Maximum Salary

Superstars like LeBron James and Carmelo Anthony are often referred to as “maximum-salary players” as they approach free agency, since they’re likely to command the most lucrative contract offers possible when they hit the market. That holds regardless of whether they’re making less than the max on their current deals, as in the case of James, or have suggested they’ll take less when they next sign, as Anthony has. The NBA’s collective bargaining agreement limits players to salaries based on a percentage of the salary cap, but the maximum varies from player to player. That helps explain why Anthony could sign at a discount this summer and still make a higher salary than James, even if the four-time MVP ends up with the max.

If a player has been in the NBA for six years or fewer, he can earn up to 25% of the salary cap in the first year of his deal. Players with seven to nine years of experience can earn up to 30%, while veterans with 10 or more years in the NBA are eligible for up to 35% of the cap.

Those percentages are somewhat deceiving, since the NBA uses factors to determine the maximum salary that are slightly different than what goes into calculating the salary cap. That’s why James Harden made $13,701,250 on his max deal in 2013/14 rather than $14,669,750, which is 25% of the $58.679MM salary cap for 2013/14. For players eligible for the 30% max in 2013/14, their top salary was $16,441,500, and the 35% max was $19,181,750. These figures will fluctuate from year to year, depending on the league’s projected Basketball Related Income for a given season.

There are a number of exceptions to the maximum salary, as follows:

• The maximum salary only applies to the first year of a multiyear contract. For example, if Eric Bledsoe were to sign a maximum-salary deal this summer, he would be subject to the maximum salary for the first season, with either 7.5% or 4.5% raises, depending on whether he signs with the Suns or another team. So by the third or fourth year of his contract, he could be earning significantly more than the max.
• A free agent’s maximum salary is always at least 105% of his previous salary. For instance, Anthony’s 2013/14 salary was $21,388,954. He is eligible to sign a new contract that will allow him to earn a maximum of $22,458,402 — 105% of his prior salary. That’s why he could take slightly less and still earn more than James, whose salary in 2013/14 was $19,067,500.
• A first-round pick coming off his four-year rookie scale contract is eligible for a maximum-salary contract extension worth 30% of the cap (rather than 25%) if he meets one of the Derrick Rose Rule criteria. That entails winning an MVP award, being voted an All-Star Game starter at least twice, or being named to an All-NBA team at least twice.

There were 16 players who were either playing on some form of max deal or had signed max extensions when I examined the league’s maximum-salary players in August. Those ranks have since swollen to 18 with the additions of Paul George and DeMarcus Cousins, who inked max extensions. The list demonstrates the many caveats and variations involved with max contracts, which ranged in value from slightly more than $57.5MM to nearly $123.7MM in 2013/14. Simply put, it’s difficult to define the NBA’s maximum salary in a broader sense, since it applies to individual players and not the league as a whole.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ and ShamSports were used in the creation of this post.

A version of this post, written by Luke Adams, was initially published on May 8th, 2012.