Nick Collison Style Signing Bonus

[SkyHook]

Can a team which is significantly below the cap sign a player (either their own free agent or another team's) to a Nick Collison style contract? Where the signing bonus gets applied to the current year cap & the subsequent years have a much smaller cap hit?

[Dunkenstein]

First of all it is important to point out that in the Collison case, this was not a free agent signing, it was an extension to an existing contract.

The Thunder was slightly more than $6.5 million under the salary cap before re-signing Collison. They took advantage of that below-the-cap status to award Collison all of their space as a signing bonus that took his 2010-11 compensation to a whopping $13.3 million.

Signing bonuses in extensions are usually pro-rated through the life of the contract. Teams under the cap, though, can apply the entire signing bonus at the time the extension is signed, as long as the bonus doesn't exceed the available cap space.

[answerthink]

The Collison structure wasn't actually a signing bonus. While it was reported as a signing bonus just about everywhere, it was technically a renegotiation with a corresponding extension.

The new rules limit but don't prevent such a structure. Under the new rules, if a player's contract is extended and renegotiated simultaneously, his salary may not decrease by more than 40% from the last season before the extension (after it is renegotiated) to the first season of the extension.

[Three34]

When signing a free agent, the maximum decrease percentages are the same as the maximum increase percentages.