This is not the Joe Johnson lockout, but that may be how future generations of NBA observers refer to it. J.J. famously signed a $123-million contract no one thought he was worth a year ago; it remains and shall always be considered Arn Tellem's greatest achievement.
How New Salary Rules Would Have Affected Joe Johnson’s Contract
Part of the reason that J.J.‘s contract is so massive is because it lasts six years and because, under the now-expired collective bargaining agreement, players who sign Bird rights contract are eligible for 10.5 percent annual raises. Howard Beck of the New York Times reports that players and owners agreed, in the course of NBA lockout talks last week, to drop both maximum contract lengths and annual raises. So how would those new rules have affected Johnson’s massive deal?
It would have had a pretty big effect, all told. As it is, Johnson signed a max contract worth $123.6 million over six years, for an average annual salary of $20.6 million. At its peak, Johnson’s contract will pay out $24.9 million.
If new contract rules were in place last year, and assuming that Johnson’s contract still began at $16.3 million in Year 1, the total value of the deal would have been $89.7 million over five years, for an average annual salary of $17.9 million.
That sixth year really is a killer -- pulling back max contract length is a huge deal for owners, who can't talk themselves into extra seasons that seem too far away to have a real impact. But even beyond that, there are real annual savings with the new pay raise limitations. The Hawks would have saved $900,000 on Johnson's contract in Year 2, $1.8 million in Year 3, $2.7 million in Year 4 and $3.5 million in Year 5.
These wins for the league are as big a deal for the big deals as they seem.
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