Over 36 Rule

[bgwizarfan]

I have 2 main questions involved with the Over 36 rule that confuse me in Larry's FAQ and I'd also like to go through a specific example, since we haven't really gone through one before on here. Someone please correct me if I'm wrong anywhere.

In Larry's example in the FAQ, he goes through a simple Mid-Level Exception example where the overall amount of money doesn't change. I get how if the team is limited to an exception, adding more years won't give the player more money. But if it's a situation like Antawn Jamison's, where he's a Larry Bird Free Agent re-signing with his old team, I don't see how that applies (assuming he's not going to cross his applicable maximum salary).

Larry Says: "In other words, the Over-36 rule completely eliminates the advantage of adding additional years onto the contract, effectively closing the loophole described earlier. It does not matter how many additional years are added on -- as more years are added, more salary is classified as deferred and counted against the cap in the earlier seasons, and the base salary in the earlier seasons has to be reduced further to fit the total within the maximum allowed amount. The player therefore receives no more money in a longer contract than he would receive in a four-year contract, so any incentive for signing a longer deal is eliminated."

I don't think the above is true for all cases. Let's look at Jamison - he turns 32 on June 12. While I don't think the Wizards would sign him for more than a 4th year, you never know. The 5th year of Jamison's new contract would be a "Zero Year." For simplicity sake, let's say the Wiz give Jamison a 5 year, 60 million contract that goes $10m, $11m, $12m, $13m, $14m. The 5th year would be a Zero Year so here's how the cap hit looks
...................Paid...........Deferred.............CAP
Year 1: $10,000,000 $3,043,478 $13,043,478
Year 2: $11,000,000 $3,347,826 $14,347,826
Year 3: $12,000,000 $3,652,174 $15,652,174
Year 4: $13,000,000 $3,956,522 $16,956,522
Year 5: $14,000,000 X X

So, to me, the more years you add on here, the more Jamison makes... and it only helps him to have more years added on and hurts the Wizards since it increases their cap amount for more than theyre actually paying him. I understand for the specific example Larry gave it worked that way, but I was unclear if that was a general statement for all Over 36 contracts or not.

Okay, now we get to problem #2. Jamison plays Year 1 and Year 2, so before Year 3, the contract has to be re-arranged. Now if you go to Larry's charts, http://members.cox.net/lmcoon/salarycap.htm#49, i cannot figure out how Larry re-arranges the contracts in the "Paid" section for Years 3-5 - where does $4,600,000 come from? (and the rest of the ones in that column). Averaging I get... so here's my question...what happens to Jamisons contract then:

................PAID................CAP
Year 3: .....??........$10,869,565.33
Year 4: .....??........$10,869,565.33
Year 5: .....??........$10,869,565.33

Lastly, after reading the CBA portion, I think there's a small error in the end of this section: Larry says: "If the player's birthday is during the July Moratorium and he signs a contract within five days after the moratorium ends, then they treat him as though his birthday was June 30."

That's actually not true - they don't treat him as though his birthday was June 30th (that would be pointless since the season starts October 1st, so age wise, he would still sign his contract after he turns another year old). They treat him as his AGE was on June 30th...so if a player turned 33 on July 6th and he signs his contract within 5 days of the moratorium ending, they treat him as if he's 32 (which obviously can make a big difference).

Overall, after reading the CBA, it's incredible that Larry was able to interpret as much as he did for the FAQ...without the FAQ, i wouldnt have any idea what the Over 36 rule was talking about. Sorry for making this long, but we rarely talk about this, and there's actually a live shot it will come into play this summer

[bgwizarfan]

i don't like responding to my own post, but i didnt get any responses... Dunk or FGump (or Larry if you see this), do one of you mind taking a few minutes and seeing what I have right and possibly answering my questions

this is one of the most confusing rules in the CBA so it'd be good for it to be clarified.... thanks

[Dunkenstein]

i don't like responding to my own post, but i didnt get any responses... Dunk or FGump (or Larry if you see this), do one of you mind taking a few minutes and seeing what I have right and possibly answering my questions

this is one of the most confusing rules in the CBA so it'd be good for it to be clarified.... thanks

I took a few minutes to see if there was a simple answer to your complex question, and I couldn't find one, nor did I have the time or desire to thoroughly analyze the question in order to give you an answer I was sure was correct. Sorry.

[FGump]

Although he explains the premise for its existence, LCoon's FAQ on this issue never quite states explicitly what the rule actually is. Does anyone know where the rule itself is given, in the CBA? I can't find it there either.

[Dunkenstein]

Art VII, Sect 3 (a) (2)

[FGump]

I would seriously wager this is a moot discussion, because i see no way the Wiz offer Jamison an over-36 deal. Their problem will be in squeezing both Arenas and Jamison into limited tax-free room in yr 1, and doing something that artificially increases the hit in year one (such as incur an over-36 accounting) would be totally counter-productive to that goal.

[Dunkenstein]

Like I said, bgwiz, your question is a complex one and unless Larry answers it, it's likely to go unanswered.

[bgwizarfan]

yeah, I just didn't get how he came up with those numbers for the updated "paid" section. I get the Cap part, which is I guess all that matters.

and then I'm pretty sure I'm right about what happens with the exceptions... that only the base is decreased when there's a specific limit on the total you can give a player (i.e. MLE, or in jamison's case, the maximum salary)

I know it's kind of a moot point, but it's more about how the rule works in the 1st place. I think the Wiz will offer Jamison a 3 or 4 year deal, though, and most definitely not 5. It also will be interesting to see what kind of buzz Roger Mason has around the league, so that could complicate the issue even more, though obvously Arenas and Jamison will be the priorities

[LarryCoon]

bgwizarfan -- Sorry, I'm in hit-and-run mode right now, since I haven't been here in a while and don't have much time to post (and no time to research) right now. But off the top of my head --

In a situation like Jamison -- where you're not using a limited exception (like the MLE) and you're not going to give the max, you're right that the Over-36 rule doesn't constrain the salaries (it just accelerates the cap hit). But the flip side to this argument is that you're not bending any rules -- since you're still under the max, you also have the option to legally give the player more money by simply giving him a higher salary. The rule closes the loophole of getting around limits like the max salary or the MLE by tacking salary onto the end, which doesn't apply to the situation you describe.

As to how I got the recomputed cap amounts, I'm pretty sure I just followed the rules directly in the CBA. I'm not positive -- I did have a couple conversations with the league about Over-36. I'll have to go back later and double-check my figures (and my notes, if I still have them) in case there's an error. But a few people have double-checked my math, so I'd be surprised if I got it wrong.

Birthday vs. age -- I'll have to re-check that one.

And thanks for the compliment at the end. You're right that this is one of the rules where the language does hardly anything to help you understand the purpose and reasoning. It was a big a-ha! moment for me when I really got it, and it's actually a very clever way of accomplishing their goal. I didn't work it all out alone -- I remember Dan Rosenbaum & Dunkenstein went over the rules several times (and over many drafts of the FAQ question) before I was really happy with it.