The NBA and National Basketball Players Association are making progress on a new collective bargaining agreement ahead of their mutual March 31 opt-out date, according to Shams Charania of The Athletic. Amidst those negotiations, the two sides are discussing possible changes to the league’s extension rules.
Under the current CBA, teams can offer no more than 120% of a player’s previous salary or 120% of the estimated average salary (whichever is greater) as the starting salary of an extension, aside from limited circumstances. The two sides have discussed increasing that to 140-150%, according to Charania, which “opens the door a lot more for players who signed contracts that eventually become below-market deals to get enough of a raise to commit ahead of time.”
Charania mentioned Toronto Raptors forward OG Anunoby, Sacramento Kings big man Domantas Sabonis and Utah Jazz forward Lauri Markkanen as potential beneficiaries of this proposed change, although they wouldn’t be the only ones. The Boston Celtics could offer Jaylen Brown a full max extension under the new rules, whereas Brown can earn $20-plus million more as a free agent than he would on an extension under the current CBA.
While these proposed changes are a step in the right direction, they won’t fix every issue with extensions, particularly with new national TV contracts poised to send the NBA’s salary cap soaring in the coming years.
Take Atlanta Hawks guard Dejounte Murray, for example. He’s heading into the last year of his contract and is set to earn $17.7 million next season. Under the current rules, the Hawks can offer him no more than a four-year, $95.2 million extension. If the new CBA bumps that up to 140 or 150%, the Hawks could offer him a four-year, $111.1 million extension or a four-year, $119.0 million extension, respectively.
Even if the Hawks can offer him the latter this summer, Murray would be only the league’s 14th-highest-paid point guard in terms of average annual contract value. For someone who made the All-Star Game last season and is averaging 20.8 points, 6.1 assists and 5.5 rebounds while playing second fiddle to Trae Young this year, that still might not be enough to get Murray to sign on the dotted line.
The NBA hasn’t released an official projection for the 2024-25 salary cap, but RealGM has $140.7 million as an estimate. As a free agent, Murray will be eligible to receive up to 30% of the cap as the starting salary of his new contract. That means the Hawks would be able to offer him a five-year, $244.8 million extension, and any other team could offer him a four-year, $181.5 million deal.
While players on below-market contracts such as Murray still might not have enough incentive under the new rules to sign extensions, players on contracts that descend in value will be the bigger problem.
Memphis Grizzlies big man Jaren Jackson Jr. signed a four-year, $104.7 million extension ahead of the 2021-22 season that declines by roughly $1.8 million each year. He’s set to earn only $23.4 million in the final year of his contract (2025-26), which is the first year that the league’s new national TV deals will be in effect.
The NBA and the National Basketball Players Association are discussing cap-smoothing to avoid a massive one-time cap spike like what happened in 2016. Still, a source told Forbes Sports’ Morten Jensen in September 2021 that the new TV deals could cause the cap to jump by $15 million annually even if the two sides do agree to smoothing.
Even if the new CBA allows the Grizzlies to offer Jackson an extension that starts at 150% of his previous salary, they could offer him no more than a four-year, $157.3 million deal with a starting salary of $35.1 million. If the salary cap is approaching $170 million by then, he’d be earning roughly 20% of the cap in the first year of his extension. Based on his years of NBA experience, he could receive 30% of the cap as the starting salary of a contract that he signs in free agency the following summer.
Jackson isn’t the only player in that boat. San Antonio Spurs forward Keldon Johnson signed a four-year, $74 million extension this past July that descends from $20 million next season to $17.5 million in 2026-27. Even if the Spurs could offer him 150% of his 2026-27 salary on an extension ($26.25 million), that might be less than 15% of the 2027-18 cap. He’d be far better off eschewing an extension and becoming a free agent, where he could receive 30% of the cap as the starting salary on his new deal.
The same could go for New York Knicks point guard Jalen Brunson, who signed a four-year, $104 million contract this past July. He’s earning $27.7 million this year, but his salary drops to $26.3 million next season and roughly $25 million in 2024-25. He also has a $25 million player option for 2025-26 that he figures to decline if he keeps playing as well as he has this year.
If Brunson declines his 2025-26 player option as expected, and the Knicks can offer him 150% of his 2024-25 salary in an extension, they could give him a four-year, $167.7 million contract with a starting salary of $37.4 million. A $40-plus million average annual value might be enough to keep him around long term, although that also could depend on how the point guard market develops over the next few years.
The NBA and NBPA could agree to allow teams to offer an extension based on the highest salary that the player received on their previous deal, even if it wasn’t the last season. Otherwise, changes to the Designated Player rule—also known as the “Rose Rule”—could help mitigate some of the potential problems with extensions for players on descending contracts.
Under the current CBA, teams can offer veterans with eight or nine years of NBA experience an extension with a starting salary up to 35% of the cap if they meet one of three criteria: being named to the All-NBA team or Defensive Player of the Year in either the most recent season or the two seasons preceding that one, or being named Most Valuable Player in any of the last three seasons. If there wasn’t a performance-based component to the designated veteran extension and teams were allowed to offer them as so desired to any eight- or nine-year veteran, players coming off descending contracts wouldn’t be hampered by the structure of their deals.
The devil will be in the details of the new CBA. While the proposed extension changes are a step in the right direction, some players still might have more financial incentive to test free agency than to sign an extension with their current teams.