With LeBron James lately inking a two-year, $97.1 million dollar contract extension with the Los Angeles Lakers, an arcane NBA salary-cap quirk generally known as the “over-38 rule” has come into focus.

While there are different advantages for James to signal a short-term extension — James stored the pliability of a participant possibility in 2024-25 that would allow him to play with his son, Bronny, when the youthful James is eligible to be drafted into the league — the over-38 rule meant he had no selection however to take action.

What is the over-38 rule, why was it launched and why does it matter? Let’s break it down.

What is the over-38 rule?

It’s a provision within the NBA’s collective bargaining settlement that limits groups from providing contracts lasting 4 or extra years to any participant who’s not less than 38 years previous or will flip 38 in the course of the contract. This collective bargaining settlement bylaw initially started because the over-35 rule in 1995, agreed upon by the NBA and NBA Players Association, finally turning into the over-36 rule. 

In 2016, NBPA president Chris Paul efficiently proposed to have the age restrict pushed to 38 years previous.

Why is James topic to the over-38 rule?

James will flip 38 on Dec. 30, making him ineligible to signal a deal for 4 or extra years. Because his deal is an extension on his present contract, which ran by 2022-23, James couldn’t signal greater than a two-year extension.

Is there any approach across the over-38 rule?

The solely exception to the rule is that if a workforce has that participant’s Bird rights and the participant is 35 or youthful earlier than Oct. 1. Those contracts can final one 12 months longer than if the workforce didn’t possess that participant’s Bird rights

The cause that the date is Oct. 1 moderately than opening night time is as a result of that marks the official starting of the season for wage functions. Any participant whose thirty eighth birthday falls after that date on the fourth 12 months of their contract shouldn’t be eligible to signal a four-year (or extra) contract except their workforce had their Bird rights.

Wait, what are Bird rights?

This is a salary-cap exception named after Boston Celtics Hall of Famer Larry Bird. When the wage cap was first launched within the NBA, it was meant to be a tough cap — which means no franchise could be allowed to spend greater than the allotted quantity. The league as a substitute made an exception for Bird, who in 1983 signed a seven 12 months, $15 million contract to remain in Boston. The deal on the time was thought of to be huge. Since the league made an exception for Bird to stay with the Celtics, his title has since been synonymous with the exception.

Bird rights permit a workforce to exceed the wage cap to re-sign a participant already on their workforce to a first-year wage as much as the present league most. The caveat: they should have performed for the workforce in every of the three consecutive seasons prior. Bird rights additionally take impact if a participant is traded throughout a contract with not less than three assured years, or is picked up off waivers in the course of the first 12 months of the deal.

Why was the over-38 rule launched?

The over-38 rule was created to handle a contract loophole, stopping entrance workplaces from exploiting wage cap area to supply extra money over extra years than they believed the participant might play earlier than retiring. It’s additionally seen as a sort of insurance coverage to disincentivize gamers nearing retirement from looking for contracts that would doubtlessly pay them previous the time of their retirement.

Why does the over-38 rule matter?

Despite being one of the obscure guidelines included within the CBA, the over-38 rule is one which gamers and brokers alike should be conscious of when trying to safe profitable, long-term offers. There are huge ramifications for team-building primarily based on age and the amount of cash a franchise can provide gamers in contract negotiations.

When Kevin Durant was eligible for an extension with the Brooklyn Nets in 2021, he and Brooklyn agreed to a four-year, $198 million contract. Durant, who will flip 37 in the course of the ultimate 12 months of his present contract, couldn’t signal a five-year deal on the time as a result of he had solely performed two years in Brooklyn. But the over-38 rule additionally prevented the two-time Finals MVP from ready a 12 months and signing a brand new five-year deal in the summertime of 2022, since he would’ve been 38 on the finish of that contract. Since he was restricted to signing by 2026 on an extension or new deal, Durant determined to lock in his cash within the fall of 2021. 

That resolution had lasting ramifications. Had Durant prevented signing that four-year extension, he might have been in a position to go away the Nets in free company moderately than having to demand a commerce. (His preliminary contract after leaving the Warriors in 2019 included a fourth-year player option). 

On the flip facet, the Phoenix Suns and Paul agreed to a four-year, $120 million deal the identical offseason. Paul, whose deal will expire when he’s 40, was eligible to signal for 4 years as a result of the Suns have his Bird rights, since Paul got here to Phoenix by way of a commerce in the midst of an present long-term contract. The 12-time All-Star was dealt to Phoenix previous to the beginning of the 2020-21 season, when he was 35 years previous. Because the Suns had his Bird rights, they may adhere to the over-38 rule and pay him till he turns 40.

(Photo: Gary A. Vasquez / USA Today)

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