LeBron James is “widely expected” to opt out of his contract this summer and sign a new contract that covers two years with a player option for the final season, just like the one he signed this past offseason, writes Joe Vardon of the Northeast Ohio Media Group. It’ll almost certainly be another maximum-salary arrangement with the Cavs, as James made it clear that he has no intention of leaving Cleveland again. James is intent on making the “appropriate business decision”, even if it means changing teams this summer, as Northeast Ohio Media Group scribe Chris Haynes heard in December. However, James has said on multiple occasions that he signed his existing short-term deal to maximize his earnings and not to set up an early exit from the Cavs.
Vardon estimates that the maximum salary for a player with 10 or more years of experience, like James, will swell to about $23MM next season. That would give James roughly $1.5MM more than he’d make on his option, which is worth about $21.573MM. Regardless of where the league sets the maximum salary, which won’t be determined until July, James can sign for up to 105% of his approximately $20.644MM salary from this season. The value of the player option is 104.5% of his salary this year, so as long as James is in line to command the maximum salary, as he assuredly will be, opting out will be the wise financial play.
It also makes financial sense for James to sign another short-term deal. The Cavs will only have his Non-Bird rights this summer, so the second season of his deal could again represent no more than 104.5% of the salary in the first year of the contract. Plus, most league executives assume the salary cap will zoom to around $90MM for 2016/17, and that would send maximum salaries skyrocketing with it. So, the ability to once more hit the market and reap part of the influx of the league’s new television deal is surely enticing for the Rich Paul client.
Brian Windhorst of ESPN.com first wrote in July that James would probably continue to sign short-term deals. Inking another two-year pact with a player option, as Vardon pegs him likely to do, would give James the greatest amount of guaranteed money possible while still allowing him the chance to hit free agency again in 2016. Contracts signed under the most recent collective bargaining agreement can only contain one option year, unlike the deal that James signed with the Heat, which contained two options.
The ability for James to leave so soon has made the Cavs a “little uncomfortable”, Windhorst wrote in October, even though it seems highly unlikely he leaves. Another short term deal would keep pressure on the Cavs front office to cater to James, who, as Vardon points out, wants the team to keep spending to maintain a championship-caliber roster. Still, given the backlash James would engender if he were to once more desert Cleveland, the pressure on GM David Griffin and company might be overstated.