was built in my local park and at 15 years of age I fell in love with basketball. A late joiner to the game, I have played every season since. Some Indiana friends bought me some Pacers gear for my 17th birthday, and I have supported them ever since (who wants to follow the crowd). I love American sports apparel and the presentation of sports, they do it so well (bar all the advert breaks).

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