Player Buyouts and Player Options

[answerthink]

Larry,

Now that you’re back (hopefully, anyway), I would love your perspective on whether Option Buy-Outs are possible in respect of a Team Option (as well as a Player Option or ETO).

It has been suggested to me in the string that they are not possible, in part because the word “buyout” implies it makes little sense in respect of a Team Option. I have suggested that this rationale may not be supported by the CBA, for three primary reasons:

(i) “Option Buy-Outs” is a defined section (Art XII, Sec 5) and “Option Buy-Out Amount” is a defined term (Art I (mm)). Therefore, the paragraph and definition would seem to take precedence over any inferences drawn from the capitalized word “Buy-Out.”

(ii) Art XII, Sec 5 states “…a Player Contract that contains an Option or an ETO may provide for an Option Buy-Out Amount.”

(iii) Art I (mm) states that an "Option Buy-Out Amount" is “any amount payable to a player in connection with either the exercise of an Early Termination Option or the non-exercise of an Option.”

Neither of these paragraphs seems to provide any language to suggest that "Option Buy-Outs" in respect of Team Options are not possible.

However, I certainly understand that the intent of the CBA doesn’t always match the language itself. Since I do not have access to any league resources, I was wondering your perspective.

A local beat writer was kind enough to suggest to me that my interpretation was correct, but perhaps that is not the best source for confirmation of such a technical issue (as I imagine we could both be incorrect). This issue, although technical, is sort of important to me for reasons you may understand from previous conversations.

[LarryCoon]

Yeah, it's possible to include a buyout amount on a team option. As you quoted, Art I Section 1(mm) says an OBO can be connected to "..the non-exercise of an Option" (defined term), and (ll) defines Option to be "...an option in a Player Contract in favor of a Team or player..." Essentially, the team would be saying, "We hold the option for Year X, but we'll pay you a chunk of money if we decide to let you go." In other words, it's a severance check.

I'm not sure if any contracts actually have this, though.

[answerthink]

Thank you Larry. As you will note from the string, your response is consistent with my interpretation of the CBA.

I originally asked the question because I felt Lamar Odom's contract met the qualifications stipulated in Art XII Sec 5 to be considered as having an Option Buy-Out. It is entirely possible, however, that his contract contains a simple partially guaranteed final year. Since the cap hit would be very different depending how Odom's contract was truly structured, the distinction might be important for those that track this sort of data (like Sham I believe).

I personally don't track player contracts in that level of detail. I prefer to calculate the projected salary cap, luxury tax and other such things I consider to be more fun to talk about. To that end, if you'd be willing to provide your thoughts on my escrow-related questions (under Escrow Calculation), i'd be immensely appreciative. they are the only remaining questions before i can complete my analysis. if i recall correctly, the string is a bit jumbled but i'd be happy to re-state my outstanding questions (and my assumed answers) in one new post if it is easier.

[Three34]

Odom does not have a team option in his last year. If he did, his salary wouldn't be able to decline like that. It's just a straight-up partial guarantee.

[answerthink]

thanks sham. i didn't realize odom's salary was scheduled to decline in his final season (which makes my question stupid).

can i ask how you find such detailed player salary info? i am under the understanding this is non-public. feel free not to answer if you don't want to; it's just pure curiosity.

[Three34]

I've........done a few things I'm not proud of.

[answerthink]

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