Kobe's extension ?

[daddyfivestar]

Reported 3 yr. / 90 mil but with the max raise rules and his salary next year at 24.8 the number seems to be closer to low 80s. Anyone have the details? Thx in adv - d5s

[FGump]

1 If he got a max deal, my calculations say

26,046,562
28,781,451
31,516,338

TOT 86,344,351

2 Under current CBA rules, it would take a cap of more than $79M in the summer of 2011 for a max deal for him to be calculated with higher max numbers.

[Three34]

I have it the same way. The $24.8 figure you're seeing isn't part of the extension; that's the last year of his current deal. The extension begins after that, whereby the $26 million figure is 105% of the last year of the current deal (his maximum)(, and then with the 10.5% raises on top of that (also the maximum).

[MeMe]

So is it true that he runs the risk of his contract being adjusted severely downward due to the new CBA? The prevailing thought was that would be why he'd opt out and just do a new contract, because then that contract wouldn't be affected by the new CBA.

So did that turn out to not be true? Is his extension not gonna be affected by the CBA? Otherwise why would he sign it now, except for if he was concerned about running the risk of getting injured. But he's already waited this long, so I don't see that being the case.

[Dunkenstein]

Since there is no new CBA, nobody knows what agreement will be reached regarding limitations on extensions or max contracts.

My feeling is that if the parties agree to restrict extensions in the new CBA, those restrictions won't effect extensions that were previously signed. I also don't believe that if they lower the max contract rules, they won't mess with previously-signed contracts.

[answerthink]

Minor adjustment to the numbers provided above...

Maximum raises in extended contracts are based upon 10.5% of the salary in the final year of the existing contract, as opposed 10.5% of the salary in the first year of the extension (Art VII, Sec 5(c)(3)(i)). Bryant would qualify for raises of up to $2,604,656 in 2012/13 and 2013/14, as opposed to $2,734,889.

[Three34]

Oh I remember now. We had that crop up with KG once.

[Mezotarkus]

Since there is no new CBA, nobody knows what agreement will be reached regarding limitations on extensions or max contracts.

My feeling is that if the parties agree to restrict extensions in the new CBA, those restrictions won't effect extensions that were previously signed. I also don't believe that if they lower the max contract rules, they won't mess with previously-signed contracts.

This dynamic may make the upcoming offseason interesting. Teams may be hesitant to commit significant long-term money to FAs outside of the "Big Three" without knowing how those deals will compare to what comparable talent would demand under the new rules and how those old CBA deals will impact their ability to offer deals under the new CBA.

[Mezotarkus]

Apparently, the extension is worth $83.5m.

http://basketball.realgm.com/src_wireta ... rth_$835m/

Kobe Bryant's extension with the Lakers is worth $83.5 million over three years, according to an NBA memo.

The dollar amounts are $25.24 million in 11-12, $27.84 million in 12-13 and $30.45 million in 13-14.

Bryant's deal also includes a no-trade clause.

RealGM Note: Bryant is ranked 21st in season FIC and has a Reina Value of -31%, with his lower ranking at least partially attributed to missing a few games due to injury. He 'deserves' to earn Carmelo Anthony's $15.779 million.

[Dunkenstein]

The actual numbers are:
$25,244,493
$27,849,149
$30,453,805

And what in hell is a "Reina Value"? Sounds even stupider than Hollinger's PER.

[casey]

It is even stupider than Hollinger's PER. Much stupider.

[FGump]

The actual numbers are:
$25,244,493
$27,849,149
$30,453,805

And what in hell is a "Reina Value"? Sounds even stupider than Hollinger's PER.

So these indicate the same annual raises as the max we had earlier figured (2,604,656) ...which means the prior salary we were working from was accurate (24,806,250 in 2010-11).

So, any guess on how they settled on these as the annual salary numbers? It's not a max deal in total. It's an odd number raise from the 24,806,250 in 2010-11, as well as an odd percentage raise. Maybe there was a max upfront signing bonus? (If so, perhaps the deal was max front-loaded for tax purposes) I don't have the patience to try to figure out the rationale for the numbers on this deal, but maybe someone else can.

[Dunkenstein]

I asked an NBA executive why he thought the first year of Kobe's extension was less than the 105% raise he could have gotten. Here is his reply:

Veteran Extensions cannot exceed 5 years counting both the new extended term plus any current/future years of the pre-extended term. So the maximum extension term that Kobe could sign was 3 years as he also had 2009-10 remaining and the 2010-11 PO had to be exercised simultaneously for any extension to be signed.

I'm guessing that Kobe's agent and the Lakers were trying to come up with a comparable in their contract negotiations. The extension term could be 3 years but they likely included the PO year in their comparable as Kobe could have chosen not to exercise the PO and become a FA. Therefore, I'm guessing that the comparable they used was a 4 year contract in their negotiations.

If he had exercised his PO and became a FA in July, and then if he signed a 4 year deal with any team other than the Lakers, Kobe could get…

2010-11: $24,186,094 (105% of his 2009-10 salary)
2011-12: $26,120,982 (8% raise from 2010-11)
2012-13: $28,055,870 (8% raise from 2010-11)
2013-14: $29,990,758 (8% raise from 2010-11)

Total: $108,353,704.

That number is very close to the $108,353,697 that he got with the PO and the actual 3 year extension he signed combined.

So that leads me to believe (just a guess), that Kobe would not sign for less than he could have gotten if he became a FA in July and signed with another team. And the Lakers, seeing how large the extension was going to be, probably did not want to negotiate against themselves in offering the
max that they could in the extension.

Again, it's all pure speculation, but that's what I came up with.

[FGump]

I asked an NBA executive why he thought the first year of Kobe's extension was less than the 105% raise he could have gotten. Here is his reply:

Veteran Extensions cannot exceed 5 years counting both the new extended term plus any current/future years of the pre-extended term. So the maximum extension term that Kobe could sign was 3 years as he also had 2009-10 remaining and the 2010-11 PO had to be exercised simultaneously for any extension to be signed.

I'm guessing that Kobe's agent and the Lakers were trying to come up with a comparable in their contract negotiations. The extension term could be 3 years but they likely included the PO year in their comparable as Kobe could have chosen not to exercise the PO and become a FA. Therefore, I'm guessing that the comparable they used was a 4 year contract in their negotiations.

If he had exercised his PO and became a FA in July, and then if he signed a 4 year deal with any team other than the Lakers, Kobe could get…

2010-11: $24,186,094 (105% of his 2009-10 salary)
2011-12: $26,120,982 (8% raise from 2010-11)
2012-13: $28,055,870 (8% raise from 2010-11)
2013-14: $29,990,758 (8% raise from 2010-11)

Total: $108,353,704.

That number is very close to the $108,353,697 that he got with the PO and the actual 3 year extension he signed combined.

So that leads me to believe (just a guess), that Kobe would not sign for less than he could have gotten if he became a FA in July and signed with another team. And the Lakers, seeing how large the extension was going to be, probably did not want to negotiate against themselves in offering the
max that they could in the extension.

Again, it's all pure speculation, but that's what I came up with.

That makes sense on the size of the numbers. Those totals look too close to be coincidental. But I'm still curious if a bonus was part of the picture - what amount could he have gotten if he received a max signing bonus?

On the LENGTH of the deal, they've over-thought that one. Usually Kobe would have waited until after July 1 to get 5-6 years, with another year or two in excess of $30M per added onto the total commitment. But here, regardless of the timing, Kobe was going to be limited to 4 years in total (either a brand new 4 year deal from someone in July, or 2010-11 PO plus a 3-yr extension) because of over-36 rules. Without that limit, this deal gets done after July 1 and is close to or more than $140M altogether.

[Dunkenstein]

But I'm still curious if a bonus was part of the picture - what amount could he have gotten if he received a max signing bonus?

Why would you think there would be a signing bonus involved? The numbers work quite well without one. Obviously, Pelinka and Kupchak devised an extension that was equal to what Kobe could get if he opted out and signed a free agent contract elsewhere. Adding a bonus that would increase Kobe's compensation would run counter to that objective.

[FGump]

But I'm still curious if a bonus was part of the picture - what amount could he have gotten if he received a max signing bonus?

Why would you think there would be a signing bonus involved? The numbers work quite well without one. Obviously, Pelinka and Kupchak devised an extension that was equal to what Kobe could get if he opted out and signed a free agent contract elsewhere. Adding a bonus that would increase Kobe's compensation would run counter to that objective.

You don't understand my line of thought. When a bonus is paid up front, it actually REDUCES the amount of total dollars a player can get in that deal because of the shifting of cap dollars. So originally I wondered if that might account for why Kobe ended up with less dollars.

At this point, for comparative purposes (as well as for curiosity) I'm still wondering what the cap numbers on his deal could have been if it had a max bonus upfront followed by max salaries. And couldn't his deal have actually included a sizable upfront bonus, at the numbers given?

[Dunkenstein]

If he did get a signing bonus, then as I understand the rules, his minimum base salary for the first year of the extension would be 10.5% less than his salary 2010-11 salary of $24,806,250. That would put it at $22,201,994, a reduction of $2,604,656. The one third of his bonus allocated to the first year would be $25,244,493 - $22,201,994 = $3,042,499. This would make his total signing bonus $9,127,497.

So the extension would break out as follows in terms of base salary, portion of signing bonus, total cap hit.

$22,201,994 $3,042,499 $25,244,493
$24,806,650 $3,042,499 $27,849,149
$27,411,306 $3,042,499 $30,453,805

I'm not saying that there was a signing bonus, but I think that's how you would calculate a maximum signing bonus.

[answerthink]

FGump,

I believe I understand the point you are making. Kobe can only make $26,046,563, or 105% of the previous year, in total compensation in the first year of his new contract. Therefore, the higher the bonus that gets allocated to the first year, the lower the base compensation. And since max annual raises are based upon a 10.5% increase of the first year base compensation, the lower the base compensation in the first year, the lower the base compensation in each subsequent year… and, by extension, the lower the total contract value.

The important thing to keep in mind, however, is that Kobe signed an extension (as opposed to a new contract). Maximum raises in extended contracts are based upon 10.5% of the base salary in the final year of the existing contract, as opposed 10.5% of the salary in the first year of the extension. Bryant would therefore qualify for raises in base salary of up to $2,604,656 regardless of how big the bonus is. Therefore, the bonus does not reduce the total dollars Kobe can get in a max deal. Does that make sense?

Bryant would have qualified for the same max extension we discussed earlier ($85,953,656 total value), with a signing bonus of $17,190,731. The salary cap hit would have broken out as follows (assuming all years were fully guaranteed):

Year / Base Salary / Signing Bonus / Total
2011-12 / $20,316,319 / $5,730,244 / $26,046,563
2012-13 / $22,920,975 / $5,730,244 / $28,651,219
2013-14 / $25,525,631 / $5,730,244 / $31,255,875

This would seem to satisfy all league rules:
1. Total 2011/12 compensation of 105% of previous season salary (Art II, Sec 7(c)(iii))
2. Signing bonus is exactly 20% of the total value of the extended term (Art II, Sec 11(a)(i))
3. Raises of 10.5% of base salary in the final year of existing contract (Art VII, Sec 5(c)(3)(i))

[Dunkenstein]

answerthink,

You have calculated the maximum bonus Kobe could have received if he got the maximum salary possible. My calculations are based on the last sentence of FGump's last post: "And couldn't his deal have actually included a sizable upfront bonus, at the numbers given?" In other words, at the actual cap numbers reported for his extension.

[answerthink]

oops. my bad if that was the case...

can i ask one other question if you don't mind? why do we feel that the first year of an extension can include a max decline of 10.5% less than the previous season salary? didn't steve nash sign an extension that called for a bigger decline in the first year of his extension?