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What is a rookie level contract in the NBA?

An NBA Rookie level contract is the initial contract a first round draft pick signs. It is subject to the Rookie Salary Scale and limited to 4 years, with the second 2 years as a team option. Meaning only the first 2 years are guaranteed money for the player. The NBA Rookie Scale Contract can only be signed with the team who drafted them, unless the rights are relinquished by trade or other means.

Why does the NBA have a Rookie Level Contract? How much do NBA rookies make? How long is an NBA rookie contract? Are all rookie contracts the same? We answer your questions below!

Why did the NBA introduce the Rookie Salary Scale?

With the first overall pick in the 1994 NBA Draft the Milwaukee Bucks selected wing Glenn Robinson out of Purdue. They then signed him to the largest ever contract for a rookie, worth $67.5 million over ten years. Established players in the league had long been concerned that young, unproven players signing large contracts would affect their position in the league and ability to make money under the NBA’s Salary Cap rules. Owners, for their part, were reticent about committing long-term investments on players who had yet to play a single NBA game. As a result the two sides agreed and as part of the 1995 CBA negotiations the rookie salary scale and other contract restrictions for newly drafted first-round picks were implemented league wide. The rookie scale contract was born.

How much do NBA rookie players make?

How much an NBA player makes in their first year in the league will vary on what year they join the NBA and what position they are selected in the NBA Draft, if at all.

All players taken in the first round of the NBA Draft are subjected to the NBA Rookie Salary scale. This is a sliding scale, with a set amount for the first overall pick, with a decreasing amount for every pick after that. Second round picks and undrafted players are not subjected to the rookie salary scale, you can get more detail on that by reading our blog; Are all NBA rookie contracts 4 years? Link to article not posted yet

We have listed the NBA Rookie Salary Scale below for the 2023-24 season. It is important to note that for all versions of the NBA Rookie Salary Scale teams have been allowed to offer between 80% and 120% of the listed figure. This has been in place since the first iteration in the 1995-1996 season. Usually a team will offer 120% as a default.

2023-24 NBA Rookie Scale Contract Salaries
Pick1st Year Salary2nd Year Salary3rd Year Option Salary4th Year Option Salary

For the NBA season listed above, the sure fire number 1 overall pick is Victor Wembanyama the Euro League sensation from France. When he is signed to his rookie level contract by the San Antonio Spurs after the draft he will make between 80% and 120% of $9,983,300. Our estimation is that his first year salary will be $11,979,960; the maximum allowed.

Something worth noting is that since the introduction of the NBA Rookie Scale contracts for the 1995-96 season, the value vs the Salary cap has been slowly eroding. Initially the number 1 overall pick could have made 8.35% of the salary cap in 1995. This hit a low after the 2016 salary cap spike when a salary cap of $94.1 million would only have netted the number 1 pick $4.8 million, just 5.05%. This has recovered slightly, Wembanyama’s rookie scale salary before the 120% is factored in will account for 6.8% of the salary cap.

This is one of the reasons that GMs and cap analysts around the league see draft picks with such high value. They are under contract for 4 years from a team’s point of view, but if the player doesn’t work out they can shed the contract after 2 years. In addition they are priced at great value salary wise.

In his 4th year in the league Wembanyama could be one of the best players, potentially challenging for MVPs, but would still be on his rookie deal, a salary of around just $15 million. In that same year, Damian Lillard who will be 37 years old will be making $64 million.

How long is an NBA player’s rookie contract?

NBA players that are selected in the first round of the NBA Draft will usually be signed to an NBA Rookie Scale Contract. This contract lasts for 4 years, with years 3 and 4 as team options. Players can only sign with the team that drafted their rights, unless that team trades them or relinquishes the rights to them in another way.

Years 3 and 4 being team options puts all the power in the franchises hands. The first 2 years are guaranteed money once the contract is signed, with wages subject to the rookie salary scale as above. Years 3 and 4 are options for the NBA team to decide whether to pick up. They can pick these years up individually and have until October 31st that year to commit to them. If a team decides not to sign the player to year 3 or 4, then that player becomes an unrestricted free agent and is able to sign with any team willing to offer them a contract.

If an NBA team takes on the 4th year of a rookie level contract then they have the power when negotiating the players next contract. They continue to hold the rights and while the player could enter free agency it would be restricted. Meaning the team they had been on a rookie contract with can match any other teams offer to retain their services this has happened in 2 recent high profile cases with Gordon Hayward of the Jazz and Deandre Ayton of the Suns, both received offers that were then matched by their current teams to retain their service. In addition, the drafting team can offer a 5th year, something that only the team that holds a player’s “Bird” rights can do.

For second round NBA Draft picks and undrafted players, they are not subjected to the NBA Rookie Scale Contracts. While this means that in some ways they have more leverage, in reality they do not. Because they are less of a priority for the team that drafted them, they are usually offered less money and sometimes less years. In many cases, a team drafted them in the second round because they wanted them. So they will often be signed to a standard contract that reflects the rookie level contracts, for 4 years with the second 2 as team options. Famously, in 2014, 2 time MVP Nicola Jokic was drafted in the second round with pick 41 during a Taco Bell commercial. The Denver Nuggets then left him to play overseas for a year. When he finally reached the NBA for the 2015-16 season he signed a $4million, 3 year deal, all fully guaranteed.

Players who go undrafted, often have to work their way into the league on much shorter contracts. Duncan Robinson, currently lighting it up against Jokic’s Nuggets in the NBA Finals for the Miami Heat entered the 2018 Draft as was not selected. The Heat signed him to a 2 way contract that year. A two way contract allows a player 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. Robinson played 15 NBA games that first season, but impressed and during the 2019 season the Heat signed him to a “rest of year” contract, tying him more permanently to the team. He shined playing 73 regular season  games and helping the Heat reach the 2020 NBA Finals. He was rewarded with a 5 year $90 million contract.

Other contract lengths available to undrafted players are Summer Contracts, Non-Guaranteed Training Camp Contract & Exhibit 10’s and the common 10 day contract which allows a team to play a player in 3 games over 10 days to see how they get on.

What are Bird rights in the NBA?

There are three types of Bird rights. The first is Bird Rights, the second is Early Bird Rights and the third is Non-Bird Rights . Bird Rights were established in 1983 through the NBA collective bargaining agreement to ensure that veteran players didn’t leave a team due to the introduction of the salary cap. They give teams more leverage in contract negotiations, often able to offer more years, more money and in many cases match any other contract offer to retain the services of a player.

Named after Larry Bird, It allows NBA teams to go past the salary cap limit in order for a team to sign their own players in free agency. One of the driving factors in introducing it was the Celtics desire to retain Larry Bird after his Rookie deal, despite the introduction of the Salary Cap making this a doubt. Without Bird Rights, the Celtics would not have been able to go over the “hard cap” and would have had to let him sign with another team. Bird rights effectively committed the NBA to having a “Soft Salary Cap”.