Jun 12, 2014; Miami, FL, USA; Miami Heat forward LeBron James (6) reacts during the third quarter of game four of the 2014 NBA Finals against the San Antonio Spurs at American Airlines Arena. Mandatory Credit: Bob Donnan-USA TODAY Sports

NBA Free Agents: What Options Mean for Players and Teams

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With the NBA free agent bonanza getting ready to start, you’re likely to hear some terms you may not recognize. We talk about players “opting out” and we hear about free agents and how they’re restricted or unrestricted. What does it all mean? What are the different kinds of options and how do they affect the players and the teams involved?

RESTRICTED VS. UNRESTRICTED

When a player reaches their free agency period, they’re classified in one of two ways — restricted or unrestricted. An unrestricted free agent truly has the golden ticket. They aren’t bound by any teams and can accept any offer they wish from any of the 30 NBA clubs. It’s much easier to deal with these players, as no strings apply. An example of this was when LeBron James’ contract ran out and he decided to take his talents to South Beach.

On the flip side, a restricted free agent is generally at the end of their rookie scale contract and has more red tape to deal with. The NBA doesn’t want players flocking to the big-name teams right after their rookie contracts, leaving the smaller markets barren and devoid of superstar talent, so they give teams an option to match.

For example, Eric Blesdoe of the Phoenix Suns is a restricted free agent. This means he can field offers from any team in the NBA, but the Suns have the right of first refusal. In simpler terms, they can match that deal and keep Bledsoe in the desert, if they so choose. It turns into a game, where teams offer more money than they would, in order to force the team to overpay to keep the player, thus locking up their salary cap more than they probably would.

A historical example would be the Minnesota Timberwolves offering Nicolas Batum an offer for around $10 million a year. It was looked at as a bit excessive, but the Portland Trail Blazers didn’t want to lose him and they matched.

PLAYER/EARLY TERMINATION OPTION

One of the most powerful options a player can have in their contract is the player option. This gives them the opportunity to enter into free agency early, or take an extra year with their team. The early termination option is similar, but gives the player the option to enter into unrestricted free agency a year early. An example of a player like this is Carmelo Anthony. He currently has the option to exercise his early termination option to hit the market. If he chose not to exercise that option, he’d be with the New York Knicks for another year, although it’s not always that way.

Options tend to swing the power pendulum to the other side.

Essentially, a player option is the player opting into their last year, with the early termination option having them opt out of that contract. The only significant difference is that the early termination can be written into a contract when it’s not their last year. For example, Kobe Bryant had two years of his option. The one caveat is the contract must be at least five seasons and the option can’t be before the third season.

Whomever gets the option holds the power. Look at a guy like Kevin Love. He’s basically holding the Minnesota Timberwolves hostage and now the team has no leverage with other franchises if they want to trade him.

TEAM OPTION

The last option is the team option. It’s obviously a big favorite for the 30 NBA teams and a major sticking point for players. When a team holds that option, they can confidently overpay and backload a contract without fear that the player will decline in his production. So when a contract looks like it’s favorable the team could throw a team option in there to protect themselves, significantly lowering the value of the contract.

These aren’t nearly as popular as the player option, for obvious reasons.

If you’re interested in checking out more about options and want to get very in-depth, check out Larry Coon’s terrific CBA work that explains just about anything you could possibly imagine having to deal with the collective bargaining agreement.

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