Hoops Rumors

It’s common practice in the National Football League for a team to renegotiate its contract with a player, but we hear far less about the concept in the NBA. So can an NBA team actually renegotiate a contract with one of its players?

The answer is almost always no, and it’s a firm no if the follow-up question is whether the sides can renegotiate the value of the contract downward. Unlike NFL teams, an NBA club can’t create extra cap flexibility by renegotiating a contract to push present-day cap hits into future years.

However, renegotiations are allowed to make an NBA contract more lucrative, and they can happen as long as a specific set of circumstances are in place:

• Only contracts that cover four or more seasons can be renegotiated, though that rule doesn’t apply to rookie scale deals — even though they run for four years, they can’t be renegotiated.
• Renegotiations can only occur after the third anniversary of a contract signing, an extension, or a previous renegotiation (assuming the previous renegotiation increased the salary in any season by 5% or more).
• Perhaps most importantly, teams can’t renegotiate any contracts if they’re over the cap, and they can only increase the player’s salary in the current season by the amount of cap room they have (or to the player’s maximum salary).

If a renegotiation happens at the same time as an extension, the player’s salary can increase or decrease by as much as 40% from the last season of the existing contract to the first season of the extension. Following the first year of the extension, raises (or pay cuts) are limited to 8% annually.

Here are a few other rules related to contract renegotiations:

• Teams can’t renegotiate contracts between March 1 and June 30, so the last day of February is always the deadline to complete renegotiations in a given league year.
• Renegotiations can’t occur as part of a trade. If a player is traded, he’s ineligible to renegotiate his contract for the next six months. Similarly, if a player renegotiates his contract, he’s ineligible to be traded for six months.
• In order for a signing bonus to be included in a renegotiation, the contract must be extended as well.
• Two-way contracts can’t be renegotiated.

Renegotiating a contract to include a significant raise for the current season can be a clever way of incentivizing a long-term extension for a player who would otherwise reach free agency. Contract renegotiations are rare, due to the specific series of requirements necessary to pull them off, but we’ve seen a few completed within the past 13 months.

Domantas Sabonis renegotiated and extended his contract with the Kings last July, while Jordan Clarkson did the same with the Jazz. Jonathan Isaac also completed a renegotiation and extension with the Magic earlier this month.

The Clarkson and Isaac deals were prime examples of how teams can use their cap room in a current season to “overpay” a player in the short term in order to get him on more favorable terms in future seasons.

Clarkson, for instance, entered the 2023/24 league year on an expiring $14,260,000 base salary. The Jazz used their cap space to renegotiate that figure up to $23,487,629, then negotiated a 40% pay cut for the first season of a two-year extension, so Clarkson will earn $14,092,577 in ’24/25 and $14,285,714 in ’25/26. Simply offering that two-year, $28.38MM extension may not have been enough to get Clarkson to sign, but increasing his current-year salary by more than $9MM helped incentivize him to put pen to paper.

The Magic made a similar move with Isaac this summer, bumping his current salary all the way up to $25MM, then having it decline by 40% to $15MM for the first season of a four-year extension.

Sabonis, meanwhile, had a $19.4MM base salary in 2023/24 as he entered the final year of his current contract. The Kings didn’t have the cap room necessary to bump him up to his maximum salary of $40,806,300, but they were able to renegotiate his ’23/24 salary up to $28MM. From there, they gave Sabonis a 40% raise in year one of his extension, starting his new four-year deal at $39.2MM (plus incentives) in ’24/25.

This year’s top remaining renegotiation candidate is Jazz forward Lauri Markkanen, who is on an expiring $18,044,544 contract and will become eligible for a renegotiation as of August 6. Markkanen’s maximum salary for 2024/25 would be $42,176,400 and Utah is the only NBA team that has the cap room necessary to give him that $24MM+ raise.

If the Jazz and Markkanen do renegotiate his contract on or after August 6, it will be interesting to see what the terms of his extension look like. He has a case for a maximum-salary contract, but if Utah is essentially giving him $24MM+ in free, up-front money before the extension begins, the team may have some leverage to ask him to take less than his max.

I certainly wouldn’t expect the Jazz to try to negotiate a 40% pay cut for year one of a Markkanen extension like they did with Clarkson, but even a modest dip would make the forward’s contract more team-friendly down the road.

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 was used in the creation of this post.

Earlier version of this post were published in 2015, 2017, and 2022.