Yesterday at the first day of Sixers training camp, word came out that rookie K.J. McDaniels, the 32nd pick in the 2014 NBA draft, was not at camp, as his contract had not yet been finalized. McDaniels was at media day on Monday.
For first round draft picks, salaries must fall into a slotted range. Essentially, the NBA sets the value for each pick in the first round, and teams and players can then negotiate 20% up or down from there. In practice, almost all first round draft picks sign for 120% of the value that the NBA sets for the pick where they were selected. The NBA also mandates the other terms of the contracts, giving the players the first two years guaranteed, while having years 3 and 4 as team options.
For second round draft picks, however, there is no such scale, and players can earn anywhere from the minimum salary to the maximum salary. There also isn't a restriction specifically for second round picks with regards to the number of years.
However, teams get exceptions for first round draft picks, meaning that even if they are over the salary cap they are allowed to offer their first round draft pick(s) a salary within the range of the rookie scale. Second round draft picks are not given an exception specifically for them, meaning teams have to use one of the other exceptions available (mid-level exception, minimum salary exception, etc), or sign them using cap space if they are under the salary cap.
Typically, with so many teams over the salary cap, and with second round draft picks not having much leverage in a negotiation, this means that second round draft picks frequently sign using a minimum salary exception. The minimum salary exception places the rookies salary at the league's defined minimum salary for every year of this contract, and also limits the length a contract can be to a maximum of two seasons.
So, while in theory there is no rookie scale for second round picks, in practice the majority of second round picks receive very similar contracts.
One area where teams can get creative in signing second round picks is using their mid-level exception instead, allowing them to go beyond three years in length and giving them the option of offering players more salary per year. The other scenario that offers flexibility is when a team has salary cap space, like the Sixers.
According to Eric Pincus of Basketballinsiders, the Sixers signed Jerami Grant to a 4 year contract, with the first two seasons guaranteed at $885k, and years 3 and 4 being team options. This would be incredibly similar to a first round contract, with the first two seasons guaranteed, then two seasons as team options, and would fall just under the slotted amount for the 30th pick in the 2014 draft, which is slotted at $911k for the first season.
From Grant's perspective, this offers two compelling benefits.
First, it gives him a significant raise. The minimum salary for an NBA player with 0 years of experience for the 2014-15 NBA season is $507,336, and next year that figure should be at $525,093. This gives Grant some serious extra coin over many of his fellow second round picks: over $377k extra this season, and over $359k extra next year. That's certainly nothing to dismiss for a player just hoping to break into the league.
Second, those first two seasons are now guaranteed, which second round picks frequently don't get. For a young player coming into the league, having $1.7 million in guaranteed money is something few players who fall beyond the first round receive, and a very tempting carrot to have dangled in front of them.
The sacrifice the player has to make, and why Sam Hinkie would pursue this type of salary structure when he has all the leverage in the world to sign him at the NBA minimum, is to get seasons 3 and 4. Those seasons, while it might look nice on a press release, are 100% concessions from the player to the team. By having team options, at the minimum salary, the Sixers have set themselves up tremendously well if Jerami Grant breaks out. If Grant doesn't break out, the team can cut him after two seasons at no hit. If he does work out, they have options to retain him at a very bargain price.
In essence, the Sixers gave up a little bit of extra guaranteed money over these next two years in order to double the amount of time they can have Grant under team control, if they want to. For a team like the Sixers, that little bit of extra guaranteed money over the next two seasons is barely a dent in their cap space. But, for a guy like Grant, that guarantee is significant enough for him to be willing to substantially delay his ability to negotiate his second contract, and potentially limit his earning power in years 3 and 4 if he does have success in the league.
For many second round picks, this is a favorable arrangement, as they went from being guaranteed nothing to having a very significant sum of money guaranteed to enter their bank accounts. Where the Sixers win is if that second round pick ends up becoming a significant player for them.
Sort of like how Chandler Parsons did for the Rockets.
In 2011, the Rockets signed Parsons, using cap space, to a 4 year, $3.6 million contract, with 2 guaranteed years followed by two team options. It was a tactic frequently used by the Houston Rockets front office (a front office that included Sam Hinkie), who two seasons earlier had used portions of their mid-level exception to sign Jermaine Taylor and Chase Budinger to 4 year contracts which included, you guessed it, two guaranteed years at salaries significantly above the minimum salary levels, followed by two team options.
Starting to notice a pattern?
Parsons agent at the time was Mark Bartelstein of Priority Sports, who he would eventually replace in May 2013. Parsons contract turned out to be one of the best value contracts in the league, with the Rockets getting 18 win shares for their tiny $2.6 million investment. That gamble that Houston took by giving Parsons two guaranteed seasons back in 2011 paid off in a big way.
Back in August, K.J. McDaniels left his previous agency, Rival Sports Group, to join Priority Sports, the same agency that represented Chandler Parsons back in 2011, and lost him in 2013.
To be clear, everything from here on out is a guess on my part, and I want to be 100% clear on that. I have not been told anything about the negotiations between K.J. McDaniels and the Sixers from either party.
However, if I had to guess, I would bet Sam Hinkie is looking to structure K.J.'s deal in a similar way to how he structured Jerami Grant's, giving K.J. a little bit of extra guaranteed money over the first two seasons in exchange for more seasons of team control, via options. My guess, and again this is a guess, is that those final two team options may be the sticking point in the negotiations, perhaps because K.J. wants to be able to negotiate his second contract earlier, perhaps Priority Sports is hesitant to enter into such a deal again, or perhaps K.J. and his team want more guaranteed money in order to give the Sixers those extra years of team options.
Regardless, I would be surprised if extending the contract out beyond two years is not part of what is holding this deal up, and preventing K.J. from being at camp on time.
Joel Embiid shooting jumpers #sixers pic.twitter.com/W0UXkVQwbX— Derek Bodner (@DerekBodnerNBA) September 30, 2014
I was on with 97.3 FM ESPN yesterday talking about the Sixers training camp. You can listen to the audio at 973espn.com.
Sixers head coach Brett Brown talks about the absence of K.J. McDaniels.
Brett Brown and Nerlens Noel talking about camp, and some workout footage