This Is How NBA Players Negotiated Their Way To $2 Billion In Contracts

When are we getting our four-year, $100 million deal?

This past weekend, the NBA free agency period kicked off and there were a number of historic contracts given out.


Mike Conley, a point guard for the Memphis Grizzlies, signed the biggest contract in the history of the sport: a five-year, $153 million deal, making him only one of three players to sign a deal for more than $30 million per year.

The only other players to accomplish that feat are Kobe Bryant and Michael Jordan, as per Fox Sports.

A number of other huge contracts also made headlines.

Damian Lillard, point guard for the Portland Trailblazers, signed a contract extension for $120 million over the next five years. Another guard, DeMar DeRozan of the Toronto Raptors, signed a five-year $145 million deal.

Guards weren't the only ones cashing in on the $1.8 billion spending frenzy over the weekend. The New York Knicks signed veteran Joakim Noah to a four-year deal worth $70.2 million and Dwight Howard signed a three-year deal with the Atlanta Hawks for $70.5 million.

After seeing these huge dollar amounts thrown around, you're probably asking yourself, "How is this possible?"

Well, we're glad you asked, as there a few different reasons why this is happening.

First, players receive 51% of the NBA's basketball-related income, according to CBS Sports. As SB Nation points out, there is a total pot of $6 billion, so players are entitled to receive about $3 billion in compensation. They are also guaranteed to "get their share of basketball-related income  guaranteed to them under the collective bargaining agreement."

Even though the NFL has a larger amount of revenue to share, about $6 billion of the total $13 billion, that leads into the next important point.

There are fewer players in the NBA than in the NFL.

There are 32 teams with 53 roster spots in the NFL, which adds up to a total of 1,696 players in the league at any given time. The NBA, by comparison, only has 450 players in total at any given time, thus creating a larger average salary per player. The NFL pays on average $3.5 million, while the NBA is at $6.7 million.

The average career for a NBA player (about five years) is also longer than someone in the NFL (about three years), due to the nature of the sport. Therefore, it is more likely that a player will play out his entire contract if they are destined to stay in the league for a longer amount of time.

On top of the smaller team sizes, NBA teams typically go over the soft salary cap of $94 million, which jumped $24 million this year and will go up another $20 million next summer. This is thanks in large part to a new television deal worth about $24 billion, as per the Palm Beach Post

However, there is a cap on how much an individual player can make.

That means someone like LeBron James, who has over ten years in the league, could sign a deal that is worth 35% of the total cap, even though a team could offer him $50 million yearly salary. So, even though he may be worth that on the open market, teams aren't allowed to make that offer. Therefore, he can sign a deal that is worth $33 million per year and those extra dollars are now free to spend elsewhere.

It is rumored that Kevin Durant will sign a deal worth about $50 million over the next two years with his new team the Golden State Warriors, but he can only sign a deal worth 30% of the cap because he has only played 9 years in the league. That is why most experts agree that he will sign a deal with an opt-out clause after the first year and then sign a new deal. 

As Tom Ziller points out, that percentage drops to 25% for "players signing their first contract after their rookie deal." There are some ways to sign for more money, if for example a player picks up a MVP Award. There are also any number of reasons a team may find a certain player valuable and they have to pay the new market value to retain or sign that player. 

The Grizzlies have in Conley a top 10 point guard, who is solid defensively and can score 15 points per game while dishing out 6 assists. Simply put, if the Grizzlies didn't ante up and pay him, another team would have likely given him the same max deal, so they had to make him that offer or risk losing a very important player. Also, players like Noah fit a certain need for a team like the Knicks and can't risk not filling that slot.

Either way, there were certainly many millions of reasons for players to be celebrating a little bit extra July 4th weekend.


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