Question RE: Front Loading Contracts

[eslr]

So the Thunder did a pretty quirky but smart move with Collison where they front loaded his extension by giving him a $6.5 million dollar signing bonus (total of $13 mill his first year of extension), and then left themselves with a very favorable contract around $3 mill in remaining seasons. Is this unique to extensions, or can you do this with free agent signings as well?


The Nuggets have to meet the salary minimum and seemingly it would be very wise, for example, to offer Afflalo a contract that is the max for the first year and then $4 mill the following four seasons. Is that possible?

Or maybe they would want to offer Greg Oden something like a max number in the first year (because they have to meet the salary minimum anyway and might want to tank), and $1 mill the following two seasons. Could you do that? If so, why arent any teams doing it?

[answerthink]

Despite all of the published explanations to the contrary, I don’t believe Collison’s contract contains a signing bonus. His increased 2010-11 salary was a renegotiation, to the maximum amount allowable under Art VII, Sec 7(c)(3)(i). He was offered a simultaneous extension, as per Art VII, Sec 7(d)(2).

I say this because his frontloaded salary doesn't appear to comply with the rules for signing bonuses contained in Art II, Sec 11(a) or Art VII, Sec 3(b)(4)(ii)(A).

This type of structure is unique to extensions. In the normal context, the maximum annual declines in a contract offered to a free agent are identical to the maximum annual raises (i.e., 7.5% of the first year salary for Bird players, and 4.5% otherwise in the new agreement to come). Of course, this is assuming all the related rules stay the same.