The rules of the NBA’s collective bargaining agreement are fascinating to a certain segment of NBA fans, so with that in mind, we bring you this financial quirk involving J.R. Smith.
The reigning Sixth Man of the Year signed a three-year deal worth just under $18 million to remain with the Knicks a few weeks back, and using the rules (potentially) to his advantage, has already been paid out at least half of the entire value of his contract.
A league source confirmed that J.R. Smith has already been paid $8.974 million of the $17 million contract he signed three weeks ago. Smith agreed to a two-year deal worth $11 million with a player option for a third season. Five days after agreeing to a new contract, Smith had knee surgery that, according to the club, will sideline him up to four months.
This doesn’t affect the Knicks’ cap figure in any way, and theoretically (if Smith invests the money wisely) it would be beneficial to the player to get paid out as much as possible immediately to begin to earn interest on those otherwise future dollars.
Mark Deeks, who runs the comprehensive NBA salary site ShamSports.com, explained how this fits within the league’s rules a few days back.
Smith did NOT get 80% of his contract paid up front. That’s not allowed. What IS allowed, however, is having 50% of your base salary given..
…to you as an advance prior to November 15th of the relevant season (no more than 25% before October 1st.) This is what Smith has done.
It’s a smart decision, provided Smith does something productive with all of that up-front cash.