When a player becomes a free agent, there is a maximum salary he may be paid. For players with less than 6 years of experience, that max is 25%. For players with 7-9 years, it is 30%. And for players with 10 or more years of experience, they may receive 35% of the cap. In 2013 terms, that means a 10 year veteran may receive a salary starting at $19 million in any free agent contract he signs.
But when looking at the Lakers' salary cap structure, you can see that Kobe Bryant is being paid more than $31 million in the final year of a contract that started at nearly $30 million in the first year. What gives?
In the CBA, the restriction on a max salary is superseded by a provision allowing a team to give a max salary of 105% of a player's previous salary. For any free agent, his max salary is calculated by taking the greater of the percentage of the cap or 105% of his previous salary.
So for Kobe Bryant, a player who has been signing maximum contracts for years and years through multiple CBA's, the incremental raises and 105% max has compounded and compounded into a salary that is now astronomical, but essential to be paid. In short, NBA teams have no choice but to pay a rate far above market value because they have no other alternative.
Take Dwight Howard, for example. Assuming he plays well the next three years and opts out of his fourth year with the Rockets, the team will be forced to make a choice to pay him a contract that pays him almost $24 million in the first year and almost $135 million over five years. Over five years, that contract would pay him an average annual value of nearly $27 million, an almost cap-crippling move.
But, in the climate of today's NBA, it's a salary they have to pay. With stars so scarce, teams are being forced to pay astronomical salaries to keep their players, and it limits the ability of franchises to keep their teams together. The Rockets, for example, would be forced to pay Dwight Howard and James Harden some $50 million in 2017. If Les Alexander is not willing to pony up for a very, very big luxury tax bill, it will be virtually impossible to put any core around them.
In essence, this provision disproportionately rewards veterans for long term successful play and shifts money away from role players. But how do you fix it? The rule was initially written to make sure players don't have to take a paycut after a successful season just because they became a free agent. In order to fix it, the solution is a simpler salary structure.
Instead of having a starting salary not be able to exceed 105% of the previous salary of a certain percentage of the cap, a player's maximum salary will simply be capped by the given percentage that is currently written into the CBA. That is, players with six years or less of experience will be capped at 25%, players with 7-9 years will be capped at 30%, and players with 10 years or more max out at 35%.
And that is not just their starting salaries. That is their salary for any given year. So if 10 year veteran agrees to a four year, max contract, that contract will pay them 35% of the cap for all four years. Because the cap increases every year, they will not be taking a paycut in any given season, and at the end of the deal, they can re-up for another contract that will pay him more than he got in a previous season.
This way, a player's maximum salary increases in conjunction with the salary cap, as it should be. The Lakers would not be forced to pay Kobe Bryant more than half of the salary cap in one season, and teams would be able to keep star players around at a more reasonable price and build a team around them.
This is a change that will never happen, as the NBPA is run by veteran players, the people that would be hit hardest by such a move, but a man can dream. It's a subtle change, but that one little tinkering would make the NBA's salary structure much more equitable and logical.