clock menu more-arrow no yes

Filed under:

How Kevin Durant could make an extra $100 million by signing a 1-year contract

New, comments

If the Thunder star signs a one-year contract this summer and re-enters free agency in 2017, he can make significantly more money over the long term. Here's how.

Mark D. Smith-USA TODAY Sports

The Summer of Kevin Durant officially began at 12:01 a.m. ET on July 1, but the speculation about what the superstar forward will decide to do had been running rampant for a long time now. Durant was in a unique position given the exploding salary cap over the next two seasons. In the end, he decided to sign with the Golden State Warriors.

Durant's choice to sign with Golden State came without a long-term commitment -- he signed a two-year contract with just over $54 million, with a player option after the first season. That all comes back to the salary cap.

The NBA salary cap for the 2015-16 season was set at $70 million. It jumped $24 million for the upcoming to just above $94 million. The cap jumps again next year, projected to go to around $110 million. By taking a shorter deal, Durant put himself in position to earn far more money over the remainder of his career.

Durant chose to sacrifice security for the potential for greater long-term earnings. How does this all work? Here's everything you need to know about KD's new contract in Golden State.

What is the '1+1'?

It's a two-year contract with a player option on the second year, which gives the player a chance to opt out after one season of the deal in order to become a free agent again and sign another new contract. LeBron James has signed contracts like these the last two summers with the Cleveland Cavaliers, and he's expected to sign another one this offseason.

Why would Durant sign a deal like this?

There are several reasons why Durant would sign this type of contract, and it made sense whether he was going to stay in Oklahoma City to go to the Warriors.

The biggest reason for Durant to sign a "1+1" deal this summer is money. In addition to the significant rise in the salary cap, Durant will be in his10th year in the league after 2016-17. That makes him eligible for a max contract worth roughly 35 percent of the cap in 2017. Since he just finished his ninth season, he was only eligible for one worth 30 percent of the cap. Add it all up, and Durant stands to make a lot more money because he signed the "1+1."

So how much more can he get?

Durant's maximum salary in 2016-17 will be $26.6 million no matter what, but the numbers start changing the following years depending on the contract he signs. If Durant were to sign a full maximum contract in Oklahoma City, he's locked in to 7.5 percent raises each year for the duration of a five-year contract. That works out to $153 million total over five years. If he signed a long-term deal elsewhere this summer, he stands to make a maximum of about $114 million over four years. Per NBA rules, other teams cannot give out five-year deals and the annual raises between years can only be for a maximum of 4.5 percent.

But a short-term deal in 2016, followed by a long-term deal in 2017, presents significantly more lucrative scenarios. It's still unclear exactly what the 2017 salary cap will be, but we're going to operate as if it'll be $110 million. However, it must be noted that due to the way max contracts are calculated (see: footnote No. 2 here), Durant would actually get a bit less than 35 percent of a $110 million cap in the first year of a long-term deal in 2017. Thus, our calculations will be as if Durant's new deal will start at 35 percent of $108 million. This is an estimate.

If Durant goes this route and ultimately were to sign a five-year max deal with 7.5 percent raises in Oklahoma City in 2017, he'd earn more than $244 million over six seasons. He'd make $26.6 million next year and then sign a deal that begins at around $37.8 million and rises to $49.1 million in the final year of his deal.

Instead, Durant signed a "1+1" elsewhere in 2016. Doing this actually costs Durant a good deal of long-term money. Due to an odd quirk in the CBA, the Warriors would need cap space to sign him to a full maximum contract. If they don't have cap space, the team can only sign him to a four-year deal with a first-year salary that's up to 120 percent of his $26.6 million salary in 2015-16.

(Of note: the Cavaliers are in the exact same situation with LeBron James this summer. ESPN's Brian Windhorst explained that well here).

All in all, here's what Durant's average annual salary would look in each of these scenarios:

KD free agency

And here's the total amount of money Durant would make:

SCENARIO 1: 4 years, $113.6 million

SCENARIO 2: 5 years, $153 million

SCENARIO 3: 5 years, $162.9 million

SCENARIO 4: 5 years, $188 million

SCENARIO 5: 6 years, $244.1 million

In every scenario, Durant would get more money annually by signing a short-term deal first and then a long-term deal next summer. Over the long haul, he'd actually make more than double the amount of cash if he would have signed a "1+1" and re-ups with OKC than if he signed a standard maximum contract with another team this summer. That's why there's a ton of incentive for Durant to accept a short-term deal this summer and re-enter free agency next year.

There are non-financial reasons to avoid the "1+1" this summer. Durant could prefer the security of guaranteeing more than $100 million immediately. He also may not want to deal with another season of speculation and more free-agency meetings in 2017.

But if he wants to make the most money over the long haul, going with the "1+1" this offseason is the only choice.