Basketball Related Income Rules Everything Around Me

After actively and repeatedly avoiding any discussion of the details of Brandon Roy's contract negotiations, Kevin Pritchard's statements about LaMarcus Aldridge's negotiations in Jason Quick's piece were eye-opening.

He's talking! He's talking!  After months of tight-lipped non-talk, what did KP open up about?

Basketball Related Income.

Guh. That sounds hard.

For a full definition of BRI, head over to Larry Coon's site

So here's the situation:

  • LaMarcus Aldridge's camp wants a max contract or as close to it as possible.  
  • The Blazers want to pay him as much below the max number as possible without insulting his character and sending him into a rage. 
  • To compromise, the two sides try to settle on a percentage of the Max number that most accurately reflects Aldridge's worth.  
But here's the big problem that Quick points out: the max number isn't yet known and could vary by millions depending on the league's overall economic health over the next year.  This turns any contract extension that is based off of the Max number, like LMA's, into a more subjective process than either side would prefer. 

Professor Storyteller elaborates...

The problem might not be that the team and Aldridge's negotiating team can't come to an agreement about what 'percentage' of a max contract that Aldridge deserves, the problem might be agreeing on what that max deal will look like. 

Quick is right on when he points out in his blog piece that Roy's extension amount is not static - it will be set next summer when the salary cap and other league figures are announced next July.  A 'max' contract for Chris Paul and Deron Williams this year starts at just over $13.5 million.  But given that nearly everyone expects BRI to drop this coming year, it's anticipated that the salary cap and the maximum amounts for players will also drop next summer - but nobody knows how much. 

This creates a unique challenge in negotiations for players like Aldridge, who is probably not a max player but is close. Let's say that Aldridge's agent estimates next year's BRI will drop 2.5%, which would put Roy's max salary for 2010-11 at about $12.9 million.  Now, his agent asks for 90% of what they estimate a max contract would be, or an extension that starts at about $11.6 million. The Blazers might even agree that Aldridge deserves 90% of a max deal.  But what if their estimate is that BRI will drop 5%?  That would give Roy a starting salary of about $12.1 million in 2010-11.  If they agree to pay Aldridge $11.6 million, they're not agreeing to a 90% of max deal, they're committing themselves to a 96% of max deal.  Because although Roy's max deal will adjust to next summer's figures, Aldridge's deal probably won't.  

You can see why this might lead to an extended negotiation. 

Both sides are trying to negotiate what they believe is fair based on estimates and projections, not on hard and fast facts.  And my guess is that the Blazers are going into the negotiations projecting as conservatively as possible while Aldridge's team is going into the negotiations projecting as optimistically as possible.  Leaving room for some complex negotiations. 

I full court pressed Storyteller into the corner of a dark alley and interrogated the following prediction out of him.

My guess is that a deal on an extension gets done before the October 31st deadline.  But given the uniqueness of the economic climate that the league finds itself in (before this summer, the salary cap had only dropped once - in 2002 - and has never before been projected to go down two years in a row), the negotiations over Aldridge's deal are quite understandably complex.  So although an agreement could come tomorrow, I wouldn't be surprised if it doesn't happen until very close to the deadline.

Storyteller also passed on this clarification from Quick's article regarding how Max contracts relate to BRI.

A max contract is not determined by 25% of Basketball Related Income (BRI) but rather 25% of a base figure that is calculated off of the estimated BRI figure. 

Here's a quick summary: Basketball Related Income (BRI) is the amount of income that the NBA, NBA Properties and NBA Media Ventures brings in on a yearly basis. 

Every July, the league accountants not only calculate the exact amount of BRI for the previous season, they also come up with an estimate of BRI for the upcoming season.  It is this figure of estimated BRI that is used to calculate the salary cap and the maximum amount available for most players to sign for. 

The salary cap is determined by taking the estimated BRI figure, multiplying it by 51%, adjusting that number for benefits and other CBA-mandated adjustments, then dividing by 30 (the number of teams in the league). 

The base number for calculating maximum player salaries is determined nearly identically, only instead of using 51% of BRI, this calculation uses 48.04% of BRI, then adjusts for benefits and other adjustments before being divided by 30.  In order to find a maximum salary amount, this base number is then multiplied by either 25% (for players with 6 or less years of service), 30% (for players with 7-9 years of service) or 35% (for players with 10+ years of service). 

So a player like Roy (who will have 4 years of service) who earns a maximum contract won't be paid exactly 25% of the salary cap but something closer to 23% of the salary cap - because the base number for determining maximum salaries is a bit lower than the actual salary cap. 

One more thing - if a player's previous contract paid him more than the above calculation of a max contract for him, he doesn't necessarily have to take a pay cut.  The CBA allows for players in this situation to be able to make 105% of their previous year's salary as their 'maximum' amount.  Sort of a grandfather clause for players who are already making a large amount of money.  So if Player X made $15 million in 2008-09 and the calculation of a max salary for him in 2009-10 (using the above equation) is $13.5 million, he doesn't have to take a cut to $13.5 million - his 'maximum' amount is 105% of $15 million or $15.75 million. 

Voila. You are now more informed. Thanks Storyteller!  Here's a link to his site.

-- Ben (benjamin.golliver@gmail.com)

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