CONTRACT SITUATION COMPLEX FOR JAMES
Opt-out no surprise, as he sets up for max deal
Cleveland Cavaliers superstar LeBron James’ decision to opt out of the final year of his contract and become a free agent Friday was not a surprise.
With the NBA’s unprecedented jump in the salary cap, James is maximizing his earning power. By opting out, he will make more in 2016-17 than he would have by remaining in the contract he signed last July. James’ agent informed the Cavs of the decision to opt out before Wednesday’s deadline, a person familiar with the decision told USA TODAY Sports. The person requested anonymity because he was not authorized to speak publicly about the situation.
Since James returned to Cleveland in 2014, he has signed two two-year contracts, opting out after the first season of each deal to capitalize on larger raises.
James, MVP of the 2016 Finals, could sign a two-year deal worth $56.3 million in July and opt out next season when he could sign a long-term deal when the salary cap is projected to jump from $94 million in 2016-17 to $107 million in 2017-18.
But if James took that route, he would not be able — under the current collective bargaining agreement — to a sign a five-year deal worth $200 million in the summer of 2017, three league executives told USA TODAY Sports. The people spoke on condition of anonymity because the free agency period hadn’t started.
It’s because of a clause in the collective bargaining agreement known as the “over-36 rule.” The rule prevents teams from giving four- or five-year deals to players who are unlikely to play the life of the deals with no salary cap consequences.
For a player who is 36 in the last season of a five-year deal, his final annual salary is applied proportionally to previous seasons and counts toward the team’s cap. Most players don’t make the maximum at that age. Most players aren’t James.
In James’ case, if he signed a max deal next summer, there’s no way to apply any money from the fifth and final year of deal — when he’d be 36 — to his first season in 2017-18, because league rules prevent players from making more than the maximum in a season.
Again, it’s complicated. But the bottom line is that NBA rules prevent him from signing a fiveyear max deal worth $200 million-plus next offseason.
One intriguing angle: The players or league can opt out of the current CBA on Dec. 15. If the sides have to renegotiate a CBA, it’s possible that rule will be altered — not an unrealistic scenario, considering James is the first vice president of the National Basketball Players Association. Maybe it’s the over-37 rule, which would create a way for James to sign that huge deal next summer.
That conundrum aside, nothing prevents James from signing a four-year deal next offseason with the Cavs or another team. Under current rules, James next July could sign a four-year, $156.8 million contract with Cleveland. If James decided to leave the Cavs after next season, he could sign a four-year, $150.4 million deal elsewhere.
But James has other options. Because Cleveland does not have full Bird rights (a provision allowing a player’s current team to pay him more than other teams can) on James now — just early Bird rights — it can only sign him this offseason to a four-year contract worth $137.7 million.