The Death of Incentives
No player has received incentives in this year's free agency. I explain why and give practical examples to show why they're frowned upon in the NBA's new apron environment.
NBA free agency mostly concluded on July 1st, but it took several weeks for all those contracts to become official. Those contract details are trickling out and finally being reported.
All major contracts have been signed, and so far, there is one major trend: no contract incentives. In fact, we have seen several players who previously had significant incentives get them eliminated in their new contracts.
This was expected since the implementation of the second apron. Teams already needed to be mindful of incentives since they count against the aprons. This closes the loophole of if a player earns an incentive, thus being designated from unlikely to likely, and a team getting above their respective hard cap because of it. Now it seems that teams prefer not to deal with incentives at all to maximize their apron space.
In the 2023 offseason, 14 players signed contracts with incentives. 6 players signed extensions that either added incentives (allowed in rookie scale contracts) or kept them. Those numbers shrunk to 11 and 3, respectively, in the 2024 offseason.
And so far, we have 0 contracts with any form of incentives. That could change with some of the current restricted free agents and rookie-scale extension candidates, but the league seems united against incentives from a cap perspective.
Last season, we saw the Mavericks experience the worst case scenario of having no apron space. They didn’t have enough buffer to sign players to 10-day contracts when they had their big injury bug. That’s largely in part to having $3.7 million in unlikely incentives to three players.
One of those players was Kyrie Irving. He signed a three-year, $120 million contract with the Mavericks in 2023 that included $2 million in annual incentives. This summer, both sides were motivated to sign a new contract that would lower his annual salary and give him additional years.
Irving signed a similar deal earlier this month as he did two years ago, except this one doesn’t include any incentives. This gave the Mavericks $8.5 million in flexibility when factoring in his $6.5 million salary reduction from his player option amount, and $2 million in incentives eliminated.