The NBA and the National Basketball Players Association have made a ruling on Nene‘s unusual new contract with the Rockets, according to Shams Charania of The Athletic (Twitter link). As we detailed last week, Nene’s two-year contract has a base value worth the minimum, but features over $7MM annually in likely bonuses that push the value of the deal to $10MM per year.
As Charania explains, Nene’s deal will essentially remain unchanged, but the $7MM+ in likely bonuses will be excluded in the event of a trade. In other words, he’d count for just $2.56MM in both outgoing and incoming salary for matching purposes, rather than being considered a $10MM outgoing piece.
According to Charania (via Twitter), who confirms that the Rockets had discussed a similar deal with Iman Shumpert, Nene will still have the opportunity to earn his bonuses, though the team figures to limit his playing time to avoid paying him significantly more money. In order to receive the full $10MM, Nene must appear in 40 games and his team must compile at least 52 wins.
Word first broke earlier today that the NBA was still weighing how to handle the contract. As we observed at the time,the league has the right to challenge deals that it believes violate the spirit of rules in the Collective Bargaining Agreement, even if those deals are technically legal based on what’s written in the CBA.
It’s a tough turn of events for the Rockets, who appeared to have found a creative way to maximize their flexibility for in-season deals, having generated a $10MM trade chip without being at risk of paying out the full $10MM. As a result of today’s ruling, that won’t be the case after all.
Because he signed a two-year contract, Nene will have a cap charge of $2.56MM rather than the $1.62MM cap hit he would have had if he’d signed a one-year, minimum-salary contract, pushing Houston closer to the tax. On a one-year deal, Nene would’ve had the right to veto trades.