Front Loaded Contracts ?

[LLcoleJ]

So if player A is an RFA and another team offers him an offer sheet that is front loaded - what is the most the first year can be and then subsequent years? Do front loaded deals have provisions like no ETO's or Player options? Are front loaded deals connected to a "signing bonus" that is spread over the course of the deal on top of his base?

Player A is a lotto pick would be coming off his rookie deal and is expected to be a Max player.



Thanks

Yes, player A is Bynum.

[So Cal Blazer Fan]

The term 'front loaded' is used to mean different things.

It is sometimes used to describe a situation where the player's contract declines each year instead of increases. I don't think you mean this.

It is also sometimes used to describe a situation where a player is given a signing bonus (in the case of a RFA such as Bynum, up to $17.5% of the total base contract amount). And yes, in these situations, the bonus is pro-rated over the length of the contract for purposes of how much the contract counts against the cap.

It's impossible to know exactly what the maximum offer Bynum could receive will be since the maximum of his first year's salary is determined by formula based on calculations that won't take place until July of 2009. But we can make a good approximate guess.

Let's assume that Bynum is a RFA in the summer of 2009 and that the maximum he could make in 2009-10 is $14.5 million. The most that Bynum could be offered as an offer sheet (by a team other than the Lakers) would be:

2009-10: $14,500,000
2010-11: $15,660,000
2011-12: $16,820,000
2012-13: $17,980,000
2013-14: $19,140,000

For a total of $84,100,000 for 5 years.

However, if the offer sheet included a 17.5% signing bonus (the maximum amount that he could receive), I believe that the largest offer sheet possible would count against the cap thusly:

2009-10: $14,500,000
2010-11: $15,464,256
2011-12: $16,428,512
2012-13: $17,392,768
2013-14: $18,357,024

For a total of $82,142,558 for 5 years. His signing bonus would be $12,233,998 which would count nearly $2,446,800 per year. So in the first year of the new contract, including the signing bonus, Bynum would actually pocket $24,287,198.

[bgwizarfan]

So Cal, that last part's wrong...check out Larry's FAQ for how the calculation goes... it's still the same maximum amount he would have made without a signing bonus, the difference is that he gets the amended base plus the full signing bonus in the 1st year

so the cap hit would still be:
2009-10: $14,500,000
2010-11: $15,660,000
2011-12: $16,820,000
2012-13: $17,980,000
2013-14: $19,140,000

with or without a signing bonus....the difference is that he'd simply get paid more in the 1st year

[dockingsched]

yes, a signing bonus simply changes the amount of money a player would receive the 1st yr of the their contract. it does not reduce the actual amount of base salary that is counted in the offer sheet, otherwise teams would sign players to signing bonuses in every single contract since it 1. reduces the amount of salary that counts against the cap, 2. salary is guaranteed anyway. the only negative would be when a team trades away a player that it has paid a huge bonus to already.

[So Cal Blazer Fan]

So Cal, that last part's wrong...check out Larry's FAQ for how the calculation goes... it's still the same maximum amount he would have made without a signing bonus, the difference is that he gets the amended base plus the full signing bonus in the 1st year

so the cap hit would still be:
2009-10: $14,500,000
2010-11: $15,660,000
2011-12: $16,820,000
2012-13: $17,980,000
2013-14: $19,140,000

with or without a signing bonus....the difference is that he'd simply get paid more in the 1st year

Doh!!!!

For some strange reason, I went back in time and used the rules of signing bonuses from the previous CBA. Old habits die hard apparently....

Thanks for the catch and the correction!