What comes to mind when you think of a player worthy of earning the maximum amount allowed under the collective bargaining agreement? Many people seem to think that a "max contract" has to be reserved for a handful of the league's elite, the best of the best. If the Boston Celtics are going to shell out a max contract to anyone this summer, those fans are expecting to get an MVP caliber player that will be the cornerstone of the franchise.
That is simply not the case, as not all max deals are created equally.
According to Larry Coon's brilliantly detailed NBA Salary Cap FAQs, max contracts are defined based on a combination of the salary cap and a player's experience. In the table below we can see how salaries varied this past season for those playing under a max deal based on how much time they had spent in the league when they signed those contracts. We can also project what max deals signed this summer will look like, based on a salary cap expected to be set at $67.1 million for next season.
In other words, just because you hear that a player is rumored to be getting a max contract, that does not necessarily mean that he's about to be paid as much as someone like LeBron James, or that the player necessarily has to be in the same stratosphere to earn it.
This summer will be a unique setting for the free agency landscape, as we are on the verge of an unprecedented leap in the salary cap figure. Since max contracts are based on a percentage of the salary cap at the time the deal is signed, locking in a player to a max deal this offseason could make the contract look like a bargain after the cap spikes.
Only the first season's salary is subject to the maximum, with restrictions on how much of a raise the player can earn in each season thereafter. Players can earn a 7.5% raise if they re-sign with the team that holds their Bird Rights, or 4.5% raises if they sign with another team or agree to a sign-and-trade.
This is why you are bound to see truck loads of cash being thrown at free agents that don't necessarily fit the mold of a franchise player. A likely example of this is DeAndre Jordan, who I wrote about yesterday as a potential target for the Celtics. Many have argued that the third best player on a team that fell short of the Conference Finals isn't worthy of the max. That may be true in a vacuum, but the philosophy is based on a misunderstanding of the salary cap and the environment the league finds itself in during this upcoming free agency period.
Jordan is one of the league's top centers. He's an athletic rim-protector that cleans the glass with the best of them and creates easy baskets with a bevy of dunks that makes him one of the game's most efficient players in the paint. However, as valuable as those skills are, he probably won't ever be the best player on a championship team. That does not mean he shouldn't get a max deal this summer.
Think of it this way. Jordan is only 26 years old, but has been in the league for 7 years. That means he can earn up to 30 percent of the salary cap, which gives him a first-year salary of approximately $20.1 million. That seems pretty steep for a player of his caliber, but what about after that? The cap is expected to leap to $89 million in 2016-17, so players with Jordan's experience can earn $26.7 million in the first year of a max deal signed next summer. Suddenly Jordan's salary (which would raise to about $21 million in his second year if he signs with a team other than the Clippers) seems more palatable. Instead of clogging up 30 percent of the salary cap, he would account for less than 24 percent. As the cap continues to rise at a greater rate than his annual raises, he would become even more of a bargain.
Side note: this is why some have speculated that Jordan could sign a one or two-year deal this summer, which would allow him to enter free agency again when the salary cap is much higher. If he signs a three-year deal then he will have 10 years of experience when he signs his next contract, making him eligible to make 35 percent of the cap. Signing a shorter deal would negate much of the benefit of signing him to a max deal prior to the cap spike.
Teams that have the money to spend this summer should overpay for these types of players now because it will be much more costly to find a max player later.
Draymond Green provides another great example. He's a versatile defender that has become a key cog in the Golden State Warriors system. Stephen Curry is the league's MVP and Klay Thompson is arguably their second best player, but the Warriors are nuts if they let Green get away because they weren't willing to give him a max deal on the basis that he's "only" their third best player.
Ditto for Jimmy Butler. We may only have one season of evidence that he is an All-Star caliber player and the Chicago Bulls may still consider Derrick Rose to be the pillar of their franchise (so long as his knees are sturdy enough to keep that pillar from collapsing). Doesn't matter, he's a max guy.
The Celtics currently have approximately $40.5 million committed to next year's roster, which gives them room to add any max player, regardless of their experience (assuming they renounce all cap holds). A veteran with 10+ years of experience would bring their team salary to around $64 million (without including next year's rookies), leaving them with very little room to operate under the cap. It's unlikely they would go that route, but a player with 9 years or less would leave them with reasonable flexibility.
To be a true contender in the NBA you need star players. Boston has a lot of nice pieces, but no stars. In order to entice a true superstar to come here, the Celtics need to add to their collection of talent. Some of the players that get max contracts this year won't be big enough stars to get the Celtics to that championship level on their own, but locking up a player that could play second-fiddle to another star now isn't wasting valuable cap space, it's a step in the right direction.