FanPost

Bledsoe's contract: bonuses, options and other CBA stuff explained

As the negotiations between the Suns and Bledsoe's side continue, it is worth looking at what options exist beyond the straightforward x years/y million dollars. This will hopefully add to the conversation on what kind of an offer "we" would/should offer to Bledsoe or what kind of an offer we think is the best/fairest compromise/option. In this article, I examine the possibilities of bonuses, player/team options, trade bonuses and no-trade clauses for constructing Bledsoe's contract. In the end, I give what I think would be a fair and beneficial contrac that both sides would accept.

If you haven't checked out what are all the potential outcomes of the negotations according to the CBA, you can check that out in my fanpost here - http://www.brightsideofthesun.com/2014/7/21/5922817/bledsoe-and-potential-outcomes-under-the-cba .

PERFROMANCE BONUSES

For more information on the bonuses, visit http://www.cbafaq.com/salarycap.htm#Q74 .

Types of bonuses that can be built into the contract:

  1. Performance bonuses

  2. Academic/physical achievements

  3. Extra promotional

Types 2 and 3 are always included in the team's cap situation, so there's no cap-wise advantage for the Suns here, so let's focus on the performance bonus.

WHAT KIND OF ACHIEVEMENTS CAN BE FORMULATED AS A PERFORMANCE BONUS?

  • certain amount of points, asissts, rebounds,... total or per game (e.g. 1m$ bonus if the player will score at least 7 ppg throughout the season)

  • certain amount of team wins (e.g. 1m$ bonus if the team will win at least 48 games)

  • the team making the playoffs (e.g. 1m$ bonus if the team makes the playofs)

  • some other specific numerical achievement (e.g. 1m$ bonus if he shoots more than 80% from the free-throw line).

  • attaining one of the league's honours/awards (MVP, Finals MVP, Defensive Player of the Year, Sixth Man, Most Improved Player, All-NBA Team, All-Defensive Team, and All-Star selection)

!!! Certain kinds of incentives are not allowed, such as those based on the player being on the team's roster on a specific date or for a specific number of games. !!!

HOW ARE PERFORMANCE BONUSES COUNTED IN THE TEAM'S CAP?

Performance bonuses are classified as either "likely to be achieved" or "not likely to be achieved." All performance bonuses are re-evaluated at the start of each season to determine whether they should be classified as likely or not likely to be achieved.

The determination of whether a bonus is likely or unlikely is based on whether the criterion was achieved in the previous season. For example, if a player has a bonus of 1m$ in his contract if he'll score at least 7 ppg, you look at how many ppg he had in the previous season. If the player had 7.5 ppg the previous season, then the bonus will classified as likely to be achieved. If in the previous season he scored 6 ppg, it will be clasified as unlikely.

(If either the league or players association feels that the previous season does not fairly predict the performance in the current season, then a jointly-selected expert determines whether the default classification should be overruled. This can happen when for example the player was injured the previous season.)

So how do they count against the cap?

In the first year of the contract with the bonuses, all bonuses, likely and unlikely, are counted against the cap. So if we sign Bledsoe to a 12m$ contract with 1.5m$ bonus for any All-NBA team, his cap hit in the 14/15 season will be 13.5m$.

After the first season, each season only the bonuses that are classified as likely to be achieved count against the cap. So under the above example, if Bledsoe doesn't make any All-NBA team in 14/15, his cap hit for the 15/16 season will be "only" 12m$, and not 13.5m$.

HOW MUCH BONUSES CAN WE SET IN THE CONTRACT?

Unlikely bonuses in any season are limited to 15% of the player's regular (base) salary in that season.

It's important that the rules for raises (and decreases) also apply to incentives. When salary increases or decreases are limited to 4.5% or 7.5%, then likely and unlikely bonuses may each increase or decrease by 4.5% or 7.5%, respectively.

So if Bledsoe will have a base salary of 12m$ in his first season, the bonus for that season cannot exceed 1.62m$.

TEAM/PLAYER OPTIONS

For more information, check http://www.cbafaq.com/salarycap.htm#Q59 .

A team option means that the team can decide whether the player will remain under the contract for that year.

A player option means that the player can decide that.

There can be only one option for one year in a contract. That means there cannot be firstly a team option for the 3rd year, and then a player option for the 4th year. Also, there cannot be a team option for the 3rd year and another team option for the 4th year. The only exception to this are the rookie contracts.

Conditional options are not allowed -- the availability of the option may not be contingent on some condition, such as the number of games the team wins or the player's points per game

Options can be included in any multiyear contract.

TRADE BONUS/KICKER

For more information, see http://www.cbafaq.com/salarycap.htm#Q98 and http://www.cbafaq.com/salarycap.htm#Q99 .

Teams are permitted to write a bonus called a "trade bonus" (sometimes referred to as a "trade kicker") into contracts. This bonus is paid to the player when he is traded, but only upon his first trade and not upon any subsequent trades. The bonus is played by the team trading away the player (so in our case with Bledsoe, it would be the Suns).

The amount of the trade bonus can be defined as a specific dollar amount, a specific percentage of the remaining value of the contract, or some combination (e.g., "$1 million or 10% of the remaining value of the contract, whichever is less"). In either case, the actual amount cannot exceed 15% of the remaining value of the contract.

For example, if a player has a 5year/1m$ contract and a 500.000$ trade bonus, this is how it goes:

Year

Remaining value of the contract

15% of the remaining value of the contract

Actual value of $500,000 trade bonus

1

$5,000,000

$750,000

$500,000

2

$4,000,000

$600,000

$500,000

3

$3,000,000

$450,000

$450,000

4

$2,000,000

$300,000

$300,000

5

$1,000,000

$150,000

$150,000

Option years are not counted when determining the remaining value of the contract, unless already exercised.

Performance bonuses are not counted when determining the remaining value of the contract -- just base salary.

As for how the trade bonus as specified in the contract counts the cap, it's rather complicated, but nicely explained here - http://www.cbafaq.com/salarycap.htm#Q99 .

NO-TRADE CLAUSE

A "no-trade" clause prevents the team from trading the player without the player's consent. A no-trade clause can be negotiated into a new contract if the player has been in the NBA for at least eight seasons, and has played for the team with which he is signing for at least four seasons.

Since Bledsoe hasn't been in the NBA for 8 years, he cannot be offered a no-trade clause.

MY IDEA OF A FAIR CONTRACT

I believe that the 4y/48m$ reportedly offered by the Suns is fair enough. However, I understand that some people might think, including the Suns' FO, that in order to get Bledsoe to sign and not feel undervalued/foolish, he must be offered something more, at least to be able to save face.

In this scenario, I would offer Bledsoe a 4 year deal with 12.5m$ base salary and for each year a 1.5m$ bonus for being selected either to the All-Star game, All-NBA or All-Defensive team.

While it's forbidden to tie a bonus to a player playing a certain amount of games in a season, tying the bonus to All-NBA or All-Defensive team basically does that. If Bledsoe will miss more than 20 games in a season, there's very little chance of being selected to either of those teams. And if he'll be selected to the All-star team in the west, that means that he will have been healthy for basically the whole season 'till February, and that he'll outperform many established guards, including the Dragon.

Extra protection for the Suns in many ways makes the extra 1.5m$ worthwile. On the other hand, Bledsoe gets an additional 2m$ guaranteed money, thus not having to swallow his pride in accepting the original offer from the Suns. Also, he gets the chance to earn 6m$ more. Given that the Dragon had a 1m$ incentive for the All-star game, Bledsoe can hardly argue it's unfair or under-appreciative towards him.

CONCLUSION

We've come to the end of the article. If there are any questions regarding the CBA-related matters and Bledsoe's contract, leave them in the comments and I will try to answer them or get the answers for you. Otherwise, I look forward to hearing your thoughts on what would be a fair offer that both sides would be willing to sign. Thanks for your time and your comments.