salary scales

[bgwizarfan]

I was just wondering if players are allowed to receive different scale amounts for each year.... I assume they are, but I can't find a good example of it in the NBA.

Like if a team really needed to save every penny for luxury tax purposes, could they give their rookie 80% of the scale as a rookie, and then 120% in the next 2 years followed by the maximum raise in year 4? I can't find anything that would dispute that, but I haven't found a real-life NBA example either.

Also, if a team doesn't give 120% in year 3, can they therefore not give the maximum in year 4? I.E. let's say for our player, his maximum 4th year salary is 50% greater than the 3rd year salary.

If he doesn't get the full 120% in year 3, is the maximum for year 4 just 150% of the actual 3rd year salary or could the player still get 150% of what his 3rd year salary could have been (120% of the scale). Just wondering the fine details of all that. Thanks

[grizzfan1204]

I was just wondering if players are allowed to receive different scale amounts for each year.... I assume they are, but I can't find a good example of it in the NBA.

Like if a team really needed to save every penny for luxury tax purposes, could they give their rookie 80% of the scale as a rookie, and then 120% in the next 2 years followed by the maximum raise in year 4? I can't find anything that would dispute that, but I haven't found a real-life NBA example either.

Based on the language on Larry's FAQ (question 41), I would say a player can, in fact, receive 120% of the rookie scale amount in year 1, and as little as 80% in year 2:

"A team may sign a player for as little as 80% or as much as 120% of the scale salary figure. For example, the 1st year salary for the #1 overall pick drafted in 2005 can be as little as $2,893,680 or as much as $4,340,520. In most cases, the contract that is actually signed is for the maximum 120% figure. Teams are able to provide this amount using the Rookie exception, even if they are over the salary cap. Annual raises are limited to 8%, and also can't exceed 120% of the scale amount for that season."

-http://members.cox.net/lmcoon/salarycap.htm#41

[FGump]

"Annual raises are limited to 8%"

That would seem to preclude a raise from 80% to 120%, and the similar 8% limit on decreases would seem to eliminate the opposite option as well.

[bgwizarfan]

^ i've looked for that annual raises clause in the CBA and i don't see it, unless theres something that says raises are governed by etc...

Plus, what happens if 8% is less than 120% of the scale for the next year and the player is making 120% in the previous year? I've always wondered where Larry got the 8% raise for this portion, but I can't find it anywhere in Article 8, which is where it would be, i assume.

[FGump]

1. Raise limits are specified in VII - 5 - (c)

2. 8% is slightly more than the difference from year to year in the specified scale numbers, so your second question is moot

[bgwizarfan]

I know where #1 is, but usually it'll say "raises are governed by Article VII, Section 5(C)" or whatever in that passage if it follows those raises. And if we're getting technical, the raises from year 3 to 4 are much more than that (since they're specificallly laid out in the CBA). I guess I'm just questioning if rookie scale follows that, especially since it doesn't say refer back to the article you named above.

[FGump]

1. Raise limits are specified in VII - 5 - (c)

Read it. There are blanket rules ("all contracts"), and then exceptions or variations are noted where they apply.

2. The 4th year option of a player's rookie contract doesn't need rules to limit the amount of a raise or decrease, because per the CBA rule it must be for a precisely specified amount. You take the 3rd year salary, whatever it is, and multiply it by x. The exact amount of x is specified, and varies from one salary slot to the next.

3. The first 3 years of a rookie contract do NOT have a precisely specified number, so raise (and decrease) limits would apply from year to year to govern how the overall contract is apportioned between the various years and impacts the cap each year. Keep in mind that the limits on raises/decreases in this and other cases are to keep from gerrymandering (to an extreme) a team's cap hit from season to season on a particular contract that totals $X. They do allow SOME variation from X/3 (if it's a 3-year deal), but don't want to allow too much.

[Dunkenstein]

I spoke with a friend of mine who is a player's agent. He said all salaries related to players who fall under the rookie scale are covered by Art VIII, Sect 1 (c) (1) and that VII - 5 (c) has no relevance to rookie scale contracts.
Raises are based on percentage of rookie scale, not on percentage of the previous year's salary.

His knowledge of the history of Rookie Scale Contracts is that whatever percentage of the rookie scale (as found in Exhibit B) is agreed upon by the player and his team for the first year of the contract is the same percentage of scale used for years two and three.

However, he says the language of VIII - 1 - (C) (1) is open to interpretation and if a team and player agree, for example, to 80% of scale in the first year and 120% in subsequent years, they could submit such a contract to the league for their approval or rejection. To his knowledge this has never before been done.

[bgwizarfan]

great, thanks Dunk....and FGump, thanks for the 4th year salary. I never realized it was set in stone. I figured that # was the maximum raise they could give him in year 4, but I guess it makes sense that it's set and stone.

I guess also teams could technically have 80% be guaranteed or anything less than 120% and then have some unlikely bonuses attatched to each year too which total 120% of the salary scale (though the Unlikely Bonuses probably couldnt be more than 25% of total salary, since I assume that applies to Rookie Scale Contracts too). But I guess that also would be very rare. Anyway thanks again

[FGump]

Thanks Dunk.

It sounds to me like the agents aren't put to any test to figure it out, because the teams are routinely offering the max 120%. He says it's the same percentage each year, but admits it could be submitted otherwise, - he just doesn't know how it works. And as he admitted, from his point of view it would be a "submit and see what they say" deal and "it's never been tested to my knowledge" situation.

Note also that when he says it's just submitted as a flat x% of the rookie scale, to cover the entire years, that in and of itself still falls within the 8% general rule.

But why would he bother to try to figure it out? What agent (when rookie scale deals at 120-120-120 are fairly routine) is going to want to probe for ways for his client to get less?

However, I must add, I think if push came to shove with a team wanting to do it differently, the limits of VII - 5 (c) apply. Unless he has some sort of memo from the league saying "just ignore that on rookie deals" its wording seems inclusive.

VII - 5 - (c) (1) says
The following rules apply to all Player Contracts other than Contracts between Qualifying Veteran Free Agents or Early Qualifying Veteran Free Agents and their Prior Team:

Unless you can postulate that rookie contracts are not player contracts, then the wording (written by lawyers, keep in mind) seems to apply. All means all, doesn't it?

[Dunkenstein]

FGump,
Since we already know that the fourth year rookie salary is an increase greater than 8%, and therefore is an exception to VII - 5 (c) (1), why can't there be an exception allowed for any other years of a rookie contract?

[Three34]

To his knowledge this has never before been done.

The only instance I know of someone taking the 80% is Ian Mahinmi, who signed for such in the first year this summer to help the Spurs dodge the tax. Maybe he got 100 or 120% in the other years? Theorising.

[FGump]

FGump,
Since we already know that the fourth year rookie salary is an increase greater than 8%, and therefore is an exception to VII - 5 (c) (1), why can't there be an exception allowed for any other years of a rookie contract?

The difference in year 4 is that it is a specified amount, not subject to negotiation. However, years 2 and 3 are negotiated and variable. In addition, don't lose sight of what the 8% limitation is about. It's to keep teams, on an entirely guaranteed deal that pays out over multiple years, from sliding an inordinate amount of the cap hit into a specified season for cap avoidance purposes.

note: However, if years 2 and 3 are NOT negotiable, but rather are merely mandated to be the same percentage of scale as year 1 is, then that would also negate the need for any sort of raise-restriction clause. But it must be noted that in that situation, the scale in and of itself has limited the raise to less than 8%.


SHAM - I'd guess the Spurs were trying to keep Mahinmi in Europe for another year or more and gave him the obligatory offer merely to keep his rights, but he accepted it anyhow. In that event, the 80% would not have been about tax avoidance, but rather because they hoped he wouldn't sign at all. If that's accurate, we'll eventually see the ensuing years at the minimum 80% as well.

[Three34]

It may not have been deliberately down to tax avoidance, but it bloody well worked out handily that way, for him taking the 80% is going to keep them under the tax this year unless they do something silly. So either way they're probably pretty happy about it.

[FGump]

It may not have been deliberately down to tax avoidance, but it bloody well worked out handily that way, for him taking the 80% is going to keep them under the tax this year unless they do something silly. So either way they're probably pretty happy about it.

True, but ....

...assuming your numbers are accurate, if they had given him 120%, by my calculations they still would not be taxpayers - they'd still be almost $100,000 under the line.

Which hints that the reason for the 80% was something quite different. It was because they didn't want him to take the offer, as I see it, rather than because they had a player-team tax avoiding scheme cooked up.

(And it doesn't have anything to do with future tax either, because they slide all the way under the CAP to start the 2008 summer. Not enough room to sign anyone, but clearly no tax concerns.)

[Three34]

rue, but ....

...assuming your numbers are accurate, if they had given him 120%, by my calculations they still would not be taxpayers - they'd still be almost $100,000 under the line.

Maybe so, couldn't be arsed to do the math. But either way, they now have wiggle room. Wiggle room that they've had fun with by signing like 48 diffferent people during the season so far. And all it cost them was Scola and Udrih.

Hmmm. Sounds odd when you put it like that.

(And it doesn't have anything to do with future tax either, because they slide all the way under the CAP to start the 2008 summer. Not enough room to sign anyone, but clearly no tax concerns.)

Exactly. That's why I'm thinking they may have agreed with Mahinmi to take one discount year only and then bump it up, because they can afford to next year.

[bgwizarfan]

wow sham you're the man.... didn't even know about Mahinmi. From what I have, you're right about teh 80% and this issue is now put to bed. I have Mahinmi making 100% of the salary scale for the 2nd season ($841,000, which is a greater than 8% raise from year 1) and then about 117.5% in the 3rd year, and then the obligatory 80.5% raise in year 4 for the 28th pick this year (since it's when he came over).

Looks like it's seperate from the provisions of usual contracts. Larry should be able to confirm this for sure, though.

[Three34]

Gump's theory is probably right in that they gave him the minimum offer as merely a token gesture, and Mahinmi kinda toyed with those plans by taking the lowball offer against their advice. But someone'll have to look that up for you for proof, cos if it's possible to have an example in which a playe rgets 80% one year and 120% the next, then this Mahinmi situaiton would be a perfect situation for such a thing.

[bgwizarfan]

^ i mean i'm not sure why he took it (and honestly I dont care haha), but the fact that hes making 80% this year, and 100% of next year's proves the whole issue from the start - that you can have greater than 8% raises in rookie scale contracts from year 1 to year 2 and from year 2 to year 3. Which makes me believe that you can be anywhere from 80 to 120% in any of those years.

Since the 4th year is a set % raise over the 3rd year, it's obviously better for Mahinmi to make closer to 120% in the 3rd year.

It also could be possible that he has some unlikely bonuses too, though it seems pretty unlikely (pun not intended). But if i was in his place, I'd at least make sure to get some incentive compensation in there, as opposd to just agreeing to the 80%

[FGump]

the fact that hes making 80% this year, and 100% of next year's proves the whole issue from the start ...

And you know this to be a "fact" how????????

If the above sequence (80% of scale in yr 1, 100% of scale in yr 2) is in that deal, then yes that's more than an 8% raise. But ummmm I'm thinking you might have jumped to the assumption of a precedent without knowing the numbers for each year.

Doncha think you need to back up a step, and actually find out the contract for years 2 and 3, before you start telling us you have "proof" of a raise >8%?