NBA Contracts

Everything You Need To Know About NBA Contracts

When a rookie player gets called up to play for the NBA, the terms and conditions of a contract are probably the farthest thing from his mind. However, careful attention should be given to the details of an agreement or else the talented young athlete may not receive a fair deal. The contracts of the National Basketball Association are incredibly detailed and can be rather complex. The legally binding document is rife with stipulations, rules, and player obligations. The following review of NBA contracts aims to familiarize you with the intricacies of signing up to play for a professional basketball team.

Why Does A Player Need A Contract?

Having a legally binding document that carefully lays out all of the terms and conditions of a player’s employment with the NBA helps to protect both the player and the organization. A contract will ensure that your future is secure, at least for the duration of the agreement. Knowing where you will be living and how much money you will be making can alleviate a great deal of stress, allowing you and your family to settle down comfortably and to make plans financially.

At the same time, a contract ensures the NBA team that their new star athlete will not do anything that may compromise his health (excessive drinking, drug consumption, riding motorcycles, etc.) or the integrity of the organization (inappropriate behavior, gambling on games, doping, etc.). 

What Makes A NBA Contract So Complex?

The reason a contract with the NBA is so complicated is that it must cover every possible contingency. Perhaps you hate motorcycles and would never dream of getting on one; nonetheless the contract will include a clause preventing such reckless behavior because a player’s health is so vital to the team’s success. Contracts typically include comprehensive guidelines about your personal conduct in order to make sure that the organization does not have to deal with any embarrassing scandals. Failure to abide by any of these restrictions will result in your termination.

In addition to restrictions, NBA contracts contain terms regarding the amount of money a player will receive per season, the total sum he will receive, and how many years the contract will last. Every contract is different, even among players on the same team, because there are so many terms to be negotiated.

Furthermore, the contract includes stipulations about endorsement deals. It will determine your ability to negotiate outside deals as well as what actions you must take to promote products already endorsed by the team (wearing certain brands, drinking certain beverages, etc.).

Contracts also include information about any bonuses that may be issued, such as a signing bonus or a Championship win bonus.

All of the elements of the contract must abide by Collective Bargaining Agreement regulations. The CBA works to protect players by setting minimum salary rates and by providing guidelines that determine the number of years a contract can last.

Finally, NBA contracts are unique in that you are guaranteed to receive the total sum agreed upon, whether or not you play for the entire length of the contract. Even if you are cut from the team after the first season, you are still entitled to the full compensation. For this reason, NBA contracts include many physical performance standards so as to ensure that the team is not weighed down for years with an incompetent player.

What Does A Rookie Contract Look Like?

New players do not have as much leeway when it comes to negotiating the terms of their contract. Usually, a rookie contract lasts for two years with the option of resigning for a third season. A rookie’s salary is determined by the NBA’s rookie salary scale, which is based on draft position. There is a little bit of wiggle room as the CBA dictates that a rookie can receive between 80% and 120% of the monetary value assigned to his draft position. Only first round draft picks are guaranteed contracts.

What Is A Salary Cap?

Today, many sports leagues demand franchises adhere to budget limitations for players’ salaries. This is known as a salary cap and it was established in order to keep the playing field level. The NBA uses what is called a soft cap, meaning that there are several exceptions that can be made to allow a team to spend above their salary cap. Other for these special circumstances, teams that exceed the cap will be penalized by the CBA. Every dollar overspent results in a $1 luxury tax fine.

The team’s salary cap is equal to the combined total of all the players’ salaries. Therefore, it could affect the amount of money you are offered. Number one picks usually take the largest slice of the pie, while 30th picks will receive the smallest portion.

Can Having A Sports Agent Help?

Having a sports agent representing you at the negotiating table may enable you to receive better terms than you would have otherwise received. Agents are experienced negotiators and are not easily intimidated. Moreover, an agent can explain to you what each term means and what each restriction involves.

Most sports agents do no ask for money upfront; rather they will take a cut of the total amount of money you are to receive, including bonuses. This fee can be as high as 25% and rarely goes below 10%.

Any sports contract is bound to be thorough and thus complicated. NBA contracts are no exception. Trying to get through pages and pages of legalese can be a serious headache. Nonetheless, it is vitally important that you fully understand the terms and conditions to which you are committing yourself. Failure to meet any of the player obligations or to abide by any of the rules will result in termination and claiming ignorance won’t save your job. Having a sports agent or someone well versed in entertainment contracts by your side while you negotiate the terms of agreement can make a huge difference.