The CBA Glossary

Deferred comepnsation

“Deferred Compensation” means the component of Compensation for a Season that is payable to a player during the period commencing after the May 1 following such Season, in accordance with the rules set forth in Articles VII and XXV. The determination of whether Compensation is Deferred Compensation will be based upon the time set by the Player Contract for the player to receive the Compensation, without regard to whether the obligation is funded currently or secured in any fashion

make the required tax payment to the NBA no later than ten (10) business days following the completion of the Governing Audit Report for such Salary Cap Year.

(4) All amounts remitted to the NBA by NBA Teams pursuant to this Section 2(d) shall be the exclusive property of the NBA, and such amounts shall be used and/or distributed as follows: (i) Subject to Sections 2(c)(2)(ii) and 2(c)(7) above, the NBA may elect to distribute up to fifty percent (50%) of such amounts to one (1) or more Teams based in whole or in part on the fact that such Team(s) did not owe a tax for such Salary Cap Year (e.g., subject to Sections 2(c)(2)(ii) and 2(c)(7) above, the NBA could elect to distribute fifty percent (50%) of such amounts in equal shares to all non-taxpayers in such Salary Cap Year); and (ii) amounts not distributed in accordance with Section 2(d)(4)(i) above shall be used for one (1) or more “League purposes” (as defined below) selected by the NBA.

For purposes of this Section 2(d)(4), the use of tax amounts for a “League purpose” shall mean the use of such amounts for any purpose, including, but not limited to, the distribution of such amounts to one (1) or more Teams; provided, however, that such amounts may not be distributed to a Team or expended for the benefit or detriment of a Team in a manner that is based, directly or indirectly, in whole or in part, on the amount of the Team’s Team Salary or on whether the Team is a taxpayer. Without limiting the foregoing, a team assistance plan adopted by the NBA and funded, in whole or in part, with tax amounts shall be considered a “League purpose” if, pursuant to the plan, a Team’s entitlement to an assistance receipt and/or the amount of such receipt is based, in whole or in part, on a profit, loss, and/or expense computation determined by the NBA under which the Team is credited with a Team Salary no less than the league average; provided, however, that in order to qualify as a “League purpose,” such a plan may not otherwise base a Team’s entitlement to assistance and/or the amount of such assistance on the amount of a Team’s Team Salary or on whether the Team is a taxpayer.

Standard payment schedule

Players with less than $10,000 in guaranteed salary now get paid $4,500 a week for training camp, up from $2,000. This amount is not included in a team's salary cap calculation.

Up to a point, players can negotiate different payment schedules to the standard NBA ones ⓘArticle II (Uniform Player Contract) Section 3 (Allowable Amendments):

In their individual contract negotiations, a player and a Team may amend the provisions of a Uniform Player Contract, but only in the following respects:

(d) By agreeing upon a Compensation payment schedule (to be set forth in Exhibit 1 to a Uniform Player Contract) different from that provided for by Paragraph 3(a) of the Uniform Player Contract; provided, however, that such amendment shall comply with the provisions of Section 3(b) above (relating to lump sum bonus payments) and Section 13(e) below and, provided, further that: (i) the only such amendment that shall be permitted with respect to any Season in which the player’s Compensation is not greater than the Minimum Player Salary shall be as described in Section 6(g) or Section 11(a)(ii) below; and (ii) the only such amendments that shall be permitted with respect to any Season in which the player’s Compensation is greater than the Minimum Player Salary shall be as follows: (y) a Uniform Player Contract may provide for the player’s Compensation (other than advances pursuant to clause (z) below and amounts paid on a deferred basis in accordance with Article XXV of this Agreement) to be paid in either twelve (12) equal semi-monthly payments or thirty-six (36) equal semi-monthly payments beginning with the first of said payments on November 1 of each year covered by the Contract and continuing with such payments on the first and fifteenth of each month until said Compensation is paid in full; and (z) a Uniform Player Contract that, at the time the Contract is signed, is fully or partially protected for lack of skill and injury or illness for a Season may provide for the player to be paid a portion of his Compensation for such Season, up to the Maximum Advance Amount as defined below, prior to November 1 of such Season. The Maximum Advance Amount for a Season shall equal the lesser of eighty percent (80%) of the amount of the player’s Compensation for such Season that is protected for lack of skill and injury or illness, or fifty percent (50%) of the player’s Base Compensation for such Season; provided that no more than twenty-five percent (25%) of the player’s Base Compensation for such Season may be paid to the player prior to the October 1 immediately preceding the first day of the Regular Season.

Every NBA contract must provide that at least 10% of a player's salary for a season (excluding likely bonuses and trade bonuses) is paid as ordinary salary during the season. The money must be paid either according to the standard payment schedule in the Uniform Player Contract, or in 12 equal semi-monthly instalments beginning on November 1 and continuing on the 1st and 15th of each month. This is to prevent contracts from being structured so that virtually all compensation is deferred into the future, and that players must receive a meaningful portion of their pay during the season itself. ⓘArticle II (Uniform Player Contract) Section 13 (General):

(e) Every Uniform Player Contract must provide that for each Season of such Contract, the player will be paid at least ten percent (10%) of his Salary for such Season, excluding Likely Bonuses and any portion of the player’s Salary attributable to a trade bonus, in Current Base Compensation in accordance with the payment schedule provided in Paragraph 3 of the Contract or in twelve (12) equal semi-monthly payments beginning with the first of said payments on November 1 of each year covered by the Contract and continuing with such payments on the first and fifteenth of each month until said Compensation is paid in full.

Teams cannot massively front-load salary payments by paying players before the league moratorium has ended, as this would affect the calculations done within it. The first semi-monthly payment date is always at least seven following the end of the moratorium. ⓘArticle II (Uniform Player Contract) Section 13 (General):

(f) No Uniform Player Contract may provide for the payment of any Compensation earned for a Season prior to the first semi-monthly payment date that is at least seven (7) days following the completion of the Audit Report for the Salary Cap Year covering the immediately prior Season.

The only compensation a team may provide under a player's NBA contract is money paid directly to the player. Specifically, payment must be made through acheque payable to the player or direct deposit into the player's bank account. Cars, stock, equity, investments and any other non-cash benefits are not allowed to satisfy as salary payments, so as to accord with circumvention rules. ⓘ Article II (Uniform Player Contract) Section 13 (General):

(c) The only form of Compensation that a Team may pay a player under his Uniform Player Contract is cash via a check made payable to the player or via a direct deposit made to the player’s bank account. Compensation of any other kind is prohibited.

In other professional basketball leagues, it is - or, perhaps it is more fair to say, was - commonplace for the team signing a player to pay the agent's share of the contract. However, the CBA demands that NBA teams cannot directly or indirectly pay a player's agent/representation, and contracts cannot require such payments. The player also cannot transfer his contractual right to receive NBA salary payments to another person or company, such as business partners or investment firms, with the exception that The team may send the player's paycheck to his agent or attorney if the player specifically instructs the team to do so in writing ⓘ Article II (Uniform Player Contract) Section 13 (General):

(d) No Team shall make any direct or indirect payment of any money, property, investments, loans, or anything else of value for fees or otherwise to an agent, attorney, or representative of a player (for or in connection with such person’s representation of such player); nor shall any Player Contract provide for such payment. No player shall assign or otherwise transfer to any third party his right to receive Compensation from the Team under his Uniform Player Contract. Nothing in this subsection (d), however, shall prevent a Team from sending a player’s regular paycheck to a player’s agent, attorney, or representative if so instructed in writing by the player.

Deferred compensation

Deferred compensation means money that is earned during one season, but paid later. It is permitted in the CBA, up to a point.

A player's contract cannot defer more than 25% of his compensation for any season. Without a limit on deferred salary, teams could manipulate contracts in ways that distort the salary cap or financial system., by for example promising huge payments far in the future. ⓘ Article XXV (Limitation on Deferred Compensation) Section 1 (General Limitation):

No Uniform Player Contract may provide for Deferred Compensation for any Season that exceeds twenty-five percent (25%) of the player’s Compensation for such Season.

If a contract includes deferred compensation, the contract must specify exactly which season the deferred money belongs to. For example, the contract cannot simply say $10 million will be paid later over the life of the contract; it must identify the season to which that compensation relates ($2 million deferred from 2026-27, $3 million deferred from 2027-28, etc). ⓘ Article XXV (Limitation on Deferred Compensation) Section 2 (Attribution):

All Player Contracts shall specify the Season(s) to which any Deferred Compensation is attributable.

If $500,000 or less of guaranteed salary remains at the time a player is waived, the player's remaining guaranteed salary continues to be paid according to the contract's original payment schedule. This is up from $250,000 in the last CBA.

The "Maximum Advance Amount" that players can receive upfront is still equal to the lesser of either 80% of the player's guaranteed salary or 50% of his base salary, but the date for payment of that advance has been moved up from 15th November to 1st November.

Players must be paid at least 10% of their base compensation on regular league paydays (down from 20% under the previous CBA)

The "repeater" tax

For the most part, NBA players are paid on the first and fifteenth of every month, with a standard of 24 paydays per calendar year. Players earning more than the minimum can agree to 12 payments over six months or 36 payments over eighteen months, yet the norm is the norm.

There is room for some further deviation from these standards. Players can receive both advances on their salary, and receive loans from their teams.

There is not, however, room for the amount of deviation that is currently being reported in the case of Carmelo Anthony.

It is being reported in several places around the web, most notably (and I believe initially) the Wall Street Journal, that Melo received 50% of his new $124,064,681 contract in one up front payment. Admittedly, it is not so much expressly stated as it is implied that this is the case, but whichever it is, the idea it spawned that he will or might have already gotten $62 million is wrong. The confusion comes from a misunderstanding about how, when and to what degree NBA contracts can be advanced, a confusion I hope to clarify here.

The first and most important point to make is that salary for a future season can never ever be advanced. NBA seasons begin on July 1st and end on June 30th, so if it is October 6th 2014 and you want an advance on your 2015/16 salary, you are begrudgingly going to have to wait until July 1st 2015 to get so much as a piece of it. This rule alone is enough to show that the idea that Melo received a full 50% of the full life of the contract up front is false.

There is, however, a reason the story exists, for the 50% threshold comes from somewhere. What players earning more than the minimum can do is receive an amount for up to 50% of their annual base salary prior to the November 15th of that season. In practical terms, what that means is if you have a $12 million salary in one season, you can receive up to $6 million of it before November 15th, only 25% of which can be before October 1st. [For minimum salary players, change the 50% limit to a mere 7.5%.] When considering the the previous provision that no salary in future seasons can be advanced, we are now looking at a situation whereby the most a player can receive immediately upon signing a deal is 25% of the first year base salary. And that is considerably less than 50% of the whole shaboodle.

This, then, is what Carmelo did, and therein lies the confusion as to what that 50% designation means. He did not get 50% of his contract up front. He merely will receive some of it earlier than it could have been, in a series of advances stretching throughout the life of the contract.

This is not all that common, but is not unprecedent or rare. Many players - especially rookies on rookie scale contracts who almost always get at least something - have some money advanced to them, and some even have the full 50% designated in this way. As has been cited alongside the Melo story, his team mate J.R. Smith also has this full 50% advance stipulated in his contract, but so do others, including Pau Gasol’s new deal with Chicago, while Cleveland gave 50% advances to all three of LeBron James, Kyrie Irving and Mike Miller this summer. Chris Bosh’s new contract with Miami calls for a highly comparable 40% advance, should we wish to keep naming names. Of all the new contracts handed out this offseason, approximately 50 call for some sort of advance, and while some of those advances are a mere $50,000 or so, some are as big as it gets.

[It is possible that Melo did indeed get his $62 million in advance from a bank or private lender, I suppose. But that is not what was being discussed here, and certainly not what was reported. If this is true, this is coincidental.]

So no, Carmelo did not receive $62,032,340 of his contract up front. At most, he received $5,614,600. We generally do not talk about NBA player payment schedules because, unless you directly pay or receive the checks yourself, they do not matter significantly from the point of view of roster management. However, if we are to do it, we must do so properly.

With respect to Player Contracts entered into or extended on or after the effective date of this Agreement, in the event that a Team terminates a Player Contract (resulting in the player’s separation of service from the Team), and the Team is obligated thereafter to make payments to the player pursuant to Exhibit 2 of the Contract, such payments shall be made in accordance with the following schedule: (i) If, as of the date of the player’s separation from service, the aggregate Base Compensation owed to the player pursuant to Exhibit 2 of the Contract is five hundred thousand dollars ($500,000) or less, such amount shall be paid in accordance with the semi-monthly installments prescribed by the payment schedule set forth in the Contract. Each installment shall equal the amount of Base Compensation that was due per pay period for the applicable Season immediately before the Player’s separation until the aggregate amount of the remaining Base Compensation owed to the player pursuant to Exhibit 2 of the Contract is paid in full. Article II 31 (ii) If, as of the date of the player’s separation from service, the aggregate Base Compensation owed to the player pursuant to Exhibit 2 of the Contract exceeds five hundred thousand dollars ($500,000), such amount shall be paid as follows: (x) The Base Compensation, if any, owed to the player pursuant to Exhibit 2 of the Contract with respect to the “current season” (as defined below) at the time when the request for waivers on the player is made shall be paid in accordance with the payment schedule set forth in the Contract. Each installment shall equal the amount of Base Compensation that was due per pay period immediately before the player’s separation until the aggregate amount of the remaining Base Compensation owed to the player pursuant to Exhibit 2 of the Contract with respect to the current season is paid in full. For purposes of this subparagraph (x) and subparagraph (y) below only, the “current season” means the period from September 1 through June 30. (y) The remaining Base Compensation, if any, owed to the player pursuant to Exhibit 2 of the Contract shall be aggregated and paid in equal amounts per year over a period equal to twice the number of NBA Seasons (including any Season covered by a Player Option Year) remaining on this Contract following the date upon which the request for waivers occurred, plus one NBA Season. For this purpose, if the request for waivers is made during the period from September 1 through June 30, the number of NBA Seasons remaining on this Contract shall not include the current season (as defined in subparagraph (x) above). The rescheduled payments described above shall be paid over the applicable number of NBA Seasons in equal semi-monthly installments on the pay dates prescribed by Paragraph 3(a) of the Uniform Player Contract. 32 Article II The following example is for clarity. A player has four (4) Seasons remaining on his Contract with protected Base Compensation of the following amounts: $4 million in Season 1, $4.3 million in Season 2, $4.7 million in Season 3, and $5 million in Season 4. The player is waived on December 1 of Season 1. Under Section 4(k)(ii)(x) above, the player would receive the remainder of his $4 million in Base Compensation for Season 1 in accordance with the payment schedule set forth in his Contract. Under Section 4(k)(ii)(y) above, the $14 million of protected Base Compensation remaining to be paid for Seasons 2-4 of the Contract would be paid at a rate of $2 million per Season for the next seven (7) Seasons in accordance with the payment schedule set forth in Paragraph 3 of the Contract. If the same player is instead waived on July 30 prior to Season 1, the $18 million of protected Base Compensation remaining to be paid for Seasons 1-4 of the Contract would be paid - under Section 4(k)(ii) above - at a rate of $2 million per Season for the next nine (9) Seasons in accordance with the payment schedule set forth in Paragraph 3 of the Contract. (l) In addition to the standard conditions or limitations set forth above in this Section 4 (as set forth in the form of Exhibit 2 to the Uniform Player Contract), a Team and a player are authorized under Article II, Sections 4(a)-(e) to negotiate additional conditions or limitations applicable to the player’s Compensation protection for such categories as the Team and player agree to protect that relate to only the following: (i) whether the Team waives a player by a certain time (e.g., providing that a player’s Base Compensation protection increases if the Team does not request waivers on the player by a certain date); (ii) achievement of certain benchmarks relating to Team and/or player performance or a player’s physical condition (e.g., providing that a player’s Base Compensation protection increases if the player achieves certain performance criteria or meets specified weigh-in criteria), provided that any such performance benchmarks must be based solely upon official NBA statistics, the determination of whether a player has met any such performance benchmark shall be made solely by reference to official NBA statistics as published on NBA.com, and any amendment agreed upon pursuant to this subsection is structured so as to provide an incentive for positive achievement by the Team and/or the player; (iii) a player experiencing a particular injury, illness, or other medical condition (e.g., providing that a player’s Base Compensation protection does not apply if the Team terminates a Contract due to a particular injury to a player’s left knee); and (iv) the Team’s ability to obtain insurance, using best efforts, of a certain type and dollar amount within a specified period of time following Article II 33 execution or extension (as applicable) of the Contract. Other than the standard conditions or limitations set forth above in this Section 4 (as set forth in the form of Exhibit 2 to the Uniform Player Contract) and any individually-negotiated conditions or limitations in accordance with this Section (l), no Player Contract entered into or extended on or after the effective date of this Agreement (but in the case of Extensions only with respect to the extended term) may contain any additional condition or limitation of any kind on a player’s Compensation protection.

Payment on minimum salaries

(g) A Uniform Player Contract (other than a Two-Way Contract) that provides in any Season for the player to earn Compensation not greater than his applicable Minimum Player Salary (with no bonuses of any kind) that, at the time the Contract is signed, is fully or partially protected for lack of skill and injury or illness may be amended to provide for the player to be paid a portion of his Compensation for such Season (the “Advance”), up to the Minimum Player Salary Advance Limit as defined below, prior to November 1 of such Season. The Minimum Player Salary Advance Limit for a Season shall equal the lesser of (i) eighty percent (80%) of the amount of the player’s Compensation for such Season that is protected for lack of skill and injury or illness, or (ii) seven and one half percent (7.5%) of the player’s Base Compensation for such Season. Any Advance paid to a player for a Season pursuant to the foregoing must be deducted in full from the first installment of Current Base Compensation (i.e., on November 1) and, if necessary after reducing in full the first installment, the second installment of Current Base Compensation (i.e., on November 15) for such Season that the player would have received pursuant to Paragraph 3(a) of the Contract had there been no such Advance. To effectuate the requirement set forth in the preceding sentence, every such Contract that provides for an Advance must contain the following language (and only such language) under the “Payment Schedule” heading in Exhibit 1 or Exhibit 1A (as applicable) with respect to each applicable Season: “Player’s Current Base Compensation with respect to the _________ Season(s) shall be paid in accordance with Paragraph 3(a), except that the November 1 installment of such Current Base Compensation and, if necessary after reducing in full the November 1 installment, the November 15 installment of such Current Base Compensation shall be reduced by $[amount of Advance], which amount shall be paid to Player in advance on [d

Team Fines

If the NBA fines a team, an owner, governor or any team personnel for violating league rules relating to injury reporting, rest reporting, game-status reporting, premature free-agent discussions, tampering, leaving the bench during an altercation or publicly criticising referees, and the fine is actually collected by the league, then half of the money collected must be donated to a charity chosen by the Players Association. However, there are limits on how much can be directed to charity. The charitable payment cannot exceed 50% of the maximum fine that could be imposed on a player for the same type of conduct. For example, if the maximum player fine for a particular violation is $50,000, the most that can be sent to charity from a team fine for that violation is $25,000, even if the actual fine was much larger. For violations where there is no corresponding maximum player fine, the charitable contribution is capped at $50,000, regardless of how large the team fine may be. ⓘ Article XXIX (Miscellanous) Section 19 (Fines Imposed on Teams):

In the event that (a) a fine is imposed on a Team, Governor, or Team personnel (in each case, a “Team Fine”) by the NBA for violation of a league rule regarding (i) injury, illness, rest, or game status reporting, (ii) timing of free agency discussions, (iii) tampering, (iv) leaving the bench area during a game, or (v) team criticism of game officials, and (b) such Team Fine amount is collected by the NBA, then the NBA shall remit fifty percent (50%) of the amount collected to an NBPA-Selected Charitable Organization (as defined in Article VI, Section 6(a)), provided that the maximum amount that shall be remitted to an NBPA-Selected Charitable Organization in respect of any Team Fine shall be fifty percent (50%) of the amount of the maximum fine that may be imposed on a player for engaging in the conduct at issue, and provided further that, where there is no specified maximum fine for a player for the relevant conduct, the maximum amount that shall be remitted to the NBPA-Selected Charitable Organization in respect of such Team Fine shall be $50,000. [...]

The payments are not made immediately. Instead, the NBA keeps track of all qualifying fines collected during the year and then calculates the charitable amounts after the league's financial auditors have completed the final audit for that year during the moratorium, to be payable within 90 days. ⓘ Article XXIX (Miscellanous) Section 19 (Fines Imposed on Teams):

[...] The remittances made by the NBA pursuant to this Section 19 shall be made annually, ninety (90) days following the Accountants’ (as defined in Article VII, Section 10(a)) submission to the NBA and the Players Association of a final Audit Report or an Interim Designated Share Audit Report (as defined in Article VII, Section 10(a)) for the Salary Cap Year during which the fine amounts are collected by the NBA.

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