Not a CBA expert, rather simple question

[ardee]

All the contracts we see tend to have ramping salaries year to year. Is this a provision in the CBA, are contracts simply not allowed to be signed to a flat amount (say 10 million for 6 years for a 60 million contract), or is this just tradition?

If so, what is the exact provision?

[Smitty731]

All the contracts we see tend to have ramping salaries year to year. Is this a provision in the CBA, are contracts simply not allowed to be signed to a flat amount (say 10 million for 6 years for a 60 million contract), or is this just tradition?

If so, what is the exact provision?

Contracts can go up or down from year to year by 5% or 8%* (depending on CM eligibility) or any amount in between, including being flat.

*Not compounding

[DBoys]

Smitty has it right.

[ardee]

Smitty has it right, but I would explain it a different way.

SHORT VERSION
Each year must only vary (up or down) from the prior year within a percentage of the 1st year salary, and that limit is generally 5%, except for Bird/early Bird exception contracts which have an 8% limit.

LONGER EXPLANATION
So if the 1st year salary of a contract is $10,000,000 ....
1 With a regular (ie 5% limit) contract, the limit on that size of deal would be that each year has to be within $500,000 of the prior year, up or down, as that amount would be 5% of the initial $10M salary. But the change from year to year doesn't have to always be the same.
....So, for example, you could have a deal that was $10M, $10.5M, $11M, $11.5M. (With the 5% limit, this would be the largest deal possible, using a $10M starting salary.)
....Or maybe one that was $10M, $9.5M, $9M, $8.5M
....Or maybe one that was $10M, $10M, $10M, $10M
....Or maybe one that was $10M, $10.2M, $9.8M, $9.8M
....All the years can be the same, or any year can go up or down by up to $500,000, and it doesn't have to be the same choice (or same direction, ie up or down) each ensuing year.
2 With a Bird (ie 8% limit) contract, the limit on that size of deal would be that each year has to be within $800,000 of the prior year, up or down.
3 Yes, most contracts are written with a max raise. That is because that's the way to offer the largest deal, using the smallest amount of cap room in the initial year. And when adding contracts to the team's cap, it's the 1st year salary that has to be squeezed into cap room limits (or into an exception to the cap limit).

Could you give me a source for the 5% variation figure? I am writing a paper on this and need to cite.

[DBoys]

You're going to use our work here for your paper? And then you want us to also supply the sources for that work, so you can submit it with sources? Sheesh.

[Smitty731]

Smitty has it right, but I would explain it a different way.

SHORT VERSION
Each year must only vary (up or down) from the prior year within a percentage of the 1st year salary, and that limit is generally 5%, except for Bird/early Bird exception contracts which have an 8% limit.

LONGER EXPLANATION
So if the 1st year salary of a contract is $10,000,000 ....
1 With a regular (ie 5% limit) contract, the limit on that size of deal would be that each year has to be within $500,000 of the prior year, up or down, as that amount would be 5% of the initial $10M salary. But the change from year to year doesn't have to always be the same.
....So, for example, you could have a deal that was $10M, $10.5M, $11M, $11.5M. (With the 5% limit, this would be the largest deal possible, using a $10M starting salary.)
....Or maybe one that was $10M, $9.5M, $9M, $8.5M
....Or maybe one that was $10M, $10M, $10M, $10M
....Or maybe one that was $10M, $10.2M, $9.8M, $9.8M
....All the years can be the same, or any year can go up or down by up to $500,000, and it doesn't have to be the same choice (or same direction, ie up or down) each ensuing year.
2 With a Bird (ie 8% limit) contract, the limit on that size of deal would be that each year has to be within $800,000 of the prior year, up or down.
3 Yes, most contracts are written with a max raise. That is because that's the way to offer the largest deal, using the smallest amount of cap room in the initial year. And when adding contracts to the team's cap, it's the 1st year salary that has to be squeezed into cap room limits (or into an exception to the cap limit).

Could you give me a source for the 5% variation figure? I am writing a paper on this and need to cite.

Yeah I wouldn't use anything anyone tells you on a message board as gospel. I happen to know DBoys knows this stuff cold and is correct, but I only know that because my own study of the CBA/Cap.

If you need to cite the CBA, you can find it yourself online, as it is made publicly available through the NBPA.