Max Salary Question

[Mascot]

Hello, im the commish of the RealGM a Team game this around and we have an issue about contract extensions. Is the max extension a total of 5 years combined or can they get 6 (non rookies)?

Im 99.9% sure i have it right but we have some that say its wrong.


our salary cap is going to be set at 54 million.

so would the contracts look like this?

e.g LeBron James

as Free Agent 105% of his previous salary with 10.5% raises for 6 years if he waits till FA.
$16,568,907
$18,308,642
$20,048,377
$21,788,112
$23,527,847
$25,267,583
$125,509,468

if he signs a contract extension now he gets 10.5% raises for 5 years
$17,149,243
$18,949,913
$20,750,584
$22,551,254
$24,351,925
$103,752,919

edit: using shamsports

[FGump]

When a player signs an extension, the total of current year plus future years on existing deal, plus new extension years, cannot be more than 6.

[answerthink]

Mascot,

You are correct. All extensions, other than rookie scale contract extensions, are limited to 5 seasons, including the seasons remaining on the current contract.

Your numbers as it relates to Lebron’s free agent contract are correct.

I believe your numbers as it relates to an extension need slight updating. If he signs an extension right now, the current season would be included in the five (as per Art IX, Sec 2). Also bear in mind that the first year of the extension can't exceed the maximum salary the player can receive if he were to sign a new contract that year as a free agent, so it may need to be adjusted downward.

[FGump]

Mascot,

You are correct. All extensions, other than rookie scale contract extensions, are limited to 5 seasons, including the seasons remaining on the current contract..

I'm sure you meant to say a total of 6 (including seasons remaining), not 5, and use the number six in your explanation of how LBJ's total years would be limited.

the first year of the extension can't exceed the maximum salary the player can receive if he were to sign a new contract that year as a free agent, so it may need to be adjusted downward..

There's also a provision that if the max doesn't allow the full 10.5% raise for the initial year of an extension, you still are guaranteed at least a 5% raise over that final pre-extension year regardless of the max number ...and given the current economic climate and cap projections, that 105% will be the best beginning number to work with.

[answerthink]

FGump,

Those were not my intentions. The situation is described fully in Art IX, Sec 1 of the CBA. If you are having difficulty interpreting the legalese, Larry describes it quite clearly in the answer to question 51 of his FAQ.

The "maximum salary" I referred to, in the case of Lebron James, is the greater of: (i) 30% of the adjusted salary cap and (ii) 105% of the salary provided for in the final season of the original term of the contract. As you suggest, this number is likely to be $18,006,705, or 105% of $17,149,243, for the 2011/12 season.

[FGump]

Those were not my intentions. The situation is described fully in Art IX, Sec 1 of the CBA.

I see your point, but would be interested in your explanation of where the non-rookie extensions would be included in that section you cited. Section 2 would indicate that the various parts of Section 1 cover extensions, and within those 3 subsets, which one would pertain to the limits on an extension not on a rookie scale contract?

As you've instructed, I'm deferring to your ability to read and interpret for us the legalese here that you've referred us to.

Section 1. Maximum Term.
Except where a shorter term is expressly provided for elsewhere in this Agreement, a Player Contract entered into after the date of this Agreement may cover, in the aggregate, up to but no more than five (5) Seasons (including any Season covered by an Option) from the date such Contract is signed; provided, however, that (a) a Player Contract between a Qualifying Veteran Free Agent and his Prior Team may cover, in the aggregate, up to but no more than six (6) Seasons (including any Season covered by an Option) from the date such Contract is signed, and (b) an Extension of a Rookie Scale Contract may cover, in the aggregate, up to but no more than six (6) Seasons (including any Season covered by an Option) from the date such extension is signed.

Section 2. Computation of Time.
For purposes of Section 1 above, if a Player Contract or Extension is signed after the beginning of a Season, the Season in which the Contract or Extension is signed shall be counted as one (1) full Season covered by the Contract or Extension.

[answerthink]

FGump,

We've had a rocky history so I will attempt to you answer your question as peacefully as possible. The section I referenced, and you quoted above, states that player contracts signed after the date of the agreement cannot have a maximum term longer than five seasons... with two exceptions. Neither of those two exceptions pertain to extensions of contracts other than rookie scale contracts (one exception pertains to contracts of players with Bird rights and the other exception pertains to extensions of rookie scale contracts).

[Mascot]

Mascot,

You are correct. All extensions, other than rookie scale contract extensions, are limited to 5 seasons, including the seasons remaining on the current contract.

Your numbers as it relates to Lebron’s free agent contract are correct.

I believe your numbers as it relates to an extension need slight updating. If he signs an extension right now, the current season would be included in the five (as per Art IX, Sec 2). Also bear in mind that the first year of the extension can't exceed the maximum salary the player can receive if he were to sign a new contract that year as a free agent, so it may need to be adjusted downward.

FGump,

Those were not my intentions. The situation is described fully in Art IX, Sec 1 of the CBA. If you are having difficulty interpreting the legalese, Larry describes it quite clearly in the answer to question 51 of his FAQ.

The "maximum salary" I referred to, in the case of Lebron James, is the greater of: (i) 30% of the adjusted salary cap and (ii) 105% of the salary provided for in the final season of the original term of the contract. As you suggest, this number is likely to be $18,006,705, or 105% of $17,149,243, for the 2011/12 season.

would the $17,149,243 not change to $16,568,907 since that would be his max based on a 54 mill salary cap?


so this would be correct since hes still on 09/10 salary for an extension?
$15,779,912 09/10 current salary year counts.
$16,568,907 10/11 max salary 105% of 09/10 salary
$18,308,642 11/12 10.5% raise
$20,048,377 12/13 10.5% raise
$21,788,112 13/14 10.5% raise
$92,493,950


edit: using shamsports

[answerthink]

Actually, no. Lebron is under contract for $17,149,243 in 2010/11. The value of the first season of the extension is based upon the final season of the original term of the contract. Your original numbers were correct (minus the final season).

An extension signed today would look like this:
2010/11: $17,149,243
2011/12: $18,949,914
2012/13: $20,750,584
2013/14: $22,551,255

Assuming the terms of a new CBA would not alter an existing contract, prior to the 2011/12 season it would likely get adjusted to:
2010/11: $17,149,243
2011/12: $18,006,705
2012/13: $19,807,376
2013/14: $21,608,046

[Mascot]

im getting this you used 110% instead of 110.5% i believe?

$15,779,912 09/10 current salary year counts.
$17,149,243 2010/11: this is the final year of the contract
$18,006,705 2011/12: 105% of final year of contract
$19,897,409 2012/13: 10.5% raise
$21,788,113 2013/14: 10.5% raise
$92,621,382

[answerthink]

In an extension, annual raises are limited to 10.5% of the salary for the final season covered by the original term of the contract. In Lebron's case, he will have made $17,149,243 in the final season covered by the original term of the contract. $17,149,243 * .105 = $1,800,671.

After calculating the value of the first season of the extension (in Lebron's case, the greater of 30% of the adjusted salary cap and 105% of the salary provided for in the final season of the original term of the contract), he would be eligible to receive annual raises of as much as $1,800,671 per season thereafter.

The numbers I provided above will reflect his contract should he choose to sign an extension today.

[Mascot]

An example is in order. Shaquille O'Neal's contract was extended prior to the 2000-01 season. His original contract ran through the 2002-03 season, in which he made $23,571,429.20. The first year of his extension, 2003-04, was originally written for (the then-maximum) 112.5% of this amount, or $26,517,857.85. As a 10+ year veteran, O'Neal's salary couldn't exceed 105% of $23,571,429.20, or the 2003-04 maximum salary for a 10+ year veteran (which turned out to be $15,344,000), whichever is greater. That means O'Neal's 2003-04 salary could not exceed $24,750,000.66 (using 105% of his previous salary, since that was the greater of the two). O'Neal's extension was therefore amended downward to the maximum ($24,750,000.66) once the 2003-04 maximum salary was determined.

the first year of the extension can only be 105% of $17,149,243 = 18,006,705

not a 10.5% raise of $17,149,243 = $18,949,913 i believe?


so
$15,779,912 09/10 current salary year counts.
$17,149,243 2010/11: this is the final year of the contract
$18,006,705 2011/12: 105% of final year of contract
$19,897,409 2012/13: 10.5% raise
$21,788,113 2013/14: 10.5% raise
$92,621,382

is right?

[Mascot]

ahh ok i got it now sorry the last line is a little confusing

For all other extensions, raises are limited to 10.5% of the salary in the last year of the existing contract. If the salary in the first year of an extension is amended as described above, then all subsequent years of the extension are also amended to accommodate the maximum raise, if necessary.

[answerthink]

It's a confusing topic. Perhaps think of it this way...

If Lebron signs an extension today, in 2011/12 he can make the lesser of:
1. $17,149,243 * 1.105, and
2. The greater of:

a. 30% of the adjusted salary cap, and
b. $17,149,243 * 1.05

In each subsequent season, Lebron is eligible for raises of .105 * $17,149,243.

[Mascot]

It's a confusing topic. Perhaps think of it this way...

If Lebron signs an extension today, in 2011/12 he can make the lesser of:
1. $17,149,243 * 1.105, and
2. The greater of:

a. 30% of the adjusted salary cap, and
b. $17,149,243 * 1.05

In each subsequent season, Lebron is eligible for raises of .105 * $17,149,243.

yep i got it

[FGump]

Neither of those two exceptions pertain to extensions of contracts other than rookie scale contracts (one exception pertains to contracts of players with Bird rights and the other exception pertains to extensions of rookie scale contracts).

Thank you for the amenable response.

I failed to see language there consistent with your conclusion (how could there be a circumstance under which an extension would not be pertaining to a contract of a player with Bird rights ) ...and the wording was virtually identical ....

But after further pondering, I recognize the problem is jumping too quickly from terminology to meaning. What eliminates the 6 year provision from applying to a player signing an extension is not the absence of Bird rights (he'd definitely have Bird rights in order to qualify for an extension) ...but rather the fact that he wouldn't at that point be a "Qualifying Veteran Free Agent" - because clearly he's not a free agent yet at that point.

[answerthink]

The subtle distinction is that if Lebron signs an extension, he is not a Qualifying Veteran Free Agent. Actually, he is not a free agent of any kind; he is still under contract. He would therefore not qualify for the exception.

[answerthink]

It looks like I responded to your question without the benefit of seeing your edit first, and therefore duplicated your response... As a side note, I do hope that we can form some sort of a truce in the hopes that you could answer my questions just as I yours.

[Mezotarkus]

But after further pondering, I recognize the problem is jumping too quickly from terminology to meaning. What eliminates the 6 year provision from applying to a player signing an extension is not the absence of Bird rights (he'd definitely have Bird rights in order to qualify for an extension) ...but rather the fact that he wouldn't at that point be a "Qualifying Veteran Free Agent" - because clearly he's not a free agent yet at that point.

Parsing and interpreting the legal wording can be a challenge.

[Three34]

Here's another maximum salary question. The maximum salary when not using the 105% thing is calculated as being 30% of the cap for 7 year veterans (for example), but as we might presently ourselves fully be aware of, they use a 48.04% of BRI salary cap instead of the usual 51%.

Why?