NBA Contracts and You; or Why The Magic Can't Just Cut A Guy
Unlike the NFL, NBA contracts are usually fully guaranteed. That means the day they sign the deal a player will see everything promised to them. In the NFL there are flashy numbers for a player signing a 5 year $900M deal but it's really 3 years at $10M and years 4 and 5 at $435M each. An NFL player only gets that money if they're on the roster. There are other cap wizardry tactics in the NFL that do not apply to the NBA.
Unlike the MLB, NBA contracts can't be longer then 5 years. So there not $500M 10 year deal to be had. There are also no shenanigans like signing for peanuts in 2024 and getting paid on annual basis for 50 years.
Fully guaranteed contracts means that cutting a player does not provide cap relief, and this is why a team will hold onto a clearly declining player longer then you would like. So yeah Ben Simmons sucked for years and was never worth his max deal, but someone signed him and he was getting that money if he dressed up or not so better see what you can get out of him.
The next thing to remember is rookie deals in the NBA for first round players are for 4+1. 4 guaranteed years with a 1 year option. This is basically set in stone, as is contract value based draft position. This was all negotiated by the NBAPA and the Owners to set a rookie salary scale. Generally unless you suck out loud, a team will pick up a rookie's option and sign them to a second contract.
If a player does not have his option picked up, they become a Restricted Free Agent. This means that they can try and move to a different team however any deal they sign can (and generally is) matched by the drafting team. This is why Kuminga was stuck on the Warriors despite being a bad fit for both sides until he was traded.
The second contract for a player is typically with the team that drafted them, this is "freely negotiated" and can be for anything up to a rookie max deal. This is a deal that typically based on promise and potential that may or may not pan out. Ben Simmons is the poster boy of a second contract that went bad and why teams work so hard to not hand out max deals which we get into next.
Now one thing to remember with contracts is something called years of service, or how long a player has been in the NBA. This matters mainly for setting the max percentage of the cap that a player is allowed to sign for. It's 0-6 25%, 7-9 30%, and 10+ 35%. There is also the Super Max which is 35% of the deal if they qualify for certain awards like All NBA, MVP, and Defensive player of the year.
The max sets a hard cap for the value of a deal, however because the cap raises every year, in effect there are built in raises for the deal and this trickles down to most players taking escalating deals where they make more every season. This is the norm for most of the NBA, and how a deal that seems reasonable year 1 seems an absolute joke year 5.
After a rookie contract a player has less then 6 years of service so they can only sign for the "rookie max" which is 25% of the cap. This is what Franz and Paolo are signed for. If that player hits the "Rose Rule" meaning they are an MVP or selected for an All-NBA team that can escalate to 30% of the cap. This is what Cade Cunningham has.
So what does this mean? Once a player signs a deal he's making that $100+M no matter what. You and stretch and waive a player - this is what the Bucks did to get out from under Dame's deal. This means that you take the remaining amount of money owed to a player and chop it up over I think 7 years, and that lower amount sits on your cap for the next seven years. Regardless that money will be paid, and it will count against your cap.
So TL;DR?
- The money will be paid no matter what;
- Because of that keeping a player on the team is better then waiving them
- Stop thinking of raw dollar value, but instead as a % of the cap
- Most players will see a second contract and the rough parameters of the deal are baked in from jump