How do Guarantees really work? (In particular for CP3)

[GunnerWRX]

I know the basics about guarantees. It is sort of like a team option, but not really a team option.

In particular, let's take Chris Paul's contract as an example:

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In sportrac:

https://www.spotrac.com/nba/golden-state-warriors/chris-paul-2609/

2023-24 $15,800,000 guaranteed, fully guaranteed on 6/28/23
est. $25,400,000 guaranteed part of PHX-WAS trade within 2022-23 league year (pending)
2024-25 non-guaranteed, fully guaranteed on 6/28/24

2 questions really:

For 22-23, during before the CP3-Beal trade (and before 6/28/23), he could be guaranteed for any amount between $15.8-$30.8M by the Suns, and he needs to play (or be traded) for any amount between $15.8-$30.8 as determined by the Suns?

Now for the Warriors, after this season and before 6/28/2024, the Warriors can guarantee *any* amount from vet min to $30M, and CP3's right is owned by the Warriors for the 24-25 season? Or the Warriors can either pay him $30M to pay, or they have to let him go - no in between?

[DBoys]

1 CP3's contract was to pay him 30.8M for 2023-24, but the salary was "guaranteed" for 15.8M if he was waived before 6/28/23. PHX might have waived him, but found a trade partner.
2 In a June trade, the amount used for salary match is the lessor of (a) next year guarantee and (b) just completed year salary paid. But for the team receiving him, they have to be match the just completed year salary.
3 To make that swap matchable, PHX needed CP3 to count for more than 15.8M, so they increased the amount he would get paid if he was waived before 6/28 (the guarantee) up to around 26M, before executing the trade. In theory it had to be done by mutual consent, but no player says no in that situation.
4 A few days later, because he was not waived by 6/28, his contract became FULLY guaranteed for 2023-24. So if he is waived by GS, he gets the full 30.8M.
5 If GS trades him during this season, he will count 30.8M. If they want to trade him after the season, they will face the same issue that the Suns faced (in this case, his guarantee for 2024-25 is $0), and have to increase his guarantee to the amount needed to facilitate the ability to do a salary match. OTOH they could keep him for another year, in which case his salary will fully guarantee if not waived by 6/28/24. Or they could waive him before that date, and owe him nothing.

[GunnerWRX]

1 CP3's contract was to pay him 30.8M for 2023-24, but the salary was "guaranteed" for 15.8M if he was waived before 6/28/23. PHX might have waived him, but found a trade partner.
2 In a June trade, the amount used for salary match is the lessor of (a) next year guarantee and (b) just completed year salary paid. But for the team receiving him, they have to be match the just completed year salary.
3 To make that swap matchable, PHX needed CP3 to count for more than 15.8M, so they increased the amount he would get paid if he was waived before 6/28 (the guarantee) up to around 26M, before executing the trade. In theory it had to be done by mutual consent, but no player says no in that situation.
4 A few days later, because he was not waived by 6/28, his contract became FULLY guaranteed for 2023-24. So if he is waived by GS, he gets the full 30.8M.
5 If GS trades him during this season, he will count 30.8M. If they want to trade him after the season, they will face the same issue that the Suns faced (in this case, his guarantee for 2024-25 is $0), and have to increase his guarantee to the amount needed to facilitate the ability to do a salary match. OTOH they could keep him for another year, in which case his salary will fully guarantee if not waived by 6/28/24. Or they could waive him before that date, and owe him nothing.

Thanks and #5 is extremely informative.

Another question - mid/after this season and before 6/28/24, say CP3 wants to play another season by taking less (say $15-$20M) to help the Warriors stay under the second apron (w/ Klay re-signed/extended) - can CP3 agree to lower than $30M before 6/28/24, and become immediately guaranteed for the 24-25 season before 2024 free agency starts?

[DBoys]

If CP3 and GS want another year after this one, the choices are limited:.
1 GS keeps him and he gets paid the 30M in the contract
2 GS waives him and the existing contract ends. In that scenario, as a waived player, GS has no signing rights - he's just a FA who is no team's FA, with equal opportunity to all. As a result, GS (and others) can only offer him cap room contract or minimum or an annual exception (if they have one).

[FlyingArrow]

.

[FlyingArrow]

1 CP3's contract was to pay him 30.8M for 2023-24, but the salary was "guaranteed" for 15.8M if he was waived before 6/28/23. PHX might have waived him, but found a trade partner.
2 In a June trade, the amount used for salary match is the lessor of (a) next year guarantee and (b) just completed year salary paid. But for the team receiving him, they have to be match the just completed year salary.
3 To make that swap matchable, PHX needed CP3 to count for more than 15.8M, so they increased the amount he would get paid if he was waived before 6/28 (the guarantee) up to around 26M, before executing the trade. In theory it had to be done by mutual consent, but no player says no in that situation.
4 A few days later, because he was not waived by 6/28, his contract became FULLY guaranteed for 2023-24. So if he is waived by GS, he gets the full 30.8M.
5 If GS trades him during this season, he will count 30.8M. If they want to trade him after the season, they will face the same issue that the Suns faced (in this case, his guarantee for 2024-25 is $0), and have to increase his guarantee to the amount needed to facilitate the ability to do a salary match. OTOH they could keep him for another year, in which case his salary will fully guarantee if not waived by 6/28/24. Or they could waive him before that date, and owe him nothing.

Thanks and #5 is extremely informative.

Another question - mid/after this season and before 6/28/24, say CP3 wants to play another season by taking less (say $15-$20M) to help the Warriors stay under the second apron (w/ Klay re-signed/extended) - can CP3 agree to lower than $30M before 6/28/24, and become immediately guaranteed for the 24-25 season before 2024 free agency starts?

What is the difference between a non-guaranteed contract and a team option?

[DBoys]

The difference in structure is that an NG has a year on paper, but the team can pay less than that salary (or in many cases, nothing), if they waive the player by a certain date. The do-nothing result is the player plays for that amount. When teams intend to keep the player, the NG issue becomes a nothing burger - no anticipation, no drama, no announcement that "we didn't waive him" because of course you don't waive players with contracts.

With an option, the team has not yet committed to anything, but can do so and add another year (at a salary already written) if they exercise that option by a specified date. The do-nothing result is the player becomes a free agent. In this situation, "we exercised player X's option (or, we did not)" does become a drama with comments, anticipation, announcement, etc.

Some other comparisons I can think of, there may be more

1 SAME - Both allow a team to end a contract with no further obligation.

2 DIFFERENT - BIRD RIGHTS - The team option (when declined) does keep Bird rights intact, aiding a team in cap flexibility for resigning the player if they wish to make an offer. The NG contract, when ended (by waiver), erases all Bird rights.

Applying this to the CP3 situation, if GS does not want him at that NG number and ends the contract, but wants him to return, they can only offer him a exception salary such as minimum or MLE, BAE if they have one to offer.

3 DIFFERENT - TRADE USE IN JUNE BEFORE OPTION OR NG YEAR - A trade of the player in June after the season can be done with the NG contract as is, but it is tricky because the salary counts for matching one way but not the other, to the extent it is guaranteed. The guarantee can be increased to facilitate the trade match, if needed. In comparison, the option contract cannot be traded with an option (but can be traded if the option is exercised beforehand).

4 DIFFERENT - TRADE BONUS - In earlier trades before the timing in item 3 above, a trade kicker is applied differently in regard to NG vs option.