Explained: What is an NBA supermax contract and how does it work?

Keely Diven

Explained: What is an NBA supermax contract and how does it work? originally appeared on nbcsportswashington.com

With All-NBA selections made and franchises deciding about contract extensions, fans will see the term "supermax contract" thrown around a lot. 

Here's a quick primer with everything you need to know about the NBA's most lucrative player deals. 

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What is a supermax contract?

Officially known as the "Designated Veteran Player Extension," this rule allows teams to re-sign qualified players to maximum five-year contracts worth up to 35 percent of the salary cap with eight percent escalation in each subsequent year.

The length of the supermax deal depends on the player's years of NBA experience and years remaining on his current contract. 

  • A qualified player who has completed seven or eight years of service and has two years left on his contract is eligible for a four-year supermax (keeping the player with the same team for a total of six seasons)

  • A qualified player who has completed seven or eight years of service and has one year left on his contract is eligible for a five-year supermax (keeping the player with the same team for a total of six seasons)

  • A qualified free agent who has completed eight or nine years of service is eligible for a five-year supermax 

Furthermore, teams cannot trade a supermax player for the first year after he signs the contract.  

How much is a supermax contract worth?

Valued up to 35 percent of the salary cap in the initial year and subject to eight percent escalation in each subsequent year, these deals are mammoth money.

For example, the Wizards signed John Wall to a four-year supermax in the summer of 2017 when he had two years left on his contract. The supermax money begins in 2019-20 and pays Wall $38.15 million that year. With annual escalations, his supermax is worth $170.912 million over the four-year lifetime of the deal. 

According to a report by Yahoo's Chris Haynes, Damian Lillard-who has two years remaining on his current deal with the Trail Blazers and is expected to be named to an All-NBA team-will be offered a four-year supermax extension worth roughly $191 million this summer. 

Who is eligible to sign a supermax contract?

Very few players qualify for a supermax contract. First, only a player that has (or will have) completed eight years of NBA service by the end of his current contract is eligible to sign a supermax deal, which can only be offered by the team that drafted him or traded for his rookie contract. 

Then, a player must meet one of the following three criteria.

  • Be named to an All-NBA team in the most recent season or both seasons before it

  • OR, be named NBA Defensive Player of the Year in the most recent season or both seasons before it

  • OR, be named NBA MVP in any of the three previous seasons

Which players have received supermax contracts?

Who could receive a supermax contract this summer?

Anthony Davis is already eligible for a supermax offer from the Pelicans. The following players also could receive supermax offers after the All-NBA announcement:

  • Giannis Antetokounmpo - Milwaukee Bucks

  • Damian Lillard - Portland Trail Blazers

  • Kemba Walker - Charlotte Hornets

What are the drawbacks to supermax deals?

The supermax contract was designed to help teams retain their players by allowing them to offer significantly more money than the competition; however, teams that offer such contracts are squeezing themselves in terms of salary cap room to fill out their rosters. 

No franchise can carry more than two supermax players at 35 percent of the cap each. Functionally, though, it's difficult for a team to have more than one.

Two supermax players would account for 70 percent of a team's salary in any given year, leaving the club virtually unable to sign a competitive supporting cast. 

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