The Key Differences Between NFL & NBA Contracts

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Hey Friends,

The NBA Draft took place at the Barclays Center in Brooklyn last night, with 60 young men realizing their childhood dream of joining the National Basketball Association (NBA).

2021 Top 10 NBA Draft Picks

1. Cade Cunningham, Oklahoma State (Detroit)

2. Jalen Green, G League Ignite (Houston)

3. Evan Mobley, USC (Cleveland)

4. Scottie Barnes, Florida State (Toronto)

5. Jalen Suggs, Gonzaga (Orlando)

6. Josh Giddey, Australia (Oklahoma City)

7. Jonathan Kuminga, G League Ignite (Golden State)

8. Franz Wagner, Michigan (Orlando)

9. Davion Mitchell, Baylor (Sacramento)

10. Ziaire Williams, Stanford (Memphis via New Orleans)

Interesting note: Two out of the top seven draft picks — Jalen Green & Jonathan Kuminga — played for the NBA’s G League Ignite last year, a developmental basketball team based in Walnut Creek, California that is affiliated with the NBA G League.

Green & Kuminga both skipped college, earned $500,000 while training for the NBA, and were selected in the top 10. That trend will only continue with more programs like Overtime Elite being introduced.

When it comes to rookie contracts, the NBA and NFL are actually pretty similar, albeit with a few key differences. All NFL draft picks receive a four-year contract. The amount obviously depends on your draft position, but the length is always the same.

Teams are given a fifth-year option with first-round picks that must be exercised after the third year of the deal, but with each draft pick operating in a tight band regarding a salary floor & ceiling, there are few things to actually negotiate.

As for last night’s first overall pick Cade Cunningham though, things will be slightly different. Cunningham’s contract with the Detroit Pistons will be fully guaranteed for two seasons, with separate team options for years three & four of the deal.

Here’s a quick comparison of Trevor Lawrence’s deal (2021 #1 NFL pick) vs. the deal that Anthony Edwards (2020 #1 NBA Pick) signed with the Minnesota Timberwolves last year.

Trevor Lawrence (Jaguars)

Length: 4 years (5th-year option)

Total Value: $36,793,488

Signing Bonus: $24,118,900

Total Guaranteed: $36,793,488

Anthony Edwards (Timberwolves)

Length: 4 years (3rd & 4th year are club options)

Total Value: $44,271,137

Signing Bonus: —

Total Guaranteed: $20,002,920

It’s also important to note that the NBA allows first-round picks to sign for as much as 120% and as little as 80% of the rookie wage scale, so whether it’s higher or lower, Cade Cunningham’s final numbers might be slightly different.

But outside of deal length, the other major difference between NFL & NBA rookie contracts comes via guaranteed money. Trevor Lawrence’s entire $36,793,488 is guaranteed, while Cade Cunningham will only see the first two years of his deal guaranteed.

That’s about $20 million vs. $36 million, but if Cade Cunningham makes it through all four years of the deal, his guaranteed money will rise to more than $44 million — significantly beating out Trevor Lawrence’s $36 million during the same time period.

For the more visual learners (like myself!), here’s a quick annual cash flow comparison that CBS did on Kyler Murray & Zion Williamson a couple of years ago.

The financial and structural comparison between NFL & NBA contracts stop at rookie deals, though. Almost all veteran NBA contracts are fully guaranteed, even if a player is injured or cut. Compared to the NFL, where most contracts see partial guarantees paid within the first 1-2 years of a deal but provide no backend financial protection.

Here’s a good 2016 example between Chandler Parsons (NBA) & Josh Norman (NFL) that I often reference.

Chandler Parsons

Deal Length: 4 years

Total Value: $94 million

Average Annual Value: $23.5 million

Guaranteed: $94 million

Josh Norman

Deal Length: 5 years

Total Value: $75 million

Average Annual Value: $15 million

Guaranteed: $50 million

Chandler Parsons played in only 95 out of 246 games during his three seasons. Still, he earned all $94 million of his contract while Josh Normal spent four full seasons in Washington, taking home “only” $48 million. That’s slightly less than his $50 million in “guaranteed” money and 60% less than his total contract value.

Not to mention, that contract made Josh Norman the highest-paid cornerback in the NFL, while Chandler Parsons never made an All-Star team during his nine-year NBA career.

Ultimately, NFL and NBA players receive a similar 50/50 revenue split through their current collective bargaining agreements, but the difference can almost be simplified into two main points.

Not only do NFL players see their ~50% share of revenue split amongst almost 2,000 people in total, compared to just 450 in the NBA, but with an average career length of just 3.5 years, they also hardly ever receive the full value of their contract.

Bottom line: Guaranteed doesn’t always mean guaranteed :)

Have a great weekend, and I’ll talk to everyone on Monday.

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