Why Jalen Brunson’s discount contract with Knicks is actually genius

Jalen Brunson's four-year, $156.5 million extension with the New York Knicks counts as the biggest surprise of the offseason.

Coming off an All-NBA season, Brunson had one more season at $24.9 million before he could exercise a player option and hit free agency.

According to Adrian Wojnarowski of ESPN, the contract could cost him $113 million in guaranteed money, but Wojnarowski is missing the forest for the trees.

Reporting on Jalen Brunson's discount contract is misleading

Let's start with the basics, Brunson is sacrificing some money by taking this deal. Reporting indicates he believes taking a team-friendly deal will help the Knicks win a championship, drawing inspiration from Tom Brady, Patrick Mahomes, and Derek Jeter. However, Brunson is not sacrificing anywhere near the $113 million figure so prominently featured in Wojnarowski's reporting.

Let's first address the $113 million figure. Brunson's extension, which will cover the 2025-26 season through 2028-29, contains a player option for the 2028-29 season. He functionally signed a three-year extension worth $113.2 million with an option to bring it to $156.5 million. The contract he would have been able to sign next offseason could have been worth $269.1 million over five seasons.

The quick math is $113 million, but it's comparing a four-year deal to a five-year deal, which is like comparing 15-year and 30-year mortgage payments.

Brunson not signing a five-year deal next offseason and gaining a player option allows him to extend two years earlier when the salary cap is significantly higher, which matters a lot to his bottom line.

The genius of Jalen Brunson's extension

The NBA's new television rights deal is expected to lock in annual 10 percent raises to the salary cap, but contracts can only increase by eight percent annually. What this functionally means is that for the foreseeable future, all contracts will be descending as a percentage of the salary cap.

Due to Brunson's service time, he was eligible for a 30 percent max contract next offseason or a 35 percent max should he make All-NBA again. Max contracts are based on the percentage of the salary cap for the season they're signed and then can increase off that figure. For the time being, let's assume he would have gotten a 30 percent max, the figure that Wojnarowski's reporting cited.

Over the first three years of Brunson's new extension, compared to the one he could have signed, he'll lose out on $37.1 million. The hypothetical 30 percent max would start at $46.3 million against a $154.6 million salary cap and increase by eight percent each season. However, with his current contract extension, he'll be able to hit free agency, via a player option, in the summer of 2028 when the salary cap is expected to be $205.8 million. A 30 percent max based on that would net him $61.7 million, and with an eight percent raise, he'd hit $66.7 million.

All told, Brunson is likely to earn at least $241.7 million over the next five seasons, which is only $27.4 million less than he would have earned if he had waited a season and signed a max contract. However, if Brunson were to hit the higher max criteria in 2028, he could secure 35 percent of the cap in his first season, and the gap would close to $6 million less over the same five-year period.

In the spirit of fairness, should Brunson make an All-NBA this upcoming season, he would have qualified for the higher max and this is where he could lose out on a ton of money. If he locked in a 35 percent max in 2025, he would have a five-year, $317.5 million contract. In this situation, Brunson could lose out on $75.8 million, should he sign a 30 percent max in 2028, or $54.4 million if he again qualifies for the higher max in 2028.

Jalen Brunson is doing the Knicks a massive favor. He's taking substantially less money in the short term, and in return, he's allowed to hit free agency when the salary cap will be far higher. If things break right, Brunson might be looking at $6 million less over five seasons. That's practically nothing in NBA salary terms, and if you asked any player if they would sacrifice $1.2 million per season to compete for titles with their best friends, the overwhelming majority would gladly pay that price.

This is a bold move by Brunson, but it's also genius. He gets to be a benevolent hero and sets himself up for a more lucrative payday. He gets to have his cake and eat it too, or if you're craving a New York theme, he gets to have more bites at the Big Apple.

Brunson and the Knicks found a creative solution to the tyranny of the second apron and used the fast-rising salary cap to their advantage in the present and future. Brunson is taking a financial risk, but it's a far smaller risk than the headlines would have you believe, and if it leads to the Knicks' first championship in 50 years, it'll go down in the lore of the league.