Omer Asik and Jeremy Lin’s contract situations
July 8th, 2013

In light of one or both of these two being about to be traded, there exists a new realm of questions about this two unusual, nearly-novel deals. The questions surround what they’re being paid, and what they’re being charged to the salary cap. People don’t know which set of figures to believe, and the confusions stems from the fact that those two questions actually have two different answers. “Salary” and “cap number” are usually assumed to be synonymous with each other on account of the fact that they normally are, with rare exceptions. Occasionally, exceptions can be found in buyout agreements (I believe, though cannot say decisively, that the Blazers were still playing Shawn Kemp up to and including last season), but not with valid contracts. These deals, then, are an exception. And that’s why they need clarifying. Using the Arenas provision, Lin and Asik signed for the most Houston could give them over three years – $25,123,938. The contracts called for them to be paid an even $5 million in 2012/13, $5.225 million in 2013/14, and $14,898,938 in 2014/15. For the purposes of where we’re going, it doesn’t matter how these figure was arrived at, only what they are and where we’re going. The cap number for these contracts calls for that $25,123,938 contract to be split evenly across all three years, i.e. $8,374,646 each season. This is true despite of the actual payment schedule being what it is above. So when someone asks “what are Lin and Asik getting paid?”, the answer could be either, technically. On a literal interpretation of the question, the payment schedule is the right answer. Yet when people ask that, what they really want to know, even if they don’t know there’s a difference, is what is their cap number. That’s the one […]

Posted by at 9:09 AM

There IS a difference between “team option” and “unguaranteed”, and it DOES matter
July 3rd, 2013

Several years ago, I wrote a piece called Creative Financing in the NBA, that sought to address and highlight a few quirky salaries and salaries mechanisms handed about that season. In that piece, I also spent a long time addressing the difference between team options and unguaranteed salaries. Often times, unguaranteed salaries are reported in the mainstream press as being team options, even though the two mechanisms are different. And often times, this is fine, because the differences don’t really matter. Not to the casual fan, at least. Nevertheless, differences do exist. Some of the initial post is quoted below that explains these differences: Unguaranteed or partially guaranteed final seasons are becoming quite the trend in the NBA, and they are quickly replacing team options. In fact, there are only 11 team options in the entire league […] There are very few instances in which contracts must be guaranteed. In fact, there are only two; the first year of a signed-and-traded contract, and the first two years of a rookie scale contract (which must be guaranteed for a minimum of 80% of the scale amount). Nothing else has to be guaranteed, but it is self-evident that almost all are. Would you accept an unguaranteed contract as a player? Not without incentive to do so, no. It is self evident why so many contracts are fully guaranteed. Yet the unguaranteed contract fad has its basis in logic. In a lot of cases, unguaranteed contracts function much like team options do. However, there are some significant advantages to doing it in this way, which is why it happens. The differences: 1) Team options have to be decided upon by the final day of the previous season. Seasons change over on July 1st, and thus team options must be decided upon by June […]

Posted by at 6:56 AM