How Teams Are Using Minimum Salary Deals

As Chuck Myron of Hoops Rumors outlined in a piece over the summer, when we say a player is earning the maximum salary, that doesn’t necessarily tell us how much he’ll make in a given season. Based on service time and the previous year’s salary, a player’s maximum will vary, meaning Kobe Bryant‘s 2013/14 salary will more than double James Harden‘s, even though they’re both technically max players.

The same can be said of minimum salaries, which vary from player to player, albeit not quite as drastically as max salaries. Depending on how many years of NBA experience a player has, his minimum salary for the 2013/14 season could be worth as little as $490,180 (for a rookie), or as much as $1,399,507 (for a player with 10+ years of experience). You can find all the specific figures for ’13/14 in our glossary entry on the minimum salary exception.

That minimum salary exception, which allows teams over the cap to sign players for the minimum, comes with a few more quirks. For example, it can only be used to sign players for one or two years — a longer contract requires a different exception or cap space. Additionally, if a team signs a veteran to a one-year contract using the minimum salary exception, the team is only on the hook for the two-year-veteran’s minimum ($884,293), with the league picking up the rest of the tab.

Taking into account these rules, it’s not hard to see why the Heat, a team in the luxury tax, signed veterans like Michael Beasley and Roger Mason Jr. to one-year deals. Including a second-year team option on Mason’s contract, for instance, would allow the Heat to bring back the veteran shooter next year if he thrives this season. But a two-year minimum salary would mean Mason would be on the team’s books for his full $1,399,507 salary in 2013/14, rather than just $884,293. In other words, adding an extra year to his deal would have cost the Heat an extra $500K+ in salary, plus additional tax payments, even before that second year arrived.

On the other side of the spectrum, the Sixers, the team with the most cap space in the NBA, doesn’t need to use the minimum salary exception to sign anyone. As HoopsWorld’s salary page for Philadelphia shows, the team has taken full advantage of that flexibility this offseason, inking an incredible seven players (Darius Morris, Gani Lawal, Mac Koshwal, Vander Blue, Rodney Williams, Khalif Wyatt, and Hollis Thompson) to non-guaranteed four-year contracts worth the minimum.

Not all of those seven players will make the Sixers’ regular season roster, and those that do may not last four full years with the team. But if there’s even one gem in the group, Philadelphia has locked that player up through 2017 for a total salary that barely exceeds what Nerlens Noel will earn this year. It’s one of the benefits of having cap space, and it’s an opportunity that the CBA doesn’t afford to teams like the Heat.

The Rockets are another team that has taken full advantage of the flexibility of minimum salary contracts, having locked up players like Patrick Beverley and Greg Smith to long-term deals for the minimum. And even when Houston went over the cap this summer, the club didn’t have to worry about the tax implications of two-year minimum salary contracts, meaning guys like Reggie Williams, Ronnie Brewer, and Omri Casspi received multiyear non-guaranteed deals rather than one-year pacts. Assuming those players make the team, the Rockets will pay each of them more than the $884,293 the Heat owe their minimum salary guys, but Houston won’t have to pay extra tax penalties, and will have the flexibility to bring those players back cheaply next season.

Whenever another new name joins the ranks of the NBA’s maximum salary players, we’re reminded that not all maximum salaries are created equal. It’s worth remembering that the same can be said about minimum salaries, and teams can create savings, gain flexibility, or land bargains depending on what sort of minimum contracts they’re handing out.

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