NBA Free Agency Glossary: What is a maximum contract?

One of the defining characteristics of the modern NBA is the maximum contract, commonly referred to as “the max,” or a “max contract.” In the simplest terms, a max contract is the most money a player can earn according to the CBA.

However, the “maximum” an individual player can earn is variable and is influenced by performance, years of service, and who offers the contract. Before we dive into the minutia of the CBA, understanding why the owners fought for the max contract in the first place will help set the stage for what it is supposed to accomplish.  

The origins of the maximum contract

Prior to the 1999 lockout, there was no maximum contract and a player could earn as much money as they were able to negotiate in salary as long as it satisfied the terms of the CBA. While the NBA has had a salary cap since the mid-80s, the inclusion of the “Bird exception” permitted teams to spend beyond the salary cap to retain their own free agents. 

Without a set maximum salary for players, a team could theoretically pay any player with “Bird rights” an unlimited salary in NBA free agency. While this didn’t lead to a string of league-crippling contracts, it did see Michael Jordan command more than the salary cap in 1997 and 1998, and eight players made more than 40 percent of the salary cap during the 1997-98 season. Just look at how much more the top earners made in 1997-98 as a percentage of the cap compared to players today. 

As star player contracts outpaced revenue growth, the owners fought tooth and nail to ratify a CBA with a maximum contract provision, and while it took a lockout, they eventually got their wish. By capping how much individual players could earn the owners dramatically curtailed the salaries of the league’s highest-paid players. A quarter century later, NBA fans don’t bat an eye when they hear “max contract,” but the league has specific criteria over what a maximum contract looks like for an individual. 

The different types of maximum contracts

Maximum contracts can be broken into three categories based on service time. Players who have between four and six years of service can earn 25 percent of the cap, players between seven and nine years of service can earn 30 percent of the cap, and players with 10 or more years of service can earn 35 percent of the cap in the first year of their contract. In each instance, a player could earn 105 percent of their prior season’s salary if it were to be more than the allotted percent of the cap. 

While service time dictates what the max is for a player, their performance can functionally place them into the next service time bracket. For a player to earn more than the standard max based upon their service time, the contract must be extended by their prior team, and they have to satisfy the “Higher Max Criteria.” 

This allows players with between four and six years of service to earn up to 30 percent of the cap and players with between seven and nine years of service to earn 35 percent of the cap. Players with at least 10 years of service cannot earn more than 35 percent of the cap, which effectively makes 35 percent of the cap the maximum contract in the NBA. 

Higher Max Criteria 

The higher max criteria is based on All-NBA appearances, Defensive Player of the Year (DPOY) awards, and MVPs. If a player makes an All-NBA team or wins DPOY in the final season of their deal, they qualify for the higher max. If a player fails to make All-NBA or DPOY in their final year, but has made All-NBA or won DPOY in two of the previous three seasons they qualify for the higher max. And if a player wins MVP during one of the previous three seasons they qualify for the higher max. 

Generally, for players with less than seven years of service time, the higher max criteria is a part of their rookie scale extension. Because players sign their rookie scale extensions after their first three years of service, they are very unlikely to qualify for the higher max. However, teams can negotiate max extensions that can become higher max contracts should they hit the higher max criteria in their fourth season. 

Raises and contract length 

Maximum contracts can have no larger than eight percent raises from the contract’s first year of salary. If the salary cap were to stay flat, a player could see their salary rise above the maximum 35 percent of the salary cap. However, with the NBA’s new broadcast rights deal about to start, the salary cap is expected to grow by 10 percent each season over the next decade. What this means in practice is that almost every contract will shrink as a percentage of the salary cap from its first season. Using a standard 25 percent max contract with eight percent raises, we can see the financial implications of the league’s new economic position. 

Maximum contracts, like all contracts, cannot be longer than four years. However, teams can offer players five-year contracts to their own players and extensions that have the player under contract for up to six seasons if it is an extension of a rookie contract or if it is a Designated Veteran Player. 

The “max contract” is the ultimate status symbol in the NBA, but not all maxes are created equal. If Brandon Ingram asks for the max, it’ll look different than if Stephen Curry does. The biggest losers of the max contract are actually the league’s best players, as they’re the ones whose earnings are capped. If you find yourself upset with player empowerment, you can thank the max contract.