What will max contracts look like next season?

NBA commissioner Adam Silver admitted recently that the league’s collective bargaining agreement (CBA) was not designed to handle a pandemic.

Fans attending games account for 40 percent of the league’s revenue and it’s unclear when spectators will next be able to watch live sporting events in person. To grossly simplify a very complex issue, there’s no provision in the CBA that can help the league adjust to a sudden and unexpected drop in basketball related income — such as 40 percent of the revenue stream drying up virtually overnight.

“This CBA was not built for an extended pandemic,” Silver told the NBPA membership, according to audio obtained by ESPN. “There’s not a mechanism in it that works to properly accept a cap when you’ve got so much uncertainty; when our revenue could be $10 billion or it could be $6 billion. Or less.”

The league and players have agreed to work for at least the next 60 days to re-write the CBA on the fly before the league exercises a nuclear option and terminates the agreement entirely.

Maximum contracts during a pandemic

Under normal circumstances, the maximum contracts rules have become a hot topic around the league. Designed with the purpose of helping teams retain their own stars, the current multi-tiered structure has backfired.

The Ringer has the pithiest explanation:

A handful of the best players—the group the supermax was intended for—have already showed us that the extra money won’t sway them, while players who might not be worth the risk demand it.

In other words, what good is a maximum contract rule if the Pelicans can’t use it to retain Anthony Davis but the Suns have little alternative to overpaying Devin Booker?

Ironically, the max contract rules are actually some of the salary cap nuances best designed to operate as intended after a sudden cap decrease. Since they are tied to a percentage of the salary cap, they will adjust automatically to the league’s new reality.

For example, Damian Lillard’s maximum contract extension will kick in for the 2021-22 season. In the first year of the deal, he’ll be paid 35 percent of whatever the cap settles at. Previously that was projected to be about $43.8 million, but if the cap decreases to about $105 million ($4 million less than this year’s pre-pandemic projection), his first year salary will drop to about $36.8 million.

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But what about near-max contracts?

On the surface, there’s nothing problematic with Lillard’s contract being adjusted. A problem, however, arises when pre-existing contracts are considered.

Lillard’s teammate CJ McCollum also has an extension kicking in during the 2021 offseason. He’s set to make about $30.9 million. Since that deal is not tied to a percentage of the salary cap it would not be reduced in the hypothetical scenario that the cap settles at $105 million.

McCollum’s contract would become problematic for two reasons: 1) under the previous salary estimates it would have accounted for about 24.7 percent of the Blazers’ cap space, but now it would be worth about 29.4 percent of the cap, and 2) Lillard and McCollum are suddenly much closer in salary than previously expected.

The problems here are apparent. A player unexpectedly taking up an additional five percent of a team’s cap space significantly reduces roster flexibility. And max players having their salaries reduced to roughly the same as non-All-star teammates isn’t a great chemistry experiment.

To make matters worse for the NBA, under the current rules the pre-existing salaries would continue to increase regardless of fluctuations in the cap. Unless something changes, Tobias Harris is making $36 million for the 2021-22 season no matter what since his contract has already kicked in and despite Lillard’s salary dropping from $43.8 million to $36.8 million. It’s hard to imagine such an inequitable transformation of salary NOT causing trouble within the ranks of the NBPA.

The NBA and players have 60 days to sort out these nuances — not an easy task given the constantly changing and unknown variables in play. Whatever agreement they reach, expect that maximum contracts in 2021 will not look the same as they did in 2019.