Here’s Why Giannis Antetokounmpo Could Lose Over $ 25 Million In Super Max Contract Due To COVID-19 Fallout

Giannis Antetokounmpo becomes a very rich man. On Tuesday, the back-to-back MVP signed the biggest contract in NBA history, a five-year supermax deal that will keep him in Milwaukee for at least the 2024-25 season. The deal is worth more than $ 45 million a year, making him the highest paid athlete in North American team sports in terms of average annual value, and every penny in the deal is guaranteed. Antetokounmpo is ready for life.

Still, he could have been a lot richer had he not been because of the coronavirus pandemic. That’s because of the unique rules for maximum contracts in basketball. The maximum is not a dollar figure. It is a percentage of the salary ceiling. When a player signs a maximum extension like this one, the dollar numbers are left blank until the limit is set for the season in which the deal begins. The limit itself is usually determined by income, and the pandemic has severely curtailed that income. As a compromise, the NBA and NBPA agreed on a predetermined maximum for this season of $ 109.14 million, which was also the previous season. In the future, the limit will grow between three and ten percent annually based on how much revenue the competition generates.

That’s where the $ 228.2 million amount you’ve likely seen comes from. A three percent increase on the $ 109,140,000 limit comes to $ 112,414,200. As revenues are expected to be relatively low this season, that’s the expected limit for next season, when the new Giannis deal kicks off. Because his MVP awards qualify him for official veteran status, his new deal starts at 35 percent of that ceiling figure, growing eight percent annually. Add it all up and you get $ 228.2 million.

Again, this song is set in stone. If fans are able to return to the arenas earlier than expected, the league could potentially generate more revenue than expected. In the absolute best scenario, the limit would go up 10 percent to $ 120,054,000. In that scenario, Giannis would earn more than $ 15 million more over the life of his contract.

However, this scenario is considered highly unlikely. Teams are working with that $ 112.4 million limit projection, which indicates the $ 228.2 million value associated with the Giannis contract. The odds overwhelmingly suggest this is what he’s going to make. It’s just not what he would have made if the pandemic had been averted.

In September 2019 The Shams Charania of the Athletic reported that the NBA predicted a salary cap of $ 125 million for the 2021-2022 season. Had that been the case, the raw numbers on Antetokounmpo’s contract would have been absolutely astounding.

To put this in perspective, remember that just two decades ago, Alex Rodriguez signed the biggest contract in the history of the sport for $ 252 million over 10 years. Not only would this contract exceed the total value of that contract, it would have done so in half as many years. It would have paid Giannis more than $ 50 million a year, and because an individual player’s maximum salary is never lower than 105 percent of his previous salary, he would have made more than $ 60 million for the 2026-2027 season if he was productive. enough to command so much. For a player to reach that salary organically, the cap has to grow to over $ 171 million, a 57 percent jump from its current level.

Based on these numbers, we can predict that the pandemic cost Giannis at least $ 25,549,180, the difference between that $ 253.75 million and the $ 228,200,820 he actually expects to receive. The qualification “at least” is needed there because there is one more salary limiter that we must recognize, even if we cannot specifically quantify it: escrow.

Under normal circumstances, 10 percent of players’ salaries are held in a blocked account each season. This is done as a guarantee in case players’ salaries exceed 51 percent of the basketball-related income to which they are entitled. If players earn too much in a given season, owners can take back some of it, up to that 10 percent per player. Owners rarely have to use this option, and when they do, it’s never the full 10 percent.

But the league estimates that 40 percent of BRI comes from fans attending games in arenas. That income is gone for now, which means that property will almost certainly take back that bail money. Nor will it be limited to 10 percent. Due to the unique circumstances surrounding this season, the players and owners have agreed to a number of changes. First, to cover loss of income, the escrow hit for a particular season can be spread over several years (until the next two after that). Second, the maximum deduction for each season is now 20 percent.

There is no guarantee that the league will ever actually withhold 20 percent of player salaries, but let’s imagine a nightmare scenario where so much revenue is lost this season that it becomes necessary for the next two campaigns. That would cost Giannis an additional $ 16,367,507, bringing his take-home amount on this new deal to about $ 212 million.

Again, these numbers are not final, and again, Giannis is going to make a lot of money anyway. But the amount he risks losing in this pandemic is significant. Players like Magic Johnson, Larry Bird and Kareem Abdul-Jabbar didn’t make $ 40 million throughout their careers. Now Giannis is in line to potentially lose as much of a single contract as possible due to the coronavirus.