Anthony Davis and His Next Contract With the New Orleans Pelicans

Published: July 23, 2014

(A special thanks to Jason Calmes in this article for his fact-checking and infinite wisdom. Also, a large shout out to one of our favorite podcast guests and salary cap guru’s Larry Coon.) 

While the drama of free agency is fun for most, it is nerve-racking for fans of that team whose star player is out there hearing pitches from other franchises. The idea of losing a franchise changing player for nothing causes more anxiety in a fan base than anything on the court possibly can. And even if your team’s superstar is not a free agent, just the threat of him becoming one can put your team in a position where they almost have to trade him (See: Kevin Love).

This is the new NBA, and with this franchise’s history of losing its star players, it is not a surprise that some fans are worried about Anthony Davis eventually exiting stage left. And while it is possible that he will some day play for another city, that day will likely not come any time soon. If the past is truly the best indicator of the future, the Pelicans will likely have Anthony Davis in uniform for at least five more seasons before they have to worry about him having the ability to put the Pelicans in a position where they have to move him or risk watching him leave. This is the timeline they are on.

But don’t just take my word for it. Let’s take a look back at the past, examine the present, and project forward to the future, as I take you through each and every detail of what is likely to be Anthony Davis’s next contract.

Anthony Davis’s Current Contract

Davis will count for $5,607,240 against the cap this season, and the Pelicans have the right to pick up a $7,070,730 option for the 2015-16 season. They have until October 31st, 2014 to do so, and they will undoubtedly pick up that option year. The Pelicans would then have the ability to make a qualifying offer of $9,191,949 in June of 2016 that would make him a restricted free agent that summer. But don’t expect it to get that far, as the Pelicans will be able to offer him a contract extension in the Summer of 2015. If and when Anthony Davis accepts, his new contract will start in 2016, seamlessly continuing his position on the Pelicans roster following that final year of his rookie deal.

Extension Possibilities

First, let us start with the timeline. The New Orleans Pelicans can not offer Anthony Davis a contract extension until July 1st, 2015. He will have until November 2nd of 2015 to sign the offer. If the two sides fail to agree on a new contract, then the Pelicans will have to wait until June of 2016 to extend him the qualifying offer and make him a restricted free agent. From there, they would still have the ability to negotiate with Davis and sign him to a new deal, or allow him to sign a contract with another team and match that contract.

That seems to be the worst case scenario. The more likely scenario, if history is any indicator, is that Davis and the Pelicans agree to a contract extension at the beginning of July 2015. With Anthony Davis being a player that has between 0 and 6 years of service in the NBA, they can offer him approximately 25% of the 2015-16 salary cap as a starting point, with a duration that goes up to four years. His overall contract will start at that salary, and then standard 7.5% increases will commence for the duration of the contract, regardless of how much the salary cap increases or decreases over the next four years.

The Pelicans do have another option, one that they are likely to take. They have the ability to extend one player coming off his rookie deal a ‘five-year designated player’ contract. This contract can be signed between July 1st and November 2nd of 2015, and a team is only allowed to have one ‘five-year designated player’ contract on its roster. In addition to allowing the team to offer a 5th year, the player also has the ability to command a salary that counts for approximately 30% of the cap in the first year if they meet certain criteria. This has been deemed the ‘Rose Rule’ in the new CBA.

The Rose Rule

For a player to meet the requirements of the Rose Rule, and in turn get up to approximately 30% of the salary cap, as opposed to 25%, he must do at least one of the following:

  • Be named to the All-NBA First, Second, or Third team twice
  • Be voted to start the NBA All-Star game twice
  • Be named the NBA MVP once

With two years left before Davis starts his new deal, all three of these remain a possibility for Davis even though he has not accomplished any of those things yet. By July of next year, it is possible that they all remain in play. Or perhaps only one or two of them will remain a viable option. If he signs a ‘five-year designated player’ deal and does not achieve one of those select criteria, then he will count for 25% of the salary cap in the first year of his extension. It is possible that, over the course of the contract, this could make a 10 to 25 million dollar difference for Davis and the Pelicans.

Recent Designated Player Contracts

First things first – NOBODY turns down the designated player contract. Kevin Love would have accepted it in Minnesota (it was not offered), Kyrie accepted it less than a month ago despite three somewhat miserable years in Cleveland, and so on and so forth. Now, I guess there is always room for breaking with precedent, but few (if any) agents will allow a client to turn down five years and 100+ million dollars just to allow a client to play on a bargain basement salary for two more years (one rookie, one on the qualifying offer), earn their free agency, and only get 25% of the cap from another team.

Now, all ‘five-year designated player’ contracts are not created equal. Players and teams can negotiate trade kickers, early termination options, and other minor clauses. For example, Kyrie Irving does have an ETO for his final season and a 15% trade kicker as well. Paul George’s contract has an ETO in year 5, but no trade kicker and in exchange for getting the ETO, the Pacers got him to agree to only start off at 27% as opposed to 30% in the event that he qualified for the Rose Rule (which he did). Meanwhile, John Wall is a straight 5-year contract with no ETO and since he did not meet the qualifications, he started at 25%. Quite frankly, the better the player, the more leverage he has. Expect Anthony Davis’s contract to have an opt-out in the 2020-21 season. The trade kicker, however, might work to the detriment of Davis if he wants out down the line, so I don’t know if that will be a part of his agents’ demands.

A couple of small things to note here as well. First, it is not a “true” 25% or 30% of the cap, which is why I used approximately earlier. It is 25% or 30% of a slightly small number that was negotiated a recent collective bargaining agreement. The two sides negotiated a different formula for setting the salary cap than they did for maximum salaries, so the two became decoupled. The salary cap is based on 44.74% of the BRI (Basketball Related Income), while maximum salaries are based on 42.14% of the BRI. So, for example, if BRI was 5 billion dollars, the salary cap would be a little less than $74.56 million (5 billion x 44.74%, less some deductions, divided by 30), but the 30% max salary would only start at a little less than $21.07 million (5 billion x 42.14%, less some deductions, divided by 30, then multiplied by 30%). As you can see, that is not 30% of the salary cap.

Second, you can sign other players on your team to 5-year contracts. Just not the designated 5-year contract. The Indiana Pacers, for example, re-signed George Hill for 5 years when he became a free agent, and that did not cost them their designated contract. The designated contract is an extension to a rookie deal, essentially giving you a one-time ability to have a guy under contract for six seasons. So, the Pelicans could sign AD and then turn around and give Jrue or Evans or Asik, etc. 5-year deals when their contract is up, like the Wizards just did for Marcin Gortat.

Also, once the 5-year designated contract is up, the Pelicans get the right to give it to somebody else if they so choose. And if they wanted to trade for a guy who was given designated contract by another team, they could do so. But you can only give out one designated contract. So in a world where the Pelicans kept Nerlens Noel and he became a superstar, they wouldn’t have been able to offer this contract to both Davis and Noel. This, in part, was why Harden wasn’t opposed to leaving OKC, as the Thunder could not offer him the five-year designated contract. Not saying that this was a big part of why Dell Demps has been willing to trade picks these last couple of years, but it is something to consider.

The Effects of the New Television Contract

You have probably heard about the new television contract that will come into effect starting in 2016. The current contract runs out after next season and the NBA will likely make close to double in their next deal, according to some projections. This directly affects the salary cap, and as we have seen, the salary cap directly affects Anthony Davis’s next contract if he is given the ‘five-year designated extension.’

The players are guaranteed to get no less than 49% of the BRI (Basketball Related Income) and no more than 51% of the BRI in each given season. For the purpose of this article, let’s assume that the players will get 50% of the BRI. A small percentage of that money goes towards benefits, while 44.74% (see above) is dedicated to the salary cap.  Now, television is only a portion of the income, but it is a large percentage. Currently, television accounts for about $930 million every year and total BRI projects to be between $4.5 and $5 billion these next two seasons. Now, we can do some complex math here, but let’s assume that the television deal essentially doubles and an extra $930 million is thrown into the pool. About half of that will go to the players, with 45% of it going towards the salary cap and the rest going towards benefits. Divide that up amongst 30 teams, and you are looking at the cap rising by about $15 million per team in that first year, just based off the new television deal.

Based on this conservative projection, it would be safe to assume that the salary cap for the 2016-17 season will be at least $80 million, with $85 million likely being the top end of the projection. Now, let’s go back to AD’s possible contracts. This would put the first year of Davis’s contract at $18.8 – $20 million if he did not meet the clauses of the Rose Rule. If he did, his contract would start at $22.6 – $24 million in year one. Again, factoring in standard increases over all five years in his contract, this could mean a difference of close to $25 million dollars over those five seasons, depending on how much the cap increases. The first table below will shows what his contract will look like, give or take, if the cap rises to $80 million, and the second table shows what his contract would look like, give or take, if the cap rises to $85 million.

[table id=64 /]


[table id=65 /]


The 1800+ words can be summed up like this: On July 1st of 2015, the New Orleans Pelicans will present Anthony Davis with a five-year extension that will likely wind up being in the neighborhood of $110 – $140 million when it is all said and done. There is no sure-fire way to know at this point what the final numbers will be, and in fact, the Pelicans and Anthony Davis will not know what the final terms of the contract will be on the day he signs it. But it will be signed, because it is far more financial security than he can get in any other scenario.

Nobody has ever turned down the ‘five year designated contract’ and AD likely won’t be the first. Based on recent precedent, we could expect to see Davis negotiate for an ETO in the final season, and this basically puts the team on a five-year time table starting this season. They will have the last two seasons that he is under his current contract and the first three of his new contract to show him that he can win here. If not, Davis could very easily do what Kevin Love is doing now (and Chris Paul did before him), and threaten to opt out and leave the following season if the team does not trade him. Once we hit the summer of 2019, Davis will have all the leverage, so it is imperative that the team shows him that this is the best place for him by then.

The eventual dollar figure attached to the contract will depend on two major factors:

  • The new TV contract
  • Whether Davis meets the ‘Rose Rule’ criteria

In all likelihood, we won’t know the exact figures until some time in June of 2016 what Davis’s contract will look like, because that is when the All-NBA teams are released. Some might root for Davis not to meet the criteria because that would likely add an addition 4-6 million dollars in cap room each season, and while that is understandable, I believe that Davis will be underpaid regardless of whether he meets the criteria or not. If Davis becomes the MVP candidate that most expect, his true value would probably be closer to $40-$50 million per year over the course of that extension. It’s nice to save money wherever you can, but some players are simply worth paying top dollar for, and Davis is one of those players.

Something else to keep in mind is that while I have stated in the past several times that 2015 could be the last chance for Dell to make a big move for a core piece, the truth is that he can also set things up so that he can make a splash in 2016 if he so chooses. Jrue Holiday and Tyreke Evans will be on bargain basement deals at that point, accounting for approximately $22 million against a cap that figures to be between $80 and $85 million. Even if you add in Davis at the highest level possible and Omer Asik on a contract similar to Marcin Gortat’s new deal, the Pelicans will still have more than $20 million in salary cap room. And that is the low side of the projection, with $30-$35 million in cap room a realistic possibility if they clear out everyone else on the roster – something they would do if say Kevin Durant were interested in teaming up with AD.

In the summer of 2017, the team would likely have to give significant raises to both Jrue Holiday and Tyreke Evans if they wanted to keep them around, but there is a window for the Pelicans to do something major in either 2015 or 2016, even with AD’s new deal on the horizon. By the end of the summer of 2016, however, the team will likely have whatever core it wants around Davis locked into place and will move forward with that core, trying to get the championships that will satisfy Davis and keep him here long term.

You will undoubtedly hear (or read) misinformed people tell you that the Pelicans are in danger of losing Davis if they don’t show him they can win big in the next year or two, and now you have the ammunition to correct them. Or you can just point them to this article so you can save your breath (or fingers). The fact is that Davis is here for a minimum of five more years, and in all likelihood, a couple of more after that. Davis is less than 350 days away from signing a contract that will make him financially stable for the rest of his life, and the Pelicans will fork over $100 million with a smile on their face, because they will be securing one of the best bargains in the entire NBA for at least another four years.


  1. Pingback: LBJ,HOU,PHI,NOP,LAL,DET,MIN,Canadians,Aussies,Summer League,Free Agents | Basketball Intelligence

  2. Pingback: Have The Pelicans Botched Rebuilding Around Anthony Davis?

  3. Pingback: Anthony Davis is a Beast, and Only 21: The NBA Should Be Very, Very Afraid | The Big Lead

  4. Pingback: The Best Case Scenario For The Chicago Bulls And Jimmy Butler

Leave a Reply

Your email address will not be published.