There has been some buzz and corresponding confusion about the contract specifics of Yi Jianlian’s recent deal with the Lakers. The following will (hopefully) shed some light on the particulars in brief fashion.
Base Salary: $1,139,123 (Minimum Salary 5 Yrs Service)
Guaranteed Portion of Base Salary: $250,000 (EST 37 Days Prorated Minimum Salary) (Minimum Salary 5 Yrs Service: $1,139,123/170 = $6,701 Per Day; $250,000/$6,701 = 37 Days).
Likely Bonus: $6,860,877 (Based on *games played* with 3 benchmarks)
*A lot of bonuses on constructed on recognized league honors such as DPOY, and thus aren’t adjusted in terms of payment until after the season.
Total Potential Contract Value: 1 Year, $8,000,000
Signing Mechanism: Cap Space. Regardless of unlikely v. likely bonus orientation, LA had to fit the entire base salary + bonus amount into cap space in the current year, thus there is no cap advantage relative to team salary here by comprising a majority of potential salary via a bonus.
LA Team Salary Cap Hit: $8,000,000
II.Likely Bonus Component
Yi has $6,860,877 in total potential likely bonuses based on games played with the following benchmarks:
20 Games: $2,286,959 (Season Timeline : would occur prior to the December 15th trade restriction)
40 Games: $2,286,959 (Season Timeline: would occur prior to the Trade Deadline in mid February)
59 Games: $2,286,959 (Season Timeline: would occur a week or so after the Trade Deadline in mid February)
*Season Timeline information makes the assumption that Yi plays in every game for demonstrative purposes
“Games played” means actual games played in, not games Yi is eligible to play in (ie on the active list). Article 2 Section 11 (3) of the CBA gives us that insight:
No Uniform Player Contract entered into or extended on or after the date of this Agreement may contain a bonus for the player being on a Team’s roster as of a specified date or for a specified duration, or for the player dressing in uniform for or being eligible to play in a specified number of games.
Basically, Yi’s benchmarks are based entirely on games played in, which is a way to circumvent the above restriction.
The Lakers utilized the likely bonus structure (over unlikely) because the determination of likely v. unlikely bonuses is based on the preceding season, and because Yi didn’t play in the NBA last year the rule is to treat the bonus as likely (an appointed “basketball expert” could deem otherwise).
Trade Restriction: Yi was signed with cap space, and thus can be traded after the 12/15/2016 restriction lifts.
Base Salary Guarantee: Yi’s $1,139,123 base salary component will fully guaranteed if not waived by January 7th, permitting him to clear waivers before the 1/10/17 league wide contract guarantee date.
Team Salary: Yi’s team salary hit combines base compensation with “likely” bonuses (unlikely bonuses are not included). Thus Yi’s entire $8,000,000 team salary charge would count as outgoing salary in a trade after his restriction lifts, meaning it could return $12,100,000 in any non-aggregated trade (150% + $100,000) and could also be a high salary aggregation chip.
IV.Trade Application Scenarios
1.Low Extreme: Let’s say Yi doesn’t play in a single game prior to 12/15 (very unlikely) where he becomes trade eligible. His guarantee on that date would be $348,438 ($1,139,123 *prorated 52 days/170). He could thus be traded, with his outgoing salary counting as $8,000,00o to return a $12,100,000 salary, and the receiving team could then waive Yi for that figure + the prorated 48 hour waiver period (if unclaimed) as a cap hit . That’s a legitimate trade chip for aggregation possibilities and for potential salary relief for the receiving team depending on other assets.
2.Middle Ground: In the same circumstance but with Yi playing in 20 games prior to December 15th, it would trigger his $2,286,959 incentive benchmark in addition to his $348,438 guaranteed base salary if dealt on that date. His outgoing salary would still be $8,000,000 but his cumulative guaranteed salary for waiving purposes on a future team would be those amounts combined ($2,635,397 total) + the 48 hour waiver period should a waiver occur.
3.Trade at the Deadline: Last years deadline was 115 days into the season on February 18th (this year with either by the 16th or 23rd as it’s usually a Thursday), so using that number as a general indicator given that it’s post January 10th guarantee date Yi’s outgoing salary would again be $8,000,000 but his guaranteed portion for waiver purposes would be the full $1,139,123 base compensation + potentially the first two benchmarks of $2,635,397 each. There were 55 games prior to the deadline last year, thus Yi likely couldn’t meet that final 59 benchmark pre-deadline depending on scheduling.
Overall, the structure was a clever manipulation of the rules by the Lakers specifically as it pertains to the overlap between likely bonuses and trade rules, and one I don’t think we’ve seen before.