Contracts: Fixed Amount?

[Malinhion]

Do you have to set a fixed dollar amount or could you give a contract that pays conditionally based on a % of the salary cap?

[Dunkenstein]

Do you have to set a fixed dollar amount or could you give a contract that pays conditionally based on a % of the salary cap?

EDIT: I misread your question. The base contract would have to be a fixed amount, but I can't see why the parties couldn't set up a bonus structure that is conditionally based on change in the salary cap. The bonus probably couldn't go down if the cap decreased, since I don't believe the league allows negative bonuses. For cap purposes I suspect the league would take the previous year's raise in the cap and make that percentage a likely bonus.

[Daini]

This is somehow related. ESPN:

"Agent Bob Myers confirmed to The Associated Press late Wednesday night that Roy agreed in principle to a contract at the NBA maximum salary. The fifth year is at Roy's option. Specific numbers won't be available until the NBA salary cap is set next July. This year a starting max contract would be worth $82 million over the course of five years. However, next year the cap is expected to go down between 5 and 10 percent. That means the value of Roy's contract will go down, too."

The value of Roy's extension is dependent on next year's salary cap figure. How come they don't mention the possible drop/rise in actual salary when describing other extensions that kick in in a year (or sometimes even two)?

If I understand this correctly, each time an extension is signed that doesn't begin immediately (or the very same summer), it's worth is known only to a certain degree and can be affected by salary cap change. Is that right?

[FGump]

It depends on the terms of the extension.

Roy's is a deal for the "maximum salary" he is eligible for. (Not all extensions are, of course.) But until the salary cap is set for 2010-11 (the first year of the deal), it's unknowable what amount his contract will start at, since the max is based on the salary cap.

[LarryCoon]

It not only applies to "maximum extensions" (extensions that kick in at whatever the maximum happens to be), but to regular extensions as well. An extension can be written with a first year salary of up to 110.5% of the existing last year salary. But if that turns out to be higher than the maximum as defined in the year the extension kicks in, then they amend the extension downward. I describe this (and give an example) in my FAQ.

The interesting thing relates to extensions that take effect in or after 2011. They'll be under the terms of the next CBA, so not only do we not know what the numbers will be for 2011, we don't even know what the formula will be.