For over six years, I have been advocating that NBA teams do not front-load contracts enough. In a salary cap league, financial flexibility is vital, and teams could be doing a better job of structuring contracts in a way that maximizes this flexibility. Teams are getting better at this, even demonstrated by this year's article compared to last year's, but there are still instances where improvement can be made. If you read last year's article, you can skip the background information below that goes over high-level rationale for front-loading, and skip down to the current year examples below, starting with the New York Knicks section.

 

The general concept is that, in many cases, giving a player extra money in the first year of his contract doesn’t matter given the current cap situation of the team, but saving some money on the later years of the contract could give the team additional cap space or additional wiggle room below the luxury tax in the future.

 

For various reasons included max salaries, progressing rookie scale contracts, and other situations where the team wants to offer the player the most money available with the current year resources that they have, most NBA contracts include raises and get more expensive over time. Therefore, front-loading a contract can help negate the effects of raises for other players on the roster.

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In addition, players generally are easier to trade if they have a lower salary, as a player outperforming his salary will have more value in a trade than a player who is underperforming his salary. Thus, front-loading a contract makes the player more tradeable as time goes on, which is another benefit for the team. Having a lower salary at the end of the contract will also lower a player’s free agent cap hold, which could provide additional benefit to the team.

Now, it should be noted that whenever a team and a player agree to a contract, it takes two to tango, and the player would have to agree to structuring the contract in this manner. However, players generally should be agreeable to a front-loaded contract, as the time value of money principle shows that getting more money up front is financially the better alternative. One could argue that this is also true from the team perspective, but sources have told me that the business side of NBA organizations generally stay out of these matters, and would not raise an issue for its own time value of money reasons.
 

For the most part, this front-loading concept applies to teams that are capped out but below the luxury tax, so those are the teams we will be looking at for the current (2022-2023) season. Thus, for this exercise we will not be considering teams currently over the luxury tax line or teams that are close enough that frontloading some of their 2022 offseason signings would have put them close.

 

For example, the Celtics, Nets, Nuggets, Warriors, Clippers, and Heat all made signings this summer that they could have front-loaded (or at least made flat), but doing so would have increased their luxury tax bill. There could be an argument that it’s still better to frontload based on the team’s future finances, but even if a team is looking like they will be more expensive in the future, or will be subject to the repeater tax in the future, the NBA is very unpredictable and you could be paying more luxury tax now in hopes of future savings that you might not even need. In addition, the Trailblazers are extremely close to the luxury tax and front-loading some of their 2022 signings would have put them into the tax.

 

There are also a few CBA-related rules that need to be noted before going into more detail below. 

• Players signed via cap space or using Non-Bird rights are limited to 5% raises (or deductions) of the first year of the contract (raises/deductions do not compound). Same with players signed as part of a sign-and-trade.

• Players signed via Bird rights or Early Bird rights are limited to 8% raises (or deductions) of the first year of the contract (raises/deductions do not compound).

• Options years cannot have a lower salary than the previous year (non-guaranteed seasons do not have this same limitation).

 

Now, before showing some examples of where teams failed to front-load contracts this summer, let’s show some teams that did so effectively. 

 

New York Knicks

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The Knicks had about $35.5 million cap space this summer, and used that to sign Jalen Brunson and Isaiah Hartenstein as free agents while keeping the low $1.8 million cap hold of Mitchell Robinson on the books. While they didn't have quite enough cap space to front-load Hartenstein's 2-year, $16 million contract, they were able to front-load Brunson's 4-year, $104 million contract contract (note that the final year of the contract could not be less than the prior year because it is a player option year). 

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After the Knicks used their cap space, they re-signed Mitchell Robinson to a 4-year, $60 million contract using his Bird Rights, and front-loaded it to the fullest extent possible.