That site is reporting decreasing salaries. That's not allowed in the NBA. Front-loaded generally refers to having decreasing salaries. That is not allowed in the NBA the same way we refer to "front loaded" in the NFL. You can't design contracts the way hoopshype reports Wallace's/Hinrich's. You can have a 20% signing bonus (20% of the entire value of the contract). But, the net effect of signing bonuses does not change how teams have to deal with salary cap. Thus, there is no incentive for the teams to give bonuses vs normal compensation. And there is no way for players to get more money overall via a bonus verson normal compensation. However, since money is worth more now than in the future, you might want 20% at signing while accepting a lower base salary. For Scola, a signing bonus could help him pay off his Euro team in one year, but it would increase his hit to the Rockets MLE this year, unless he took a smaller base salary. So, bonus's don't achieve much, if anything.
heypartner, I was told by someone who knew these things much better than my self that the rules in the NBA allows for decreasing salaries-- but at no more than an 8% or so decrease per year.
The old CBA allowed contracts to increase or decrease by 15% (non-compounded, for Bird free agents). I would imagine that hasn't changed...
I agree with BBS. Semantics or not, the salary cap charge for some players appears less over time. The media reports are saying it, cites indicating salaries are saying it. And BBS was not using the most "absolute", I am right, tone, within this thread. So maybe the salaries are not technically decreasing, it is just signing bonus are used and increase the amount early in the contract. Wallace and Hinrich do have lower cap hits later in the contract, maybe their salaries don't go down, but the signing bonus (considered in cap charge) is higher early, perhaps because they have ETOs and thus the prorated signing bonus is reduced. That said the language in Coon about ETOs even imply the later years' can have lower set salaries (because he distinguishes this from an option year, that cannot have a lower salary). What is the missing piece in all this or if the CBA has conflicting pieces, or Coon's interpretation of it, I do not know. How we could achieve lower cap hit for Scola, with a 3 year contract where an ETO could not be in play, I have no idea. But we can do a 500K bonus to help his buy out, though I don't think his affects the Rockets's salary cap or lux tax though probably reflected in the amount of contract reported to the media..
I'm not really sure what you are saying. Free agents sign for whatever they want/can. Decreasing salaries in the same contract is what aelliott and I are saying is not allowed. the old, old CBA...the one before 1999....allowed decreases. Carl Herrara, I think you might be referering to the new maximum *raises* of 8% for some FA contracts. They used to be 10%.
I agree there is a max raise of 8%... but it sems the CBA also contemplates decreases... for example, here's Larry Coon's faq on the new CBA, on the "Gilber Arenas Provision: http://members.cox.net/lmcoon/salarycap.htm#37 The bolded portion of the quote leads me to think decreases are possible under the rule. Also, on realgm, there's a CBA discussion board... I once raised a question about whether a team can sign a player to a $7 million deal that pays $5 million the first year, and $2 million the next... I was told that the maximum decrease was 8%, just like the max increase.
Well I remember reading Camby and Odom had front loaded contracts, which was why I posted that. I have read several times that Odom did. Hoopshype claims Camby has a decreasing salary: http://hoopshype.com/salaries/denver.htm But that Odom has an increasing salary: http://hoopshype.com/salaries/la_lakers.htm Also I do remember that Odom had a big signing bonus so maybe some of the "front loaded" refers strictly to signing bonus and some to salaries that decrease. Those are old CBA contracts. New CBA contracts that seem to decrease as pointed out in this thread can be seen here: http://hoopshype.com/salaries/chicago.htm These are new CBA deals So to me this means the reported Scola deal of, Year 1: $2,668,000 Year 2: $2,484,000 Year 3: $2,300,000 is in fact possible.
Joe Johnson signed his current contract 8/19/05. It's a 5 year deal worth $70M. http://www.eskimo.com/~pbender/contracts In '05-06, the 1st year of his deal, Johnson made $12M. http://www.eskimo.com/~pbender/misc/salaries06.txt In the 2nd year of his deal he made $12, 744,000. http://www.eskimo.com/~pbender/misc/salaries07.txt That's not a front loaded contract. The actual rule is that you can decrease but only by the same amount that you are allowed to increase from year to year. i.e 10% or 12% (depending on the type of FA). That makes it impossible to create a first year balloon payment. I haven't seen any cases of anyone actually decreasing salary over the life of the deal. The problem is that your ability to sign a player is determined on your ability to fit the first year salary under your cap. So, why would a player or a team want to do that? Why not just use a lower first year salary and take less of a cap hit and then give salary increases each season? I'm not seeing the logic of giving a decreasing salary.
You guys should own up that it looks like salaries can decrease in the same contract, and certainly yearly cap hits (factoring in bonuses) can decrease. There is quite a bit of language implying that in Coon's link, Herrera and Nikes links, and other sites for yearly salaries. If I am wrong on this, I'll own up too.
Chicago is clearly doing this. Hinrich and Wallace for sure, apparently Nocioni too. http://hoopshype.com/salaries/chicago.htm And in particularly does make sense for Wallace. Of course he is likely to get worse each year at his age so his contract per year is closer to market value. Unless the player is a slam dunk to earn the max contract given the type of exemption used (Bird, EB, MLE, etc), there is no reason not to consider doing more contracts this way. It would be particularly important if early on you are clear of lux tax to pay more up front but maybe not later, e.g., when Chi and Atl have big contracts when other guys come off rookie deals and down the line the lux tax will be trickier to avoid.
As my previous post said, they can decrease by the same amount that they are allowed to increase (which depends on the type of FA). The signing bonus which is capped at 20% of the total deal is spread across the life of the deal (actually across all guarenteed years). So, the cap hit for a signing bonus is the same if the contract increases or decreases. Here's the actual verbage from the NBA CBA which describes the legal increases/decreases for various types of FA. Article VII, Section 5, item c. c) Annual Salary Increases and Decreases. (1) The following rules apply to all Player Contracts other than Contracts between Qualifying Veteran Free Agents or Early Qualifying Veteran Free Agents and their Prior Team: (i) For each Salary Cap Year covered by a Player Contract after the first Salary Cap Year, the player’s Salary, excluding Incentive Compensation, may increase or decrease in relation to the previous Salary Cap Year’s Salary, excluding Incentive Compensation, by no more than 8% of the Regular Salary for the first Salary Cap Year covered by the Contract. (ii) In the event that the first Salary Cap Year covered by a Contract provides for Incentive Compensation, the total amount of Likely Bonuses in each subsequent Salary Cap Year covered by the Contract may increase or decrease by up to 8% of the amount of Likely Bonuses in the first Salary Cap Year, and the total amount of Unlikely Bonuses in each subsequent Salary Cap Year may increase or decrease by up to 8% of the amount of Unlikely Bonuses in the first Salary Cap Year. (2) The following rules apply to all Players Contracts between Qualifying Veteran Free Agents or Early Qualifying Veteran Free Agents and their Prior Team (except any such Contracts signed pursuant to Section 6(d)(3) or Section 6(e)(2) below, which shall be governed by Section 5(c)(1) above): (i) For each Salary Cap Year covered by a Player Contract after the first Salary Cap Year, the player’s Salary, excluding Incentive Compensation, may increase or decrease in relation to the previous Salary Cap Year’s Salary, excluding Incentive Compensation, by no more than 10.5% of the Regular Salary for the first Salary Cap Year covered by the Contract. (ii) In the event that the first Salary Cap Year covered by a Contract provides for Incentive Compensation, the total amount of Likely Bonuses in each subsequent Salary Cap Year covered by the Contract may increase or decrease by up to 10.5% of the amount of Likely Bonuses in the first Salary Cap Year, and the total amount of Unlikely Bonuses in each subsequent Salary Cap Year may increase or decrease by up to 10.5% of the amount of Unlikely Bonuses in the first Salary Cap Year. (3) The following rules apply to Extensions other than Extensions of Rookie Scale Contracts: (i) For each Salary Cap Year covered by an Extension after the first Salary Cap Year covered by the extended term, the player’s Salary, excluding Incentive Compensation, may increase or decrease in relation to the previous Salary Cap Year’s Salary, excluding Incentive Compensation, by no more than 10.5% of the Regular Salary for the last Salary Cap Year covered by the original term of the Contract. (ii) In the event that the last Salary Cap Year covered by the original term of the Contract provides for Incentive Compensation, the amount of Likely Bonuses and Unlikely Bonuses in each Salary Cap Year covered by the Extension after the first Salary Cap Year covered by the extended term may increase or decrease by up to 10.5% of the amount of Likely Bonuses and Unlikely Bonuses, respectively, in the last Salary Cap Year covered by the original term. (4) The following rules apply to Extensions of Rookie Scale Contracts: (i) For each Salary Cap Year covered by an Extension of a Rookie Scale Contract after the first Salary Cap Year covered by the extended term, the Player’s Salary, excluding Incentive Compensation, may increase or decrease in relation to the previous Salary Cap Year’s Salary, excluding Incentive Compensation, by no more than 10.5% of the Regular Salary for the first Salary Cap Year covered by the extended term of the Contract. (ii) In the event that the first Salary Cap Year covered by the extended term of the Contract provides for Incentive Compensation, the amount of Likely Bonuses and Unlikely Bonuses in each Salary Cap Year covered by the Extension after the first Salary Cap Year covered by the extended term may increase or decrease by up to 10.5% of the amount of Likely Bonuses and Unlikely Bonuses, respectively, in the first Salary Cap Year covered by the extended term. (5) For purposes of this Article VII, Section 5(c) only, the amount of any bonuses that a player may receive pursuant to Article II, Sections 3(b)(iv) and 3(c) shall be added to the player’s Regular Salary and excluded from his Incentive Compensation
That's clearly within the allowed percentage as stated in the CBA. I hardly consider that a "front loaded" contract though. It does decline, but it's proportional. A front loade deal is what they do in the NFL,where a guy makes the majority of his money in the first year or two. Those are done to discourage other teams from matching. The NFL allows that along with other methods of preventing teams from matching that are not allowed in the NBA.
Here's an example of a front loaded contract: In his Monday Morning Quarterback column, Peter King of SI.com has the goods on Adalius Thomas's contract with the Patriots: • Signing bonus: $12 million in 2007. • Option bonus: $8 million payable in 2008, applied for cap reasons in equal $2 million increments in 2008, 2009, 2010 and 2011. • Salaries: $900,000 in '07, $900,000 in '08, $1.9 million in '09, $4.9 million in '10 and $5.9 million in '11. • Workout bonuses: $107,000 annually if he participates in the Patriots' offseason workout program in Foxboro. • Cap numbers: In succession, beginning this year, $3.4 million, $5.4 million, $6.4 million, $9.4 million, $10.4 million To put it another way, this is a front-loaded contract in terms of the value to Thomas (he'll make $22 million between now and December 2008) but a back-loaded contract in terms of the cap charge to the Patriots. Thomas will be a very good player for a very reasonable price in 2007. But in 2011, when Thomas is 34 years old and almost certainly not nearly as effective, he's going to cost quite a bit of money against the Patriots' cap. Bottom line: The Patriots are mortgaging the future to win now. http://sports.aol.com/fanhouse/2007/03/05/adalius-thomas-contract-22-million-in-first-two-years/ That's pretty common nowdays in the NFL, but those kind of games are not legal in the NBA.
Notice how the deal isn't proportional. Thomas makes the bulk of the money between now and Dec. 2008.
So why would ESPN bothered with writing this then? http://sports.espn.go.com/nba/news/story?id=2104688
Go back and re-read the quote in the article: The Hawks' offer, sources said, is likely to be front-loaded with a payment as high as $20 million in the first year of the deal Notice that it says "payment", not "salary". That means that Joe Johnson receives $20M in cash the first season, but that's signing bonus + first year salary. The article is talking about actual cash to Johnson, but that isn't his salary and that isnt' the way that it hits the cap. Even though Jonhnson gets the cash upfront, it is prorated across the entire deal. Let's say I sign a player to a 5 year/$70M deal. I can give him an upfront signing bonus of 20% (17.5% for a restricted FA - I think) of the total deal. So that's $14m in signing bonus. It's cash up front the player, but the amount of the signing bonus is spread across all the guarenteed years of the deal (5 in this case). So, even though the player got $14M up front, only 1/5 of it counts in his first year salary and on the 1st year's cap. In this case, his $14M siging bonus gets prorated at a rate of $2.8M per year. Add that to the remainder of the first year salary and you could easily get over $20M in actual cash up front while still only increasing the actual salary and cap number by the allowable amounts. Does that make sense? The signing bonus just let's him receive some of his salary for subsequent years up front. In my example, only $2.8M of that $14M signing bonus was actually first year salary. The remaining $11.2M is just an early payment of salary for years 2 through 5. The reason that a team offers a big lump sum payment up front is, of course, to discourage a team with cash flow problems from matching the offer. While that strategy gives you an advantage in signing a restricted FA, it doesn't give you any advantage in getting around the cap. The NBA is very strict about strategies to circumvent the cap and they usually quickly close down any loopholes that teams may find. That's the basic difference between the NFL and NBA. NBA rules don't allow you to manipulate the cap while the NFL does.
If a team is targeting to get under the salary cap in year X, perhaps they would want to pay more up front to get the player's salary down the summer they are under the cap.
I believe you are the only person who even brought up NFL style front loaded contracts as a reference point. BBallS said some teams had decreasing salaries and more upfront money on contracts, i.e., "front loaded contracts"--and multiple posters were quite dissmissive of him. He was essentially correct, whether it met "NFL" standards of front loaded contracts or not. But anyway, time to move on, the content that came from the thead, including what you brought to the table, was constructive and infortmative, that is what is most important.
Correct, and it applies to the lux tax levels as well. Chicago will have big raises soon, Gordon, Deng, maybe others. In addition to making Wallace's contract slightly less painfull and more movable later as he declines, it made sense to pay more to Wallace, Hinrich and Nocioni now in efforts to increase their chances to retain their other key guys later.
