NBA Expiring Contracts Will Soon Make A Return

It wasn’t too long ago that expiring contracts were valuable assets in the NBA.  During the era of the 2005 collective bargaining agreement that lasted until 2011, general managers of NBA teams couldn’t be happier to have a horrendously overpaid player on their rosters — so long as the player was in the final year of his contract.  Kwame Brown was an instrumental part of the Pau Gasol trade to the Lakers that looks much more balanced eight years later, thanks to his brother Marc. Keith Van Horn was such an important expiring contract for the Jason Kidd trade to the Mavericks that the Mavs brought him out of quasi-retirement just so he could balance the salaries in the trade. Bill Simmons has routinely reminded us of the importance of Theo Ratliff’s expiring contract.

NBA Expiring Contracts Will Soon Make A Return

During the years before the new CBA, contracts could last up to six years instead of five, resulting in more players becoming washed up by the final year of their deals; few GMs were shrewd enough to avoid these albatross deals. Maybe most importantly, the owners felt the brunt of the economic recession from the 2008-09 season through 2010-11.  Teams gladly accepted expiring contracts in trades not only to balance out the incoming and outgoing salaries that are mandated by NBA rules, but also to receive salary cap and cash flow relief at the end of the season.

Now, contracts are shorter, GMs have gotten smarter, and the NBA salary cap will rise dramatically over the next two off-seasons.  Therefore, even the worst contracts in the league aren’t that bad anymore.  Take DeMarre Carroll and the Toronto Raptors, for example.  Carroll is a fine player, and it wouldn’t surprise me in the slightest if he bounced back from his health woes this season and paid dividends for the Raptors either in the 2016 playoffs or the next three seasons of his four year, $60 million deal.  Imagine, though, if this were 2009 and Carroll had just signed anything in the same stratosphere as a $60 million contract.  We would be talking about how the Raptors’ ability to become a real contender in the next few years would be significantly hindered by the Carroll contract.  But in 2016, when the cap may climb as high as $110 million 15 months from now?  Paying $15 million per year for a free agent acquisition who may wind up as nothing more than a rotational role player is simply the cost of doing business.

History will soon repeat itself, though.  After the exponential cap rise through 2017, the cap may actually go down, depending on what happens with the new CBA that should commence in the summer of 2017.  By the start of the 2017-18 season, NBA GMs will have spent the 2015, 2016, and 2017 summers paying inflated prices for free agents because of the cap rise, which will lead to more players making far more money in the final years of their contracts than their production would suggest they should make.

This summer, there is a relatively sparse crop of free agents, meaning that those who are testing the market this summer will get every penny they could ask for and more. Mike Conley will turn 29 before the start of the season, and he’ll get a four or five year max contract that starts at $25.3 million. Al Horford will turn 30 during the NBA Finals, and he’ll get the same deal. Would it shock you if either of those guys weren’t worth the $30+ million they’ll earn in 2020?

What about a guy like Chandler Parsons?  Parsons has tremendous value to teams because of his position and his amazing recruiting ability that may or may not involve half of the Sports Illustrated Swimsuit Issue.  He also has an agent, Dan Fegan, who is great at getting his clients exactly what they want and more. Parsons will likely get a max deal starting at $21.0 million per year, and he’ll turn 28 a few days before next season starts. He doesn’t quite qualify as injury prone, but after this season, he will have missed at least ten games in three of his five NBA seasons, never playing more than 76 games. Again, that’s not bad, but I could easily see Parsons missing more time as he enters his thirties, relegating him to “expiring contract” status.

If you miss the good old days when many of our unsubstantiated trade rumors every July and February revolved around players like Theo Ratliff, Erick Dampier, and Raef LaFrentz, you’re in luck. Starting in 2018, the value of the expiring contract will begin to make its return. By 2019 and 2020, a half decade since GMs started making it rain like Pacman Jones each summer, NBA expiring contracts will be instrumental again.

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