What is the limitation on a front loaded contracts?

JES12 · Post #1 » by **JES12** » Sat Feb 21, 2009 2:10 am

Someone asked this about Jason Kidd on the Dallas forum. Paying him over half of his contract the first year (say $15 mil) next year and then $ mil the last three years.

I thought there was a 10% rule or something like that, but when reading over Larry Coon's Q&A, I could not find anything. I thougt I read something there before.

Can anyone shed some light?

FGump · Post #2 » by **FGump** » Sat Feb 21, 2009 7:00 am

The limit on raise or decrease is either 8 or 10.5% (depends on the type of signing) of the first year salary of the contract. Kidd in Dallas would be 10.5%, so if he got $15 mill in yr 1, then yr 2 on the same contract would have to be at least $13.425 and yr 3 would have to be at least $11.85 and so on.

It's in Art VII Sec 5 (c) of the CBA
http://www.nbpa.com/cba_articles/article-VII_5.php

JES12 · Post #3 » by **JES12** » Sun Feb 22, 2009 3:53 am

Thanks for that info FGump.

Hey, BTW, if I haven't done it already, I appologize about the bickering over Shawn Bradley's contract many moons ago.

JES12 · Post #4 » by **JES12** » Mon Mar 2, 2009 8:54 am

I have read and read and I cannot find out why this will "not CBA leagal" yet that is that I am told by some who are knowledgeable about the CBA.

Jerry Stackhouse's contract, according to shamsports, is:

$7.250 mil if we win a championship.
$3.625 mil if we don't win a championship and he is not waived by August 10th, 2009
$2.000 mil if we don't win a championship and we do waive him by then

I had made a post describing a similar type contract with Jason Kidd, but with a bigger % drop and with 2 non guaranteed years. Something like this:

2009-10 $20 mil (all guaranteed)
2010-11 $20 mil (only 4 mil guaranteed if we fail to win a championship in '10)
2011-12 $20 mil (only 4 mil guaranteed if we fail to win a championship in '11)

The only responce I get is "it is not CBA-leagal"

Can anyone tell me why?

Post #5 » by **Three34** » Mon Mar 2, 2009 9:07 am

Can't see why that wouldn't be legal. Fantastically unlikely, though.

JES12 · Post #6 » by **JES12** » Mon Mar 2, 2009 9:47 am

Thanks for that response sham. I did not think anyone would be up right now. Someone else told me that the $3.625 mil on Stack is if he is waived btwn August and January and the $7.25 mil comes in play if not waived by Jan (10?) regardless of championship.

Is that correct?

Post #7 » by **Three34** » Mon Mar 2, 2009 9:54 am

Well if he's still around at the 2009/10 contract guarantee date of Jan 10th, then yeah they whole chunk is guaranteed, for that is what the guarantee date is - it guarantees all contracts for the remainder of that year. But that's not going to be applicable for the Mavs and Stack.

As things stand, Stackhouse is only $2 million guaranteed for next season. If he's still on the roster come August 11th, that increases to $3,625,000. If he's still on the roster come January 10th 2010, it increases to full. And if you win the title this year, it's guaranteed regardless. But since he's going to be off the Mavericks roster at some point in July (they either waive him, or trade him away to someone who wants a $5.25 million financial saving, which will almost certainly happen since everyone is broke), you need not worry about these other dates too much.

JES12 · Post #8 » by **JES12** » Mon Mar 2, 2009 10:02 am

Thanks for that clarification. Yeah, I'm not worried about Stack's future. It was my "similar contract" idea for Kidd. It would make no sense if we decide to keep him and the 20 mil happens all 3 years. That would just be dumb.

So, I see that he meant by "not CBA-legal". I was under the assumption Stack could play the entire year for $3.625 mil if we did not win a chip this year and similarly, I was using the $4 mil for Kidd.

It all makes tons of sense now.

I appreciate your help here.

FGump · Post #9 » by **FGump** » Mon Mar 2, 2009 9:21 pm

JES12 wrote:Jerry Stackhouse's contract, according to shamsports, is:

$7.250 mil if we win a championship.
$3.625 mil if we don't win a championship and he is not waived by August 10th, 2009
$2.000 mil if we don't win a championship and we do waive him by then

I had made a post describing a similar type contract with Jason Kidd, but with a bigger % drop and with 2 non guaranteed years. Something like this:

2009-10 $20 mil (all guaranteed)
2010-11 $20 mil (only 4 mil guaranteed if we fail to win a championship in '10)
2011-12 $20 mil (only 4 mil guaranteed if we fail to win a championship in '11)

The only responce I get is "it is not CBA-leagal"

Can anyone tell me why?

You are reading Sham's info incorrectly. Jerry Stackhouse's contract, according to shamsports, is:
$7.250 mil. Period.

The other numbers are only guarantee numbers, which don't effect the size of the contract itself. They only come into play if he is cut, in determining how much he gets paid anyhow even though he has been cut and won't be playing for Dallas for the season.

Dallas and Kidd can indeed create a deal with all kinds of variables on the guarantee money if he gets cut, but assuming you are still trying to create some sort of deal where Kidd gets paid big money to play in 2009-10 and small money to play in 2010-11 as in the OP, negotiating a lesser guarantee doesn't help in any way. As we discussed earlier, you are allowed minor decreases from one year to the next, but nothing even remotely close to the size of variation you want.

The Mavs can't offer Kidd a multi-year deal at fairly strong money without it negatively impacting their cap flexibility in 2010. Like it or not, that's the facts, and there's no way around it.