Stretch provision

[JAR69]

Is it correct that the "stretch" provision in the new CBA for extending the cap hit for waived players across twice the number of remaining seasons plus one only applies to contracts signed under the new CBA?

[dockingsched]

correct, only contracts signed under the new CBA.

[Wizenheimer]

adding another question:

NJ signed Shawne Williams to a contract under the new CBA (12/15/2011). Before the deadline, Williams was traded to Portland and is currently on their roster

Can the Blazers use the stretch provision on Williams?

[Dunkenstein]

adding another question:

NJ signed Shawne Williams to a contract under the new CBA (12/15/2011). Before the deadline, Williams was traded to Portland and is currently on their roster

Can the Blazers use the stretch provision on Williams?

I believe they can.

[HotrodBeaubois]

Just found this anyone know about this?

Home > Sports > Mavericks Blog Comments 0 | Recommend 0Clause in Brendan Haywood's contract could make him 'sweetener' in trade talks
ByEddie Sefko / Reporter
esefko@dallasnews.com | Bio

11:39 PM on Fri., Jun. 8, 2012 | Permalink

The Mavericks have big decisions to make before the NBA draft June 28, and free agency begins July 1. But no decision may be bigger than what to do with center Brendan Haywood.

It's been widely speculated that the Mavericks will use the one-time amnesty provision to remove Haywood from the salary cap. But a rare clause in Haywood's contract could make that move unnecessary.

Haywood has what one NBA executive called "the best spread provision in the NBA'' in his contract. In layman's terms, any team that waives Haywood can spread out the payments for the remainder of his contract until 2026, according to an NBA source.

That means the team that owns his rights and waives him would be responsible for no more than $2 million per year over the next 14 years.

That clause in the deal is a huge incentive when it comes to including Haywood as a possible sweetener in trade talks that are going fast and furious as teams gear up for the frenzy that will begin as soon as the NBA finals end. Other teams see that as a very appealing contract.

On paper, Haywood's contract would appear to be an albatross. He's guaranteed money over the next three seasons, escalating from $8.349 million in 2012-13 to $9.073 million the following season and $9.798 million in 2014-15. His final season, at $10.522 million, is not guaranteed.

But the fact that the $27.22 million that is guaranteed can be spread out over more than a decade, if a team so desires, is a huge advantage for a team looking for salary-cap protection if they also are looking for a functional center.

Haywood averaged 5.2 points and six rebounds in 21.2 minutes per game this season.

What the spread provision in his contract allows is for the Mavericks possibly to use Haywood and other assets to facilitate sign-and-trades for free agents, which wouldn't further eat into their money under the salary cap.


More From Dallasnews.com

http://mavsblog.dallasnews.com/archives ... -coul.html

[Nanogeek]

Can an existing contract be amended to add a stretch provision with a generous implicit financing rate?

[Scoot McGroot]

His stretch provision only comes into play if a team waives him. Thus, Haywood is either a $2 million hit against the cap every year for the next 14 years (not a good thing), or is a center that is owed $27 million over the next 3 years. Neither is extremely attractive.

[Three34]

Stretch provisions ain't that rare. Even Randy Foye has one. Moreover, revising a payment schedule doesn't affect the cap hit.

[Nanogeek]

Stretch provisions ain't that rare. Even Randy Foye has one. Moreover, revising a payment schedule doesn't affect the cap hit.

A stretch provision apparently revises a payment schedule in a manner that impacts the cap hit (e.g., Haywood). Why can't a contract be amended to add a stretch provision to have a similar effect in the case of the player being waived in the future?

[HartfordWhalers]

Stretch provisions ain't that rare. Even Randy Foye has one. Moreover, revising a payment schedule doesn't affect the cap hit.

A stretch provision apparently revises a payment schedule in a manner that impacts the cap hit (e.g., Haywood). Why can't a contract be amended to add a stretch provision to have a similar effect in the case of the player being waived in the future?

But Haywood's stretch provision doesn't impact the cap hit.

http://www.cbafaq.com/salarycap.htm#Q64

In all other cases (i.e., when the contract or extension was not signed under the current CBA, or when the team elects not to spread-out the cap hit per the Stretch provision), the player's remaining guaranteed salary is included in team salary in the remaining years of the contract, ignoring any revised payment schedule.

[Nanogeek]

The Dallas Morning News story, right or wrong, seems to imply the stretch provision does impact the salary cap hit.

The Mavericks have big decisions to make before the NBA draft June 28, and free agency begins July 1. But no decision may be bigger than what to do with center Brendan Haywood.

It's been widely speculated that the Mavericks will use the one-time amnesty provision to remove Haywood from the salary cap. But a rare clause in Haywood's contract could make that move unnecessary.

Haywood has what one NBA executive called "the best spread provision in the NBA'' in his contract. In layman's terms, any team that waives Haywood can spread out the payments for the remainder of his contract until 2026, according to an NBA source.

That means the team that owns his rights and waives him would be responsible for no more than $2 million per year over the next 14 years.

That clause in the deal is a huge incentive when it comes to including Haywood as a possible sweetener in trade talks that are going fast and furious as teams gear up for the frenzy that will begin as soon as the NBA finals end. Other teams see that as a very appealing contract.

On paper, Haywood's contract would appear to be an albatross. He's guaranteed money over the next three seasons, escalating from $8.349 million in 2012-13 to $9.073 million the following season and $9.798 million in 2014-15. His final season, at $10.522 million, is not guaranteed.

But the fact that the $27.22 million that is guaranteed can be spread out over more than a decade, if a team so desires, is a huge advantage for a team looking for salary-cap protection if they also are looking for a functional center.

Haywood averaged 5.2 points and six rebounds in 21.2 minutes per game this season.

What the spread provision in his contract allows is for the Mavericks possibly to use Haywood and other assets to facilitate sign-and-trades for free agents, which wouldn't further eat into their money under the salary cap.

[DBoys]

The Dallas Morning News story, right or wrong, seems to imply the stretch provision does impact the salary cap hit.

Any such implication would definitely be wrong. Shortly after this DMN story was published, DallasBasketball.com reported, including direct confirmation from Cuban, that Haywood's exaggerated stretch provision alters cash flow but not cap hit. http://mavericks.scout.com/2/1193490.html

[Three34]

The Dallas Morning News story, right or wrong, seems to imply the stretch provision does impact the salary cap hit.

Right, but Dudey McDuderton who wrote the story was clearly being fed it by an executive. And this would not be the first time that a reporter with bare bones knowledge of cap stuff was fed a story about such matters by an executive with a more in-depth knowledge, but didn't quite interpret it correctly. It happens.

[Wizenheimer]

I found it pretty entertaining how the report managed to make it seem like the stretch component of Haywood's contract suddenly made him a valuable trade commodity.

an obligation of 2 million a year for 14 years?...with the associated cap-hit?...yeah, that's SO much better then his contract

[HartfordWhalers]

I found it pretty entertaining how the report managed to make it seem like the stretch component of Haywood's contract suddenly made him a valuable trade commodity.

an obligation of 2 million a year for 14 years?...with the associated cap-hit?...yeah, that's SO much better then his contract

Whats interesting to me about it is, how it reflects on the massive extent of deferred compensation cited in the (failed) minority shareholder suit against Cuban. All of these deferred obligations will need to be paid at some point.

[Wizenheimer]

I found it pretty entertaining how the report managed to make it seem like the stretch component of Haywood's contract suddenly made him a valuable trade commodity.

an obligation of 2 million a year for 14 years?...with the associated cap-hit?...yeah, that's SO much better then his contract

Whats interesting to me about it is, how it reflects on the massive extent of deferred compensation cited in the (failed) minority shareholder suit against Cuban. All of these deferred obligations will need to be paid at some point.

you mean that Cuban bought the Mavs for 280 million 12 years ago but has already accumulated 300 million in deferred compensation on top of 270 million in debt?

if that lawsuit had numbers anywhere close to the reality, what is the real value of the Mavs?

and my guess is that a lot of teams have major levels of debt and deferred compensation. Probably not Cuban-level, but still scary

[HartfordWhalers]

The debt I agree with. The deferred compensation especially to that extent I think is unique. Both in his usage of deferred compensation (which definitely isn't the norm), and in his payroll, which has always been on the high side.

[DBoys]

I found it pretty entertaining how the report managed to make it seem like the stretch component of Haywood's contract suddenly made him a valuable trade commodity.

an obligation of 2 million a year for 14 years?...with the associated cap-hit?...yeah, that's SO much better then his contract

Whats interesting to me about it is, how it reflects on the massive extent of deferred compensation cited in the (failed) minority shareholder suit against Cuban. All of these deferred obligations will need to be paid at some point.

What deferred comp do you think you are talking about? There is NONE in the Haywood contract at this point, for example, and the Mavs are not a team that tends to pay off players to go away.

[Wizenheimer]

I found it pretty entertaining how the report managed to make it seem like the stretch component of Haywood's contract suddenly made him a valuable trade commodity.

an obligation of 2 million a year for 14 years?...with the associated cap-hit?...yeah, that's SO much better then his contract

Whats interesting to me about it is, how it reflects on the massive extent of deferred compensation cited in the (failed) minority shareholder suit against Cuban. All of these deferred obligations will need to be paid at some point.

What deferred comp do you think you are talking about? There is NONE in the Haywood contract at this point, for example, and the Mavs are not a team that tends to pay off players to go away.

here's the assertion:

Mark Cuban, the majority owner of the Dallas Mavericks, was sued last year by Ross Perot, Jr., a minority owner in the team. Perot alleges Cuban's mismanagement of the franchise has diminished the value of Perot's investment in the team because the Mavericks are sinking in more than $200 million of debt, have lost more than $273 million since 2000, have negative working capital and owe $300 million in deferred compensation to players.

http://www.forbes.com/lists/2010/32/basketball-valuations-11_Dallas-Mavericks_324736.html

for instance, Dirk has made over 160 million over his career. The CBA would allow 40 million of that to be deferred. Jason Terry could have close to 20 million deferred. Michael Finley - 20 million. In the 12 years Cuban has been handing out big contracts, if he had a policy of pushing deferred comp, the obligation could have built up in a hurry

[HartfordWhalers]

Thanks for digging that up.

Haywood might not have standard deferred compensation -- if he isn't waived he is paid on time -- but the distinction between deferred compensation and more general deferred obligations was one I tried to respect with my wording above. And I think its hard to argue that structuring a buyout to stretch for a decade in advance doesn't reflect upon and fall within a pattern of general financial behavior, although ymmv.