Kevin Durant has attracted the most attention in free agency, but an even better player hits the market tomorrow:
LeBron has spent the last two seasons with the Cavaliers on 1+1 contracts, and he again opted out this year. He has said he plans to return to Cleveland.
But that still leaves a major decision: one-year contract or a two-year contract?
We’ll make two assumptions from here:
1. The Cavs won’t go under the salary cap. As much as he wants a few extra million dollars from Dan Gilbert, LeBron isn’t going to destroy a championship team to get it. Cleveland is so far above the cap, it’d take major moves to get below.
2. LeBron’s next deal will include a player option as insurance in case something goes wrong, but his intent will be to opt out. So, what I call a one-year contract will actually have a player option for the second year, and what I call a two-year contract will actually have a player option for the third year.
The Cavaliers have LeBron’s Early Bird Rights, meaning they can exceed the cap to re-sign him at 175% of his previous salary up to the league-wide max. LeBron earned $22,970,500 last season, so 175% would get him to the max — projected to be a little more than $30 million.
However, there’s a catch. Early-Bird contracts must be for at least two years (not counting option years). So, LeBron couldn’t maintain his maximum leverage while earning a maximum salary.
To give him a one-year contract, Cleveland would have to partially renounce LeBron and sign him through Non-Bird Rights (technically a form of Bird Rights). A Non-Bird contract is limited to 120% of a player’s previous salary. For LeBron, that’d mean $27,564,600 — about $3 million shy of the max he could get by signing into cap space with any team. Then, with Cleveland holding his full Bird Rights next summer, he could re-sign for the max.
So, would LeBron rather have the leverage of a one-year deal or more money up front?
If he signs a two-year deal, he’d project to make about $30 million this year and $33 million next year — $63 million over the next two seasons.
If he signs a one-year deal, he’d make $27,564,600 this year and about $34.5 million next year — $62 million over the next two seasons.
The difference is even more negligible than it appears. His projected max of $34.5 million for 2017-18 is based on the NBA’s latest cap projection ($107 million), and those tend to be conservative. If the cap comes in higher, so would LeBron’s max.
Another consideration: Would LeBron rather sign a long-term deal in 2017 or 2018? He obviously can’t in 2017 if he signs a two-year deal this summer. The salary cap is slated to dip from $107 million in 2017-18 to $105 million in 2018-19, which, at face value, would make 2017 a better time to lock in.
However, the projected cap reduction is based on a clause in the Collective Bargaining Agreement that adjusts the cap if teams spend too much or too little on players the previous year. The upcoming season could be the final one of the current CBA, as either side can opt out by December 15, 2016.
LeBron, as players union vice president, should have insight into what the CBA will look like in coming years.
So, LeBron’s decision will give us a clue about the league’s future — and inform us how to time rumors about LeBron leaving Cleveland.