LeBron James keeps missing out on massive new contracts because of an obscure NBA rule that limits older players
- LeBron James signed a surprise, two-year, $85 million contract extension with the Los Angeles Lakers.
- An obscure age-related rule has again foiled James' ability to sign a massive, five-year, maximum contract.
- Under the "over-38" rule, James would have lost money if he had waited to sign a 5-year max contract next year.
- This same rule affected James with the Cleveland Cavaliers.
LeBron James has twice been the victim of a little-known NBA rule meant to protect teams' payrolls.
On Tuesday, The Athletic's Shams Charania reported that James signed a two-year, $85 million extension with the Los Angeles Lakers. James had the opportunity to hit free agency in 2021; he will now be a free agent in 2023.
As The Athletic's John Hollinger noted, the 8% annual raises James sees on the deal are greater than the percentage of the salary cap he could earn by becoming a free agent.
However, Hollinger also noted that if James had opted out in 2021, he couldn't have signed a four- or five-year max contract because of the "over-38" rule.
James has seen this before.
The previous "over-36" rule thwarted James' contract plans in Cleveland
In 2016, James looked set to sign a historic, $200 million contract, the first among NBA players. James had opted out of his contract each year with the Cleveland Cavaliers to sign increasingly bigger two-year deals as the league's salary cap went up. After three years, at which time the Cavs would have had his full Bird rights, James looked poised to sign a five-year contract worth 35% of the salary cap — enough to total over $200 million.
His plan was foiled by the "over-36" rule.
Under the previous collective bargaining agreement (CBA), the rule prevented teams from signing players to four- or five-year deals if they would turn 36 or older over the course of the contract. Under the rule, the money owed to players in years after they turn 36 would be spread out to the earlier years of the contract. The rule was meant to protect teams from committing to players who would be unlikely to see the end of the deal.
For James, who was 31 at the time, that would have meant taking the money in the fifth year of the deal (when he'd be 36) and spreading it out over the first four years. However, he would have made more than the maximum amount possible in a single season, violating rules.
James ended up signing a three-year, $100 million contract with the Cavs.
Months later, when the NBA and players association negotiated a new CBA, they changed the rule to the "over-38" rule. The same rules still applied, but to players over 38 instead of 36. The change made sense, with players increasingly playing to older ages. It also stood to benefit Chris Paul, the players association president, though he didn't end up signing a full five-year max contract.
The rule change impacted James again
In 2018, James signed a four-year, $153 million contract, with a player option for the 2021-22 season with the Los Angeles Lakers.
If James opted out of his contract in 2021, the Lakers would have had his full Bird rights, meaning he could sign a five-year deal worth 35% of the cap, with 8% annual raises. The deal would have been worth approximately $229 million over five years.
But once again, James, who turns 36 on December 30, has brushed up against the age rule. A five-year contract would have taken him past age 38, meaning the later years of the deal would have been pushed to the front of the deal, and he would have been making more than the maximum allowed.
Instead, James will be eligible to sign a new deal in 2023, when he'll be 38. Whether the NBA changes the "over-38" rule by then is unclear.
Not that it will likely matter too much to James — it's been estimated that James makes $60 million per year in endorsements.
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