The NBA draft season has concluded, leaving teams eager to see how their newly acquired players will fit into their rosters. While some teams made straightforward picks based on their position, others took risks in pursuit of potential talent. The true impact of these draft choices will only become clear several years down the line. However, one aspect of the NBA draft is well-established: the rookie scale and its financial implications.
Understanding the NBA Rookie Scale
Under the Collective Bargaining Agreement (CBA), every first-round draft pick is assigned a predetermined salary for the first two years, with team options for the third and fourth years. The salary scale is determined by the player’s draft position during the first three years, while the fourth year’s salary is calculated as a percentage of the third year’s earnings. Players can negotiate contracts within a range of 80 to 120 percent of their assigned salary, although it’s uncommon to see players agree to deals below the 120 percent mark.
The financial winners of this year’s draft, Markelle Fultz and Lonzo Ball, secured the top two picks. Fultz is poised to earn over $33.7 million in his first four years, while Ball is set to make slightly more than $30.1 million. These figures assume that both the Philadelphia 76ers and Los Angeles Lakers will sign their new franchise players to four-year contracts, an outcome that appears highly likely.
Financial Prospects for Top Picks
Picks 3 to 6 in this year’s draft—Jayson Tatum from Duke, Josh Jackson from Kansas, De’Aaron Fox from Kentucky, and Jonathan Isaac from Florida State—can all anticipate annual earnings exceeding $5 million under their respective contracts. Notably, Kentucky graduates enjoyed considerable success in this draft, with Fox, Malik Monk, and Bam Adebayo collectively earning a combined $48.9 million from their rookie deals.
The financial stability continues through the lottery picks. Lauri Markkanen, the 7th overall selection, is set to earn a minimum of $8.3 million, with the potential to accumulate over $18.3 million in a four-year span. Following closely behind, Frank Ntilikina, picked right after Markkanen, is projected to receive more than $7.6 million over his first two seasons, with the potential for approximately $16.8 million in the next four years. The 9th pick, Dennis Smith Jr., will make around $7 million in his first two years, with the potential for a total of $15.4 million over four seasons. Completing the top ten, Zach Collins will earn nearly $6.7 million during his first two years, with his rookie deal capping at just over $14.7 million. The Portland Trail Blazers traded up to secure Collins, packaging their 15th and 20th picks to acquire him.
Narrowing Gap between Picks
Surprisingly, there isn’t a substantial drop-off in earnings between the 15th and 30th picks in the draft. Justin Jackson, the 15th pick, acquired through a trade by the Sacramento Kings, can expect to make $5.1 million over two seasons and approximately $12.0 million over four years. Josh Hart, the 30th pick who will join Ball in Los Angeles, will earn slightly over $3 million in his first two seasons, with the potential to reach nearly $7.6 million over four years. The remaining picks fall within the earning range situated between Hart and Jackson.
Exploring Endorsement Opportunities and Future Prospects
Rookies with star potential have the opportunity to capitalize on endorsement deals to supplement their income. Given the limited earning potential under the rookie scale, both agents and rookies seek additional off-court opportunities for financial gain. Agents, in particular, actively pursue avenues outside of rookie contracts since they do not receive a percentage of their clients’ initial deals. It is only with their second contracts that agents truly experience a substantial payday.
Interestingly, being drafted in the second round may offer certain advantages over being selected later in the first round. Second-round picks have non-guaranteed contracts, allowing teams to release them without facing financial penalties. However, if a player believes in their abilities and performs well, it can lead to significant financial rewards in the future.
A prime example of this is K.J. McDaniels, chosen as the 32nd pick by the Philadelphia 76ers in the 2014 NBA Draft. McDaniels was dissatisfied with the terms of the initial contract offered by Philadelphia, prompting him and his agent to renegotiate a one-year deal worth $507,000. Although his rookie salary seemed modest, it ultimately paid off in the long run. Despite being traded mid-season to the Houston Rockets, McDaniels made a strong impression on the team, leading them to offer him a three-year, $10 million contract after his rookie season. This three-year deal proved to be more lucrative than what 12 first-round picks would earn over four years, assuming their teams retained them on four-year contracts.
Of course, the decision to bet on oneself by accepting a non-guaranteed contract in the second round comes with risks. In contrast, Caleb Swanigan stands to make a guaranteed $7.9 million over four years with the Portland Trail Blazers. Even if Portland were to sign him to a two-year deal, he would still earn $3.2 million, regardless of potential trades, releases, or missed games due to injury. Second-round picks do not enjoy such security. However, a player in the right situation, confident in receiving ample playing time and opportunities, may benefit from turning down the initial contract and seeking a more flexible arrangement.
Regardless of draft position, every player hopes to excel during their initial seasons in order to secure their place in the league. It is with their second contracts that players truly gain leverage, both in choosing their team and negotiating their earning potential.