Over-36 Rule (2 unlikely hypotheticals regarding Lebron)

[jaywalkszzz]

I'm curious how the Over-36 rule affects the Cap Hit of a team in the following scenarios:
1) Signing a 34 year old to a 5 year contract
2) Signing a 35 year old to a 5 year contract

I attempted calculating two unlikely Lebron scenarios in the following google doc:
https://docs.google.com/spreadsheets/d/15p1tGXTo9gYm1sODiKxUqUYftLl7n7kAekhPUHD1V_g/edit?usp=sharing

Am I on the right track? This rule had my head spinning.

[Johnstarks]

I didn't think you could?

[jaywalkszzz]

I didn't think you could?

I'm still not confident in my calculations, but according to http://www.cbafaq.com/salarycap.htm#Q58, "It is often reported that the Over-36 rule prevents teams from signing older players to long contracts, but this is false. Teams are not prevented from signing longer contracts -- the Over-36 rule simply removes the incentive for doing so"

Thus, I think teams are allowed to, but are swayed from doing so because of the large Cap Hit caused by shifting deferred salary to earlier years of an Over-36 contract.

[BdeRegt]

Realistically, under current CBA rules, LeBron would not be able to sign a 5 year max contract. Because of the over-36 rule, the end salaries are deemed deferred payments. This means that those salaries are added to the earlier years when calculating team salary. This would cause the first year to go over the max amount. In order to make the contract work, the overall value would have to be reduced to fit within the max contract values for those shorter years. LeBron would basically just be giving away money by signing the over-36 long contract.

I hope that helps but CBAFAQ definitely explains it better. Personally, I think this rule will definitely be changing in the next CBA so I would not worry about it until a new deal is released.

[Smitty731]

I haven't had the time to check your math in the google doc, but I wanted to chime in that this rule is on the table to be discussed in this round of CBA negotiations. I guess anything technically is, but this one will be for certain.

The main reason why is that all of the NBA, its teams, and the NBPA all agree that players are playing later in their careers at a high level, so the rule needs to be, at a minimum, tweaked. It used to be that anyone age 36 or older was clearly going to be a role player on the extreme downside of their career. Now, you could conceivably see a player like LeBron James still playing at an All-Star level at age 36.

[jaywalkszzz]

Realistically, under current CBA rules, LeBron would not be able to sign a 5 year max contract. Because of the over-36 rule, the end salaries are deemed deferred payments. This means that those salaries are added to the earlier years when calculating team salary. This would cause the first year to go over the max amount. In order to make the contract work, the overall value would have to be reduced to fit within the max contract values for those shorter years. LeBron would basically just be giving away money by signing the over-36 long contract.

I hope that helps but CBAFAQ definitely explains it better. Personally, I think this rule will definitely be changing in the next CBA so I would not worry about it until a new deal is released.

BdeRegt Thanks. I think you're right and you were helpful.

In Larry Coon's example, he says "the cap amount in the first season is now greater than the team's $5 Million Non-Taxpayer Mid-Level exception! To make the contract fit within the exception, the salaries need to be reduced"
(http://www.cbafaq.com/salarycap.htm#Q58)

Thus, in Larry Coon's example, the player's overall salary could not be bumped up to $21,350,000 by adding an extra year. Whether the player was signed to a three year deal or a four year deal, the player's salary was going to be $15,675,000 no matter what so that it fit into the NT-MLE. Thus, the over-36 rule was serving it's purpose in that case.

In my two scenarios, I took this into account so that the shifted deferred salaries fit into Lebron's max on the first year. Assuming I'm shifting salaries correctly/proportionately, if Lebron signed a 5-year deal at age 34, his max would be reduced by $48,604,876 thanks to the over-36 rule. In addition, if he signed a 5-year deal at age 35, his max would be reduced by $99,125,905.

https://docs.google.com/spreadsheets/d/15p1tGXTo9gYm1sODiKxUqUYftLl7n7kAekhPUHD1V_g/edit?usp=sharing

[jaywalkszzz]

I haven't had the time to check your math in the google doc, but I wanted to chime in that this rule is on the table to be discussed in this round of CBA negotiations. I guess anything technically is, but this one will be for certain.

The main reason why is that all of the NBA, its teams, and the NBPA all agree that players are playing later in their careers at a high level, so the rule needs to be, at a minimum, tweaked. It used to be that anyone age 36 or older was clearly going to be a role player on the extreme downside of their career. Now, you could conceivably see a player like LeBron James still playing at an All-Star level at age 36.

Yea, some speculate they'll bump and tweak it to an over 38-rule.

If they end up tweaking the over-36 rule and catering to max old guys like Lebron, who I assume will age gracefully, the unintended consequence maybe that many will get "deferred compensation" well passed their playing years, which the over-36 rule wanted to avoid.

If they don't adjust it, Lebron will be forced to take shorter-term contracts to avoid the over-36 rule and that leaves the possibility that the Cavs may lose him to free agency in his latter years.

[DBoys]

If they don't adjust it, Lebron will be forced to take shorter-term contracts to avoid the over-36 rule.

I really don't see the problem here that some want to imagine. Lebron will eventually get to an age where only 3-year deals are allowed. Like everyone else. But, so what?

With this story (if there is one), it feels like we're being fed a manufactured "crisis" based entirely on the fact of LBJ not being able to sign the $200M deal that some wanted to see this summer or next and write about. Instead, he'll have to sign for 160 here and another 40 there. But why should we care? And if we're changing the rules just because LBJ is likely to still be quite good at that age, what if LBJ doesn't want to be tied up for that long, and opts for a shorter deal anyhow? Then you've changed the rules, to accommodate the only player for whom it really matters, and then it didn't get used by him anyhow - after which, now you've allowed a bunch of bad contracts to ordinary players.

To me, this is knee jerk stuff. NBA is smarter than that. Aren't they?

[Smitty731]

If they don't adjust it, Lebron will be forced to take shorter-term contracts to avoid the over-36 rule.

I really don't see the problem here that some want to imagine. Lebron will eventually get to an age where only 3-year deals are allowed. Like everyone else. But, so what?

With this story (if there is one), it feels like we're being fed a manufactured "crisis" based entirely on the fact of LBJ not being able to sign the $200M deal that some wanted to see this summer or next and write about. Instead, he'll have to sign for 160 here and another 40 there. But why should we care? And if we're changing the rules just because LBJ is likely to still be quite good at that age, what if LBJ doesn't want to be tied up for that long, and opts for a shorter deal anyhow? Then you've changed the rules, to accommodate the only player for whom it really matters, and then it didn't get used by him anyhow - after which, now you've allowed a bunch of bad contracts to ordinary players.

To me, this is knee jerk stuff. NBA is smarter than that. Aren't they?

From what I've heard around the league, teams and NBPA is that they think players are going to be playing later and later in to their careers on a regular basis going forward. Essentially, the belief is that we'll regularly see high players that are 40 or older within the next 5 years or so.

[DBoys]

From what I've heard around the league, teams and NBPA is that they think players are going to be playing later and later in to their careers on a regular basis going forward. Essentially, the belief is that we'll regularly see high players that are 40 or older within the next 5 years or so.

If it's a thing coming, do we see evidence of it existing already? We've always had a player here or there who could still play quite well at 37, 38 etc but never more than a handful at a time. Who were the players who were great at ages 37, 38 and so on in 2015-16?

[Smitty731]

From what I've heard around the league, teams and NBPA is that they think players are going to be playing later and later in to their careers on a regular basis going forward. Essentially, the belief is that we'll regularly see high players that are 40 or older within the next 5 years or so.

If it's a thing coming, do we see evidence of it existing already? We've always had a player here or there who could still play quite well at 37, 38 etc but never more than a handful at a time. Who were the players who were great at ages 37, 38 and so on in 2015-16?

It seems to be a more forward looking thing than a current situation. The thought is that a guy like Steve Nash played at a high level over 36 and that was with various injuries. And a guy like LeBron James doesn't show any signs of slowing down any time soon (arguable, not sure I don't see some slippage myself), so the rule may need tweaked.

And this isn't just my opinion. This is coming from NBA teams, agents, and the NBPA.

[DBoys]

Sorry, but to me predictions of change are just someone's agenda. Not sure I buy that "everyone" is clamoring for a need for change, either. Nothing is any different now than before, because (as Sir Charles is fond of saying) Father Time always wins.

You mention Nash, but he's actually an argument AGAINST any change. He only played 3/4 of a season in his age 37 year, about 1/2 in age 38, and almost none in age 39. The fact that he was impaired more and more where he couldn't play is part of the equation for him, and others.

We gotta keep in mind that there's no rule against signing players over 36, and even having them tied up for 3 years if you want. But the limits are shorter because the likelihood is extremely high that at those ages, they aren't going to be able to make the end of the contract if it's longer. And I don't see any reason to think otherwise, nor does a random player here or there playing well for a bit longer indicate a paradigm shift.

[jaywalkszzz]

If they don't adjust it, Lebron will be forced to take shorter-term contracts to avoid the over-36 rule.

I really don't see the problem here that some want to imagine. Lebron will eventually get to an age where only 3-year deals are allowed. Like everyone else. But, so what?

With this story (if there is one), it feels like we're being fed a manufactured "crisis" based entirely on the fact of LBJ not being able to sign the $200M deal that some wanted to see this summer or next and write about. Instead, he'll have to sign for 160 here and another 40 there. But why should we care? And if we're changing the rules just because LBJ is likely to still be quite good at that age, what if LBJ doesn't want to be tied up for that long, and opts for a shorter deal anyhow? Then you've changed the rules, to accommodate the only player for whom it really matters, and then it didn't get used by him anyhow - after which, now you've allowed a bunch of bad contracts to ordinary players.

To me, this is knee jerk stuff. NBA is smarter than that. Aren't they?

I agree that the over-36 rule has been doing it's job and shouldn't be changed. I see no problem with it.

I am more interested in the salary cap mechanics/mathematics of the over-36 rule and how it affects a player's earning potential. I particularly wasn't too sure of the math involved (deferring then re-adjusting) with signing a 35 year old to a 5 year contract, which I believe has two "zero years"?

https://docs.google.com/spreadsheets/d/15p1tGXTo9gYm1sODiKxUqUYftLl7n7kAekhPUHD1V_g/edit?usp=sharing

[DBoys]

I agree that the over-36 rule has been doing it's job and shouldn't be changed. I see no problem with it.

1 I am more interested in the salary cap mechanics/mathematics of the over-36 rule and how it affects a player's earning potential.

2 I particularly wasn't too sure of the math involved (deferring then re-adjusting) with signing a 35 year old to a 5 year contract, which I believe has two "zero years"?

https://docs.google.com/spreadsheets/d/15p1tGXTo9gYm1sODiKxUqUYftLl7n7kAekhPUHD1V_g/edit?usp=sharing

1 From what I can tell, a player's earning potential isn't altered. The only thing that changes is the timing of each contract, ie which summer or summers the player is signing a new deal. But regardless of age, once the rookie scale deal is done, each player still can get as much as a max deal each year, if teams think it's deserved and want to offer it.

2 As for how a player's contract would be altered in order to give him an over-36 deal, isn't this hypothesizing about and trying to measure purple unicorns? No disrespect intended, but I have read an article here or there doing the same thing as you, trying to figure out cap hits on the variations in such hypothetical deals, and I find it kinda humorous because of the moot nature of the idea (haven't we NEVER seen a single NBA deal of this sort, in the history of ever?). They do leave the door open to long over-36 deals in theory, but in real life it's just not a thing.

[jaywalkszzz]

I agree that the over-36 rule has been doing it's job and shouldn't be changed. I see no problem with it.

1 I am more interested in the salary cap mechanics/mathematics of the over-36 rule and how it affects a player's earning potential.

2 I particularly wasn't too sure of the math involved (deferring then re-adjusting) with signing a 35 year old to a 5 year contract, which I believe has two "zero years"?

https://docs.google.com/spreadsheets/d/15p1tGXTo9gYm1sODiKxUqUYftLl7n7kAekhPUHD1V_g/edit?usp=sharing

1 From what I can tell, a player's earning potential isn't altered. The only thing that changes is the timing of each contract, ie which summer or summers the player is signing a new deal. But regardless of age, once the rookie scale deal is done, each player still can get as much as a max deal each year, if teams think it's deserved and want to offer it.

2 As for how a player's contract would be altered in order to give him an over-36 deal, isn't this hypothesizing about and trying to measure purple unicorns? No disrespect intended, but I have read an article here or there doing the same thing as you, trying to figure out cap hits on the variations in such hypothetical deals, and I find it kinda humorous because of the moot nature of the idea (haven't we NEVER seen a single NBA deal of this sort, in the history of ever?). They do leave the door open to long over-36 deals in theory, but in real life it's just not a thing.

1) That's what I initially thought, but after reading BdeRegt's post above, I'm now under the impression the player's overall salary in an over-36 contract would have to be reduced because the Team Salary in the first year is aggregated with deferred salaries from "zero years", thus making the player's Team Salary greater than the player's maximum salary. Larry Coon has an example which I posted above.

2) I'm not trying to find an over-36 rule contract in hopes a player signs one, I am merely trying to understand quantitatively why an over-36 contract is such a disadvantage to the player or team signing to make it so that we have NEVER seen a single NBA deal of this sort in history ever.

[DBoys]

..."the player's overall salary in an over-36 contract would have to be reduced because the Team Salary in the first year is aggregated with deferred salaries from "zero years", thus making the player's Team Salary greater than the player's maximum salary."

I think what you're missing is what this over-36 rule is designed to do. It is preventing the team from paying an older player over 4-5 years, when he's so old that team and player expect he'll only play 3 more seasons. This rule bunches all 4-5 years into only 3 cap years, which in effect has erased the benefit for doing a "spread the salary over 4-5 years" deal in the first place.

Also, for the player who is truly intended to be kept longer, that's still possible. They simply sign the length-limited deal to fit within the restriction (such as, they only sign for 3 years), and then they know they can come back and do another deal when this one ends, if it makes sense at that point. There's never really any incentive to sign the longer deal anyhow at that point, because should that happen, it would eat up cap space, in the year the deal is signed, that could be used elsewhere. So they just stay within the limit, get the lower cap hit, and know they can come back and do another deal when this one ends, if it makes sense at that point.

If you want to put a number on it, to understand why it's disadvantageous, it's fairly simple to see using simple scenarios. Say you want to pay Pete Player 15M a year, the max is 30M, you have full Bird rights, and he's over 36 already.

If you do a 3 year deal (15-15-15) followed by a 2 year deal (15-15), you will use 15M in cap room this year. The biggest starting salary you can offer him for the 3 year deal would be 30M.
If you do a 4 year deal (15-15-15-15) followed by a 1 year deal (15), you will use 20M in cap room this year. The biggest starting salary you can offer him for the 4 year deal would be 22.5M.
If you do a 5 year deal (15-15-15-15-15), you will use 25M in cap room this year. The biggest starting salary you can offer him for the 5 year deal would be 18M.

Clearly, the team looks at those choices, what it does to cap room, and does a 3-year deal. And given the player's age, they have added incentive to want to do a shorter deal, too.

In addition, the point I made earlier is still accurate, even if you didn't follow it. That was, no player's salary ever HAS TO BE reduced in any year to accommodate over-36 limits, even a max salary guy. For example, if you intend to pay the player max-max-max-max-max, then you can ALWAYS do so. The only thing is, at a certain age, a team will be doing that using multiple contracts rather than one.

[jaywalkszzz]

..."the player's overall salary in an over-36 contract would have to be reduced because the Team Salary in the first year is aggregated with deferred salaries from "zero years", thus making the player's Team Salary greater than the player's maximum salary."

I think what you're missing is what this over-36 rule is designed to do. It is preventing the team from paying an older player over 4-5 years, when he's so old that team and player expect he'll only play 3 more seasons. This rule bunches all 4-5 years into only 3 cap years, which in effect has erased the benefit for doing a "spread the salary over 4-5 years" deal in the first place.

Also, for the player who is truly intended to be kept longer, that's still possible. They simply sign the length-limited deal to fit within the restriction (such as, they only sign for 3 years), and then they know they can come back and do another deal when this one ends, if it makes sense at that point. There's never really any incentive to sign the longer deal anyhow at that point, because should that happen, it would eat up cap space, in the year the deal is signed, that could be used elsewhere. So they just stay within the limit, get the lower cap hit, and know they can come back and do another deal when this one ends, if it makes sense at that point.

If you want to put a number on it, to understand why it's disadvantageous, it's fairly simple to see using simple scenarios. Say you want to pay Pete Player 15M a year, the max is 30M, you have full Bird rights, and he's over 36 already.

If you do a 3 year deal (15-15-15) followed by a 2 year deal (15-15), you will use 15M in cap room this year. The biggest starting salary you can offer him for the 3 year deal would be 30M.
If you do a 4 year deal (15-15-15-15) followed by a 1 year deal (15), you will use 20M in cap room this year. The biggest starting salary you can offer him for the 4 year deal would be 22.5M.
If you do a 5 year deal (15-15-15-15-15), you will use 25M in cap room this year. The biggest starting salary you can offer him for the 5 year deal would be 18M.

Clearly, the team looks at those choices, what it does to cap room, and does a 3-year deal. And given the player's age, they have added incentive to want to do a shorter deal, too.

In addition, the point I made earlier is still accurate, even if you didn't follow it. That was, no player's salary ever HAS TO BE reduced in any year to accommodate over-36 limits, even a max salary guy. For example, if you intend to pay the player max-max-max-max-max, then you can ALWAYS do so. The only thing is, at a certain age, a team will be doing that using multiple contracts rather than one.

I can see how the quote you referenced can sound confusing, so let me try to explain what I meant with a similar example. I also think you're missing my original question.

I was asking, when all things are equal (except age), what is the affect of the Over-36 rule on a player's Team salary (NOT scenarios that avoid the Over-36 rule by signing 3-year or shorter contracts because that defeats the investigation of the rule)

"Control" example or standard for comparison purposes:
Let's say you want to pay a Player $30M a year, his max is $30M, you have full Bird rights, and he's only 30 years old (w/ 10+ years experience). He can obviously be offered a 4-year $120M contract with no problem. This is the "Control" example or standard for comparison purposes.

"Test" example where the Over-36 rule applies & is compared to the "Control":
Let's say you want to pay a Player $30M a year, his max is $30M (assume salary cap has not changed since he was 30 years old and disregard the 105% of previous salary maximum rule). You still have full Bird rights. The only difference is he's 37 years old (still w/ 10+ years experience). Signing him to the same 4-year $120M contract would NOT be possible because the Team Salary becomes $40M after bunching the 4th year salary to the first 3 years, "thus making the player's Team salary (equal to $40M) greater than the player's maximum salary ($30M)."

Your statement "The biggest starting salary you can offer him for the 4 year deal would be 22.5M" confirms that the player's paid salary HAS TO BE REDUCED from $30M per year to $22.5M per year for a 4-year contract to accommodate his $30M Max Team Salary.

I understand the team can sign non-Over-36 rule contracts (30M+30M+30M+30M) OR (3yr 90M+1yr 30M) OR (2yr 60M + 2yr 60M) OR (1yr 30M + 3yr 90M) if they want to pay him $120M total over 4 years, but that was not my original question.

You also incorrectly stated that "this rule bunches all 4-5 years into only 3 cap years". Although this is true initially, once the player is in the season that is two seasons before the "first zero year", the deferred salary stops being classified as deferred and is shifted back onto the "zero years" of the contract. As you can see in the 4-year $90M contract, the Team Salary for Year 1 is $30M, Year 2 (20M), Year 3 (20M), and Year 4 (20M).

Nonetheless, I appreciate all your examples because they have helped me understand the rule's affects in greater detail. I am a visual learner so I made a google doc that has two tabs to refer to if you're not following:

TAB 1: "jaywalkszzz ie's": contains tables to what I've already described.
TAB 2: "DBoys ie's": contains your six scenarios and I analyze the quantitative disadvantages to both the Team Salary and Player.

https://docs.google.com/spreadsheets/d/1affWfyO2ZrwOYASMp4Zk1jx5Ur5n92frSBwHMl_hXSI/edit?usp=sharing

[DBoys]

"I can see how the quote you referenced can sound confusing, so let me try to explain what I meant with a similar example. I also think you're missing my original question."

I did understand your questions. But you're getting bogged down in minor stuff, and losing sight of what you're seeking with this math, which is (as you have said) to see if the math can help you understand WHY teams don't go ahead and do an over-36 deal. Right? (Or, your exact words - I am merely trying to understand quantitatively why an over-36 contract is such a disadvantage to the player or team signing to make it so that we have NEVER seen a single NBA deal of this sort in history ever.)

So, I simply ignored the side irrelevancies, and cut to the bottom line in my answer.

"Year 1 on an over-36 deal is a cap killer" is your answer. That is clear when you do a comparison, so you have to compare the numbers both ways PERTAINING TO THE CAP FOR THE SUMMER OF DECISION, and looking at the non-over-36 route is part of the exercise. The later years might get adjusted after the fact if they were to get that far, but they don't, because the possibility of offering an over-36 deal was killed by the impact on the cap when it's being written. And also, of course, by the fact that they could write the deal the easy way, not mess with their cap, and still eventually do the same number of years if they eventually want to.

Part of the equation is one of practicality or expediency, where the fact is that teams worry about what is in front of them (how much cap room can they use now, and what players can they get for it) and don't really care if they have the potential to, in the right scenario, waste some now but regain it later.

Once you realize that, then you realize (as I noted earlier) that trying to figure out all the variations and permutations of what happens in years 2 and later is irrelevant, an exercise in chasing purple unicorns, since no such deal is going to get written in the first place.

[DBoys]

"I understand the team can sign non-Over-36 rule contracts (30M+30M+30M+30M) OR (3yr 90M+1yr 30M) OR (2yr 60M + 2yr 60M) OR (1yr 30M + 3yr 90M) if they want to pay him $120M total over 4 years, but that was not my original question. "

Yes I understood that already - but whether you wanted that to be part of the answer or not, it IS part of the answer. Your question is to understand WHY teams don't do over-36 deals, and part of the answer is that they really don't HAVE TO do them, in order to pay the player full compensation over as many years as he can play. The player can get up to a max deal every year, and they just have to do the deals a bit more frequently (forcing them to re-assess more often) than they would with a younger player.

"You also incorrectly stated that "this rule bunches all 4-5 years into only 3 cap years". Although this is true initially ..."

Nope. there was nothing incorrect in what I said, because I was pointing you to the one (and only) calculation that matters, which is "what is the choice WHEN THE CONTRACT IS OFFERED." At that point, the team will indeed have to "bunch all 4-5 years into only 3 cap years" in the process of dealing with their cap and cap room as they write the deal, and that difference means "what happens later" becomes moot to them. If a certain road goes over a cliff, no one cares what the road looks like at the bottom of the cliff - instead they turn around and go another way.

[jaywalkszzz]

"I can see how the quote you referenced can sound confusing, so let me try to explain what I meant with a similar example. I also think you're missing my original question."

I did understand your questions. But you're getting bogged down in minor stuff, and losing sight of what you're seeking with this math, which is (as you have said) to see if the math can help you understand WHY teams don't go ahead and do an over-36 deal. Right? (Or, your exact words - I am merely trying to understand quantitatively why an over-36 contract is such a disadvantage to the player or team signing to make it so that we have NEVER seen a single NBA deal of this sort in history ever.)

So, I simply ignored the side irrelevancies, and cut to the bottom line in my answer.

"Year 1 on an over-36 deal is a cap killer" is your answer. That is clear when you do a comparison, so you have to compare the numbers both ways PERTAINING TO THE CAP FOR THE SUMMER OF DECISION, and looking at the non-over-36 route is part of the exercise. The later years might get adjusted after the fact if they were to get that far, but they don't, because the possibility of offering an over-36 deal was killed by the impact on the cap when it's being written. And also, of course, by the fact that they could write the deal the easy way, not mess with their cap, and still eventually do the same number of years if they eventually want to.

Part of the equation is one of practicality or expediency, where the fact is that teams worry about what is in front of them (how much cap room can they use now, and what players can they get for it) and don't really care if they have the potential to, in the right scenario, waste some now but regain it later.

Once you realize that, then you realize (as I noted earlier) that trying to figure out all the variations and permutations of what happens in years 2 and later is irrelevant, an exercise in chasing purple unicorns, since no such deal is going to get written in the first place.

I think you're getting too caught up in the semantics of when I wrote "have to be reduced…". When I wrote "…have to be reduced…", I was comparing the 4-year Over-36 rule contract to the "Control" 4-year max contract that is not subject to the Over-36 rule. I did this because I was trying to understand BdeRegt's comment: "This would cause the first year to go over the max amount. In order to make the contract work, the overall value would have to be reduced to fit within the max contract values for those shorter years."

That was my original issue, which I now understand. In other words, I was unsure if the Team Salary after deferring, stayed at $40M, or does the Team Salary have to be reduced to the Player's $30M max to make the contract legal (referring to an example in my last post).

Again, I have acknowledged in the google doc that the player should not sign the 4-year Over-36 rule contract because the player does "NOT HAVE TO" to reduce their earning potential from $120M to $90M ($22.5M x4), which is your point and I agree.

I am in agreement with you and realize your points (even that "chasing purple unicorn" idiom which was equally confusing as the Over-36 rule. Urban dictionary's definition #4 for "purple unicorn" had me cracking up.).

Below, I labeled the scenarios you gave and labeled the Tables in the doc for reference:
https://docs.google.com/spreadsheets/d/1affWfyO2ZrwOYASMp4Zk1jx5Ur5n92frSBwHMl_hXSI/edit?usp=sharing

#2 a) If you do a 4 year deal (15-15-15-15) followed by a 1 year deal (15), you will use 20M in cap room this year.

#2 b) The biggest starting salary you can offer him for the 4 year deal would be 22.5M.

#3 a) If you do a 5 year deal (15-15-15-15-15), you will use 25M in cap room this year.

#3 b) The biggest starting salary you can offer him for the 5 year deal would be 18M.

I also did take into account Year 1 of the summer of decision.
If you missed the bolded enlarged numbers in the doc, it is spelled out explicitly below:

Scenario #2a) Shows the $5M disadvantage to the Team's Salary in Year 1 (Player is paid $15M, Team Salary 1st Year: $20M)

Scenario #3a) Shows the $10M disadvantage to the Team's Salary in Year 1(Player is paid $15M, Team Salary 1st Year: $25M

Scenario #2b)
Shows the $7.5M disadvantage to the Team's Salary on Year 1 (Player is paid $22.5M, Team Salary 1st Year: $30M

It also shows, the $7.5 M disadvantage to the Player's Salary on Year 1 (Player is paid $22.5M, Player's Max: $30M)

Scenario #3b)
Shows the $12M disadvantage to the Team's Salary on Year 1 (Player is paid $18M, Team Salary 1st Year: $30M

It also shows, the $12M disadvantage to the Player's Salary on Year 1 (Player is paid $18M, Player's Max: $30M.

Quantitatively, I have figured out why (with your help, thank you.) an Over-36 contract is such a disadvantage to the player or team signing.

My Other ramblings:

I did not originally ask what are the potential advantages of the Over-36 rule because as you stated, the moot nature of the idea. On the surface, I did not think there would be any because of what it was intended for. When I started to learn the deferring and shifting of salary, it got me thinking to fully investigate the Over-36 rule beyond Year 1 for any potential unintended advantages (which I believe you see as "chasing purple unicorns" that don't exist).

Maybe looking into Year 2 and later, turned out to be an exercise of "chasing purple unicorns", but what if it matters to a rebuilding team that has minimal chance of winning a title now. What if it would be to their benefit to "waste some (cap room) now but regain it later". For example, if you look at Scenario #3a) and instead you start with a Player at age 35 in Year 1, a team can potentially pay and lock-in a solid 37-year old role-player in the $15M market range, but only have a Team Cap Hit of about $11.1M in Year 3. That's an extra $3.9M they can pay to another role-player on Year 3. Year 3 would be a year where they could arguably have a better shot at a playoff spot or even a title. Of course they would "waste" $10M in cap room in Year 1 ("PERTAINING TO THE CAP FOR THE SUMMER OF DECISION"), but what if the team is below the Salary Cap Floor and has excess cap room to spend anyway. A team under the Salary Cap Floor would have to cut a supplemental check to all of their players on the roster for nothing, so why not "kill" $10M in cap room in Year 1.

Simply focusing on "what is in front of them" are the teams' prerogative. I can see the practicality or expediency argument of the equation because actual General Managers want to keep their jobs and have the pressure to win now and not in Year 3. What separates a mediocre GM and a good GM in my opinion, is that a good GM would not only focus on "how much cap room they use now and what players can they get for it", but they would also look at potential possibilities. It doesn't hurt to try to figure out a few variations and permutations of what happens in years 2 and later in an Over-36 rule contract because it's perfectly legal, within the confines of the 2011 collective bargaining agreement, and just might be marginally advantageous.

If a certain road goes over a cliff, no one cares what the road looks like at the bottom of the cliff ? Say that to the many who admired the Grand Canyon or even hiked down it (just to humor you).