Revenue has exploded, salaries have soared, and the rules about who can play look nothing like they did when the league tipped off in 1946. Most of those changes trace back to contracts, and to the scandals some of them set off. They’re negotiated behind closed doors, but they shape the rules everyone plays by, and they’re still doing it today.
Ironclad looks back at eight contracts that made the NBA what it is.
When the American Basketball Association (ABA) merged with the NBA in 1976, four teams had a spot. Two of the remaining teams accepted very different exit deals from the ABA:
TV money grew, and the NBA tried more than once to buy Daniel and Ozzie Silna out, starting in the 1980s. Every attempt failed.
By 2012-2013, the Silnas were raking in $19 million annually. In 2014, after the Silnas sued for a cut of newer revenue like League Pass, the NBA and the four teams settled with a $500 million up-front payment. All told, the deal paid out about $800 million for a team that never played an NBA game.
That’s the risk with any deal without an expiration date. If the money is tied to revenue nobody can predict, it keeps running until someone pays to make it stop.
Since the 1984-1985 season, the NBA has tied each team’s salary to league revenue. In the decade before 2016, the cap rose $17 million in total. Then, in 2014, the NBA signed new national TV deals that would bring a huge influx of revenue starting in 2016. The NBA proposed phasing in the increase. The players’ union rejected the plan in 2015, arguing it would artificially hold the cap down. Commissioner Adam Silver warned of unintended consequences.
The cap jumped from $70 million to $94.1 million in a single summer. The Golden State Warriors, already a title contender, cleared space and signed Kevin Durant outright. Teams that had saved room for Durant spent it anyway, often on deals that didn’t age well. The 2023 collective bargaining agreement added the fix: The cap can now rise no more than 10% a year.
Max salaries and payroll minimums are set as a share of the cap, so every deal tied to it moved too. Pricing pegged to an index or revenue figure is only as stable as that number. If it can jump by a third in a year, the formula needs a ceiling.
The Milwaukee Bucks drafted Glenn Robinson first overall in 1994, but negotiations stalled. In October, the Bucks held a press conference sharing that Robinson had turned down a $60 million contract. Why? Because his side wanted $100 million, a figure no contract in pro sports had ever reached. At the time, the entire Bucks franchise was valued at about $75 million.
Robinson missed the entire preseason before signing a 10-year $68 million deal. While it was well short of his ask, it was still the richest rookie contract in league history.
Within months, the NBA set a rookie wage scale, starting in 1995. First-round picks now sign within a set pay range based on draft position. The amounts grow with the cap, but more than 30 years later, the scale still hasn’t caught up to Robinson. This year’s No. 1 pick came within about $1 million.
One outlier ask turned an open negotiation into a template. The deal that goes sideways often becomes the reason a standard term exists.
The Minnesota Timberwolves signed forward Joe Smith with a one-year contract in 1999 for well under his market value. Privately, he signed something else: a written promise that after three seasons of below-market deals, the team would then pay him up to $86 million over seven years. Three seasons would give Minnesota his Bird rights, which let a team go over the cap to re-sign its own players. (More on those at #2.)
The plan came apart by accident. Smith’s former agent sued an ex-employee, and the secret agreement surfaced in discovery. In October 2000, an arbitrator confirmed it, and Commissioner David Stern came down hard. He voided Smith’s current contract and the two before it. He also fined the team $3.5 million, the stiffest fine in league history at the time, and took its next five first-round picks. The NBA later gave two back.
Twenty-six years later, the league reached for the same penalty. This September, the LA Clippers forfeited five first-round picks and paid a $30 million fine over off-court deals arranged for Kawhi Leonard.
Smith’s side agreement took down every contract it touched. If the real deal isn’t in the paperwork, the paperwork can’t protect you.
In 1970, the NBA had a rule in place that barred players less than four years out of high school from entering the league. The ABA had a similar rule, but with an exception—if players faced financial hardship, they could join early.
Spencer Haywood, who grew up in poverty in Mississippi as one of 10 children, qualified. After two years at the University of Detroit, Haywood joined the ABA for a year, leading the league in scoring and rebounding.
The Seattle SuperSonics took notice and signed him to a six-year, $1.5 million deal, ignoring the NBA’s rule entirely. The league threatened sanctions, and Haywood and the Sonics sued on antitrust grounds. In March 1971, Supreme Court Justice William O. Douglas let Haywood keep playing. The two sides settled, and the NBA rewrote the rule to admit players facing hardship. By 1975, players were entering the draft straight out of high school.
The four-year rule had applied to every player since the league’s first season. Standard terms stand until the first real challenge, and then the change applies to everyone who comes after.
Bird rights let teams go over the salary cap to retain existing players, and in the 1990s there was no upper bound on how high teams could go. Enter: Michael Jordan. After leading the Chicago Bulls to a then-record 72 wins and a title in 1995-96, he re-signed for one year and $30.1 million, against a $24.3 million cap. A year later, he signed for $33.1 million against a $26.9 million cap. One player was out-earning the limit for an entire roster.
That same fall, Kevin Garnett turned down a $102 million extension from Minnesota. Right before the October 1997 deadline, the team raised its offer to six years and $126 million, the largest contract in team sports history at that point.
Team owners drew a line in the sand at that point. They reopened the collective bargaining agreement in 1998 and locked players out, wiping out half the season. The deal that ended it created the league’s first max salaries. The top tier was $14 million a year, less than half of Jordan’s final Bulls salary.
An exception with no ceiling invites someone to find the edge. Once one deal resets expectations, the other side writes a cap into the framework.
In the early 1980s, the NBA was struggling. TV money was thin, several teams were losing money, and players were threatening to strike. The deal that headed it off created the first modern salary cap in pro sports. Players got at least 53% of league revenue. Owners got a cap of $3.6 million per team, starting in 1984-85.
The Celtics had a problem. Larry Bird’s contract was about to expire, and Boston wanted to keep its star no matter where the cap landed. The deal let teams go over the cap to re-sign their own veterans, an exception often credited to Boston’s push to keep Bird. The irony is that Boston never needed it for Bird. He re-signed for seven years and more than $15 million before the cap took effect. The name stuck anyway.
For 15 years, the exception had no limit. Owners tried to kill it in the 1998 labor fight, but it survived with a max salary attached. Today, Bird rights are how the Warriors kept re-signing Stephen Curry even as their payroll blew past the luxury tax line, where teams start paying the league a penalty on every dollar over.
An exception written to keep one star now runs the whole system. Draft any carve-out like the rule it’s going to become.
For most of the NBA’s first three decades, every player contract carried an option clause. When a contract ran out, the team could renew it, again and again, for as long as it wanted. A player could refuse to sign, but he couldn’t play anywhere else in the league. In practice, the team owned his career.
Oscar Robertson, one of the best players of his era and president of the players’ union, set out to change that. In 1970, as the NBA moved to merge with the rival ABA, Robertson and his fellow players filed an antitrust suit. It targeted the option clause and stopped the merger in its tracks.
The case dragged on for six years. The NBA’s lead outside counsel was David Stern, the league’s future commissioner. The April 1976 settlement ended the option clause. Players could finally become free agents, though their old teams kept some protection, and owners paid $4.3 million in damages. Unrestricted free agency didn’t arrive until 1988, but every contract negotiated on the open market since traces back to this case.
The option clause served teams for decades. It couldn’t survive once players organized against it. Any term that binds one side indefinitely with no way out invites the same fight. The more one-sided the term, the more likely someone eventually takes it to court.
Two contracts are already making headlines before tipoff.
First, Stephen Curry. In September, he signed a two-year extension with the Warriors for about $20 million less than the max he could have gotten. The discount gives Golden State room in the cap to build around him next summer.
Then there’s Gary Trent Jr. The NBA is investigating whether his two cheap seasons with the Bucks were tied to a promise of the four-year, $64 million deal he signed this summer. No such agreement has been publicly established, and the Bucks say the deal reflects his market value.
Fifty years after Oscar Robertson’s settlement, the fine print is still making headlines.
This story was produced by Ironclad and reviewed and distributed by Stacker.