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NBA Off-Season 2017: New Rules for Maximum Contracts, and Options for Chris Paul and Blake Griffin

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These guys are gonna make a lot of money.

NBA: Los Angeles Clippers at Los Angeles Lakers Gary A. Vasquez-USA TODAY Sports

In the NBA’s new Collective Bargaining Agreement (CBA), which will take effect this off-season, the rules regarding maximum-salary contracts have shifted slightly. This is particularly relevant for the Clippers this summer, as they will seek to use bird rights to re-sign Chris Paul and Blake Griffin to maximum contracts. Across the NBA, these rules will shape key free agencies in years to come, especially for players like Gordon Hayward this summer and Paul George next year.

So, here’s the run-down on max deals in the new CBA. A lot has stayed the same, but there were some tweaks.

  • Players with less than 7 years of experience can make 25% of the salary cap
  • Players with 7-9 years of experience can make 30% of the salary cap
  • Players with 10+ years of experience can make 35% of the salary cap

Now, that all stayed the same from the last CBA. The only change is minor—the salary is a direct percentage of the salary cap, whereas in the past it was a % of a similar number calculated differently than the cap. So, if the salary cap is $100 million, the maxes would be set at $25 million, $30 million, and $35 million, respectively.

There are three exceptions to the above rules:

  1. A player may make 105% of their previous salary, even if it exceeds the maximum.
  2. A player with four years of experience (a 5th year eligible player) can receive 30% of the salary cap to return to his team, provided he has met at least one of the following criteria during his first four seasons: 2 appearances on the All-NBA teams OR 2 appearances as an All-Star starter OR 1 NBA MVP award.*
  3. A player with 8 or 9 years of experience who is still playing for the team he began his career with (to be eligible, he cannot have changed teams as a free agent and may only have been traded during his four-year rookie contract) is eligible to receive 35% of the salary cap provided he has met at least one of the following criteria: an appearance on an All-NBA team or Defensive Player of the Year award in the previous season, OR two of the last three seasons, OR an NBA MVP award in one of the last three seasons.

*These criteria apply to 5th year max contracts signed this summer. Next summer, the criteria will have changed to: An appearance on an All-NBA team or Defensive Player of the Year award in the previous season, OR two of the last three seasons, OR was named NBA MVP in one of the last three seasons.

Now, those rules are a good start, but they don’t tell the whole story. Only the first year of a player’s contract is subject to those restrictions—subsequent years are locked in at the time of signing, regardless of cap fluctuation (meaning that by the final year of a maximum contract, a player could be making significantly less than their initial % of the cap—or significantly more. In cases when raises are allowing a player to make more than their allocated % of the cap, the 105% raise comes into play).

The salaries for future years of any maximum contract are determined using maximum raises. These raises provide teams with a significant advantage to re-sign their own free agents. Unless a player qualifies for one of the exceptions listed above, any team can offer them the same starting salary. For example, under a 100M cap, a player like Chris Paul, who has over 10 years of experience, can receive the same $35 million starting salary from any team that has the cap room to offer it. However, because the Clippers have Paul’s bird rights, they can offer him 8% annual raises—other teams can only offer 5%. The Clippers can also offer a fifth year, where other teams can only offer four.

Now, here’s how these rules shape the Clippers’ chances:

Chris Paul’s situation is fairly clear-cut: he has over 10 years of experience. Since the salary cap for next season is projected to be $101 million, Paul can earn a starting salary of $35,350,000. Here’s his total contract:

Chris Paul’s Maximum Contract Options

Signs with 2017-18 2018-19 2019-20 2020-2021 2021-2022 Total
Signs with 2017-18 2018-19 2019-20 2020-2021 2021-2022 Total
Clippers $35,350,000 $38,178,000 $41,006,000 $43,834,000 $46,662,000 $205,030,000
New Team $35,350,000 $37,117,500 $38,885,000 $40,652,500 Free Agency $152,005,000
Chris Paul’s maximum contract options with the Clippers, or with a new team. Lucas Hann, ClipsNation.com

Now, let’s look at Blake’s options:

Blake Griffin’s Maximum Contract Options

Signs with 2017-18 2018-19 2019-20 2020-2021 2021-2022 Total
Signs with 2017-18 2018-19 2019-20 2020-2021 2021-2022 Total
Clippers $30,300,000 $32,724,000 $35,148,000 $37,572,000 $39,996,000 $175,740,000
New Team $30,300,000 $31,815,000 $33,330,000 $34,845,000 Free Agency $130,290,000
Blake Griffin’s options if he signs a maximum contract with the Clippers, or another team. Lucas Hann, ClipsNation.com

For Chris Paul, taking a full-length maximum contract is clearly the way to go, whether he chooses to stay with the Clippers and sign the biggest contract in NBA history, or move on to a new team.

In Blake Griffin’s case, a full-length maximum contract may not be the best move. Because of the designated veteran extension (the third exception to the basic maximum salary rules outlined above), Griffin could be eligible for a 35% max instead of a 30% max—but due to injuries in each of the last two seasons, he has found himself not meeting the criteria this summer, following his 8th year of experience (his pre-rookie year, which he missed following knee surgery, counts because he was under NBA contract). However, players may be eligible for the increased maximum salary following their 8th or 9th year of experience. This means that if Griffin signs a one-year deal and re-enters free agency next summer, he’d be able to sign a significantly larger contract if he earns an All-NBA selection next season.

It’s no easy task with the depth of star forwards in today’s NBA, but Griffin was able to earn All-NBA 2nd team honors in 2012, 2013, and 2014, when he played a combined 226 of 230 possible games, and All-NBA 3rd team honors in 2015, when he played 67 of the team’s 82 games. In 2016 and 2017, he was left off, playing just 96 of 164 possible games. If Blake is willing to invest in his ability to stay healthy and play at the high level we saw before his 2016 debacle, he could make a contract like Chris Paul’s above.

Blake would have to take a one-year deal this summer with a player option next season, then make an All-NBA team next spring, opt out of his player option for the 2018-2019 season, and re-sign with the Clippers for the 35% maximum next summer (with a projected cap of $102 million). It would look like this:

Blake Griffin One-Year Max, Then Re-Sign

Summer Signed 2017-18 2018-19 2019-20 2020-2021 2021-2022 2022-2023 Total
Summer Signed 2017-18 2018-19 2019-20 2020-2021 2021-2022 2022-2023 Total
2017 $30,300,000 $32,724,000 $63,024,000
2018 $35,700,000 $38,556,000 $41,412,000 $44,268,000 $47,124,000 $207,060,000
Blake Griffin’s increased earning potential if he were to sign a one-year deal this summer and then qualify for the designated veteran extension next summer. Lucas Hann, ClipsNation.com

That would earn him a total of $237,360,000 over a six-year span, if everything worked out.

Even if Blake doesn’t make an All-NBA team, this path could still make more sense for him financially as long as his long-term health holds up and he is considered a max player in the summer of 2019. He could opt into his player option for $32,724,000 (the same that he’d make if he had signed a 5-year max this summer), and then in the summer of 2019, with 10 years of experience, sign a deal for a 35% max anyway.

The math here becomes murkier because the farther away we get from today, the greater the risk for change becomes. For example, if Blake Griffin signs a 5-year deal with an option this summer, he can re-enter free agency at age 32 or 33, potentially seeking another max contract if he is still playing at a high level. If Griffin were to sign a 2-year deal now and then sign a 5-year max, he’d be entering free agency at age 34 or 35, almost certainly past his last big contract. Furthermore, unpredictable cap levels complicate his situation. The salary cap in the summer of 2019 should be relatively similar to the $101 million projection for 2017 and the $102 million projection for 2018, but there is no telling what the cap will be in 2022, 2023, or 2024 when he could enter free agency again. If Blake is still a max player, he’ll be eligible to sign for 105% of his prior salary, regardless of what the cap is.

If Griffin chooses to opt for a short-term deal to target the 35% extension next summer, his only option is to return to the Clippers, who are the only team that can legally give him that contract. Even if he doesn’t, the money difference between staying and going is massive—and Chris Paul is in the same boat. There’s a good chance that both guys will return to the Clippers because they enjoy playing with each other, living in Los Angeles, and they don’t see better options to win a championship by jumping to another team. But even if those are their primary reasons, the extra $50 million that the Clippers can offer won’t hurt.