CBA Extension question (Chris Paul)

[Ming Kong!]

I was speaking to a friend, and he said that a player can still get his 7.5% increase if they got an extension as the the new CBA doesn't kick in for 2 years. I checked, and apparently Paul could sign a year extension (becoming a free agent in the summer of 2014). He would be entitled to a 7.5% raise for two years, then followed by 4.5% raises from there on. Now if he were to become a free agent next summer, he would only get a 4.5% raise next season. Over the course 7 years it's $7.5M, some serious money.

For Howard it's $8.17M. Shoot I'd probably sign an extension with Orlando that way I get my money, and in 2014 Hedo comes off the books and Arenas would too (had they not used the amnesty). So Orlando could probably have some cap space by then to sign another top free agent as well.

Paul looks like a guy that may have an attachment to the city of New Orleans, I could see him atleast sticking around for an extension.

Am I right about this extension, is there a 7.5% option for Paul and Howard?

Code: Select all

           Extension           Free Agent           Difference
2011-12   16.359805           16.359805   
2012-13   17.58679038   17.09599623   0.49079415
2013-14   18.90579965   17.86531606   1.040483598
2014-15   19.75656064   18.66925528   1.08730536
2015-16   20.64560587   19.50937177   1.136234101
2016-17   21.57465813   20.38729349   1.187364636
2017-18   22.54551775   21.3047217           1.240796044
2018-19   23.56006604   22.26343418   1.296631866
Total           160.9348035   153.4551937   7.479609755



[DBoys]

1 New CBA's rules will take effect immediately when signed. The old one has expired.
2 Some rules will be the same as before, some will be new.
3 A player can extend and get 7.5% raises, but not in conjunction with a trade.
4 Your idea for those players to get 7.5% raises in essence keep them where they already are. What is making them available is the existing contract ending soon, and an extension removes that issue.

[Ming Kong!]

1 New CBA's rules will take effect immediately when signed. The old one has expired.
2 Some rules will be the same as before, some will be new.
3 A player can extend and get 7.5% raises, but not in conjunction with a trade.
4 Your idea for those players to get 7.5% raises in essence keep them where they already are. What is making them available is the existing contract ending soon, and an extension removes that issue.

I believe you but do you have a source/link? Thanks.

[DBoys]

My source is any and every article detailing the particulars of the new CBA. Google is your friend. And you need to stop accepting the words of the moron who has offered you the utterly stupid assertion that the CBA won't take effect for two years. Good grief.

[answerthink]

According to the tentative deal, it appears that Chris Paul would have the following primary options (each assuming max money and length):

Extensions (assuming the mechanics for handling raises and player options will be identical in the new agreement):

1. Extend This Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377

2. Extend-and-Trade This Season
$16,359,805 | $17,779,458 | $19,112,917

3. Extend Next Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377 | $21,779,836

4. Extend-and-Trade Next Season
$16,359,805 | $17,779,458 | $19,112,917 | $19,912,993

However, unless the salary cap grew far more rapidly than expected, they would each be amended downward after the 2012-13 season as follows:

1. Extend This Season*
$16,359,805 | $17,779,458 | $18,668,431 | $20,001,890

2. Extend-and-Trade This Season
$16,359,805 | $17,779,458 | $18,668,431

3. Extend Next Season*
$16,359,805 | $17,779,458 | $18,668,431 | $20,001,890 | $21,335,350

4. Extend-and-Trade Next Season
$16,359,805 | $17,779,458 | $18,668,431 | $19,468,507


Free Agent Contracts

5. Decline Option, Sign Next Season without Bird Rights
$16,359,805 | $17,177,795** | $17,950,796 | $18,723,797 | $19,496,798

6. Decline Option, Sign Next Season with Bird Rights
$16,359,805 | $17,177,795** | $18,466,130 | $19,754,465 | $21,042,799 | $22,331,134

7. Pick up Option, Sign Following Season without Bird Rights
$16,359,805 | $17,779,458 | $18,668,431** | $19,508,510 | $20,348,590 | $21,188,669

8. Pick up Option, Sign Following Season with Bird Rights
$16,359,805 | $17,779,458 | $18,668,431** | $20,068,563 | $21,468,696 | $22,868,828 | $24,268,960


* If a team acquires Paul in a trade, then, for a period of six months following the date of the trade, the team is prohibited from giving him an extension for a longer period or higher amount than would have been permitted for an extend-and-trade.
** Unless 30% of the adjusted salary cap is higher.

The tentative deal has been made public. It's an 8-page document dated 11/26/11.

Man, I hope this is helpful. Because it was a pain in the ass to type.

[DBoys]

According to the tentative deal, it appears that Chris Paul would have the following primary options (each assuming max money and length):

Extensions (assuming the mechanics for handling raises and player options will be identical in the new agreement):

1. Extend This Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377

2. Extend-and-Trade This Season
$16,359,805 | $17,779,458 | $19,112,917

3. Extend Next Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377 | $21,779,836

4. Extend-and-Trade Next Season
$16,359,805 | $17,779,458 | $19,112,917 | $19,912,993

However, unless the salary cap grew far more rapidly than expected, they would each be amended downward after the 2012-13 season as follows:

1. Extend This Season*
$16,359,805 | $17,779,458 | $18,668,431 | $20,001,890

2. Extend-and-Trade This Season
$16,359,805 | $17,779,458 | $18,668,431

3. Extend Next Season*
$16,359,805 | $17,779,458 | $18,668,431 | $20,001,890 | $21,335,350

4. Extend-and-Trade Next Season
$16,359,805 | $17,779,458 | $18,668,431 | $19,468,507


Free Agent Contracts

5. Decline Option, Sign Next Season without Bird Rights
$16,359,805 | $17,177,795** | $17,950,796 | $18,723,797 | $19,496,798

6. Decline Option, Sign Next Season with Bird Rights
$16,359,805 | $17,177,795** | $18,466,130 | $19,754,465 | $21,042,799 | $22,331,134

7. Pick up Option, Sign Following Season without Bird Rights
$16,359,805 | $17,779,458 | $18,668,431** | $19,508,510 | $20,348,590 | $21,188,669

8. Pick up Option, Sign Following Season with Bird Rights
$16,359,805 | $17,779,458 | $18,668,431** | $20,068,563 | $21,468,696 | $22,868,828 | $24,268,960


* If a team acquires Paul in a trade, then, for a period of six months following the date of the trade, the team is prohibited from giving him an extension for a longer period or higher amount than would have been permitted for an extend-and-trade.
** Unless 30% of the adjusted salary cap is higher.

The tentative deal has been made public. It's an 8-page document dated 11/26/11.

Man, I hope this is helpful. Because it was a pain in the ass to type.

Lots of hard number crunching there. Helpful.

But we were discussing extensions, and unfortunately your data on that specific item is wrong. Your extend-and-trade raises are wrong. They are limited to 4.5%.

[DBoys]

"they would each be amended downward after the 2012-13 season ..."

Players have always been able to get their full raise allowable under the circumstance (ie 7.5% or 4.5% in the new CBA, depending on what category they are in), regardless of max salary limits. What makes you think that has changed?

[answerthink]

I believe my extend-and-trade raises are correct. Please ask specific questions if you disagree with my assumptions.

[answerthink]

See Art VII, Sec 7(a)(3) for an explanation as to why your understanding is incorrect.

[DBoys]

I believe my extend-and-trade raises are correct. Please ask specific questions if you disagree with my assumptions.

Your extend and raise numbers showed a raise of 7.5%. The new CBA (memo) explicitly says such raises are limited to 4.5%. Since you didn't outline your assumptions, but merely gave a number, I have no way of knowing how you derived your numbers, but your raises for an extend with the same team and extend-and-trade are the same, and the new rules (memo) say they aren't allowed the same raise.

[DBoys]

See Art VII, Sec 7(a)(3) for an explanation as to why your understanding is incorrect.

Please be more specific. What in that section/rule would indicate that extension raises don't follow the "greater of" principle of 30% of cap vs max allowable raise? I don't see it.

[answerthink]

Sorry, I never like to include a person’s original post in my response (because I want them to have full ability to modify their posts without having a permanent record if they so choose), so this may get a bit confusing. I will try to answer both of your last two posts.

For your first post, I still don't know which line you are referring to. I listed the lines from #1 - #8. If you tell me which one, I will explain my calculations.

For your second post, I have made reference to the section of the CBA that provides the clarification. More specifically, it states that the first year of the extended term can provide for a salary of up to 110.5% of the salary in the last year covered by the original term, but is subject to the maximum salary rules. The maximum salary rules for extensions, contained in Art VII, Sec 7, state that “for any player who has completed at least seven (7) but fewer than ten (10) Years of Service, the greater of (x) 30% of the Salary Cap in effect on the day following the last day of the Moratorium Period, (y) 105% of the Salary provided for in the final Season of the original term of the Contract, or (z) $11 million.” In the case of Chris Paul, the extension will be written according to the principles described in the first sentence above (which would presumably be modified from 110.5% to 107.5%). It will then get adjusted downward in accordance with the second sentence above. And, as I state, unless the salary cap grows far more rapidly than expected, (y) will provide the maximum amount.

[answerthink]

I believe the confusion on all your posts may lie in the fact that you are applying the annual increase rules to the first year of the extended term. In the now expired agreement, the first year of the extended term is instead subject to the maximum salary and Art VII, Sec 7(a)(3) rules, and every year thereafter subject to the annual increase rules.

Of course, this could change (but I see nothing in the tentative deal to suggest it will).

[DBoys]

For your second post, I have made reference to the section of the CBA that provides the clarification. More specifically, it states that the first year of the extended term can provide for a salary of up to 110.5% of the salary in the last year covered by the original term, but is subject to the maximum salary rules. The maximum salary rules for extensions, contained in Art VII, Sec 7, state that “for any player who has completed at least seven (7) but fewer than ten (10) Years of Service, the greater of (x) 30% of the Salary Cap in effect on the day following the last day of the Moratorium Period, (y) 105% of the Salary provided for in the final Season of the original term of the Contract, or (z) $11 million.” In the case of Chris Paul, the extension will be written according to the principles described in the first sentence above (which would presumably be modified from 110.5% to 107.5%). It will then get adjusted downward in accordance with the second sentence above. And, as I state, unless the salary cap grows far more rapidly than expected, (y) will provide the maximum amount.

"It will then get adjusted downward in accordance with the second sentence above."

This is your assertion that I disagreed with and still don't think is accurate. The numbers you gave are "y" numbers and can be adjusted UPWARD, but never "downward" ...because we are dealing with a comparison that allows "the greater of" to be the limit. In what situation could the max salaries possibly be forced to be adjusted downward from the numbers you have calculated?

[answerthink]

The highest possible numbers come from Art VII, Sec 7(a)(3). They get adjusted downward if they don’t conform to the maximum salary rules in Art II, Sec 7 (which can only be known when the salary cap is set prior to the first season of the extended term).

I am having difficulty explaining this to you. I was hoping that pointing to the various sections of the CBA for a more complete answer would help. Perhaps Larry’s FAQ will do? Question 52.

[DBoys]

According to the tentative deal, it appears that Chris Paul would have the following primary options (each assuming max money and length):

Extensions (assuming the mechanics for handling raises and player options will be identical in the new agreement):

1. Extend This Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377

2. Extend-and-Trade This Season
$16,359,805 | $17,779,458 | $19,112,917

3. Extend Next Season*
$16,359,805 | $17,779,458 | $19,112,917 | $20,446,377 | $21,779,836

4. Extend-and-Trade Next Season
$16,359,805 | $17,779,458 | $19,112,917 | $19,912,993

Let's make this simple. Please explain your math and reasoning on the above. It appears inconsistent with a year one extension limiter that is a different percentage from a max raise under Bird salary rules. If you used the last CBA, those numbers should be 5%. But I don't follow ANY circumstance (other than the quite unlikely prospect that the cap gets raised to precisely the right number) under which the respective deals could ever be written at those numbers, no matter what.

[answerthink]

Explanation for #1:
$16,359,805: This is the current season salary
$17,779,458: This is the option year, which needs to be picked up, according to Art VII, Sec 7(a)(2)(iii), because it implies a raise of 8.7% (which is greater than it could be under the new rules)
$19,112,917: This is the first year of the extended term. It will initially be set at a 7.5% increase (instead of the 10.5% in the previous CBA), as per the terms of Art VII, Sec 7(a)(3).
$20,446,377: This is a 7.5% raise from the final year of the original term of the contract.

Explanation for #2:
The only difference from #1 is that the fourth season is eliminated (as per #4, third bullet of the tentative agreement).

Explanation for #3
The only difference from #1 is that a fourth extension year is added (as per #4, third bullet of the tentative agreement).The calculation of the raise in this season is described in #1 (on the $19,112,917 line) above.

Explanation for #4
The only difference from #2 is that a third season is added to the extension signed next year (as per #4, third bullet of the tentative agreement). The calculation of the raise is 4.5% of the final year of the existing contract (as per #13 of the tentative agreement).

It is very likely that the $19,112,917 value in all of these hypothetical contracts would be adjusted downward (from a 7.5% raise to a 5.0% raise), as per the rules of salary Art II, Sec 7, after the 2012-13 season (as described in Larry’s FAQ, question 52).

Since you can't follow any circumstance as to how the contract would ever be at the levels written above, let me provide you one. If BRI increases so rapidly next season that the salary cap for 2013-14 is $100 million, then the numbers above would apply.

[DBoys]

However, here's the fly in the ointment. The new CBA (memo) has now created a distinction within extensions, in which there are differing (and lower) limits on extend-and-trade extensions. In those situations (such as 2 in your enumerated calculations), the limit is 4.5% not 7.5%.

Accordingly, the 3rd season in number 2 and 4 would be $18,579,533 (a 4.5% raise from the final pre-extension season) rather than $19,112,917 (7.5%), and the following year in 4 would be resultingly smaller too.

If the cap doesn't rise as much, then you'd still have the gap between 5% and 4.5% in those calculations under the same 105% limiter ...or more logically, the rules will also have a wider gap there, to preserve the distinction they are creating.

[answerthink]

The sentence you seem to be fixated on from the tentative agreement reads “…and max annual increases are 4.5 percent.”

As I have stated previously, you are applying the annual increase rules to the first year of the extended term. In the now expired agreement, the first year of the extended term is instead subject to the maximum salary and Art VII, Sec 7(a)(3) rules, and every year thereafter subject to the annual increase rules. There is nothing in the tentative deal that would suggest otherwise (including the phrase above). I am not sure where you are struggling.

I have now answered a wide range of your questions. I hope I have made the rules more clear. Suffice it to say that unless there are further changes to the related rules from the old agreement that are not described in the tentative deal, and subject to the qualifications I have already provided, all of the numbers from my original post are correct.

I will certainly read the new agreement when it is made available. If the rules change (and assuming I remember), I will post any revisions as necessary.

[DBoys]

I understand your obvious confusion. But where you are struggling is two-fold:

1 While you are choosing to differentiate the 1st year in an extension from the other(s), the wording in the memo regarding extend-and-trade doesn't actually do that. It merely says "annual increases," a phrase that reasonably encompasses all years of said extension.

2 The expired CBA used the "max salary" limits as a possible further limit on allowable raises. We saw a 10.5% raise possible, with that or a smaller 5% being the cap for the initial year. Therefore, when we see in a extremely concise summary document for the new CBA that extend-and-trades are going to be limited to 4.5% annual increases, it's overreaching to imagine that in the new CBA's extend-and-trades, they would be envisioning a 1st year with a LARGER raise - especially when at most there are only 2 years added in an extend-and-trade.

If they choose to differentiate year one from subsequent years in the new CBA, I'll try to remember to come back and post any revisions as necessary.