Front-loaded Contracts- Rebuilding the Wizards part 2

Most contracts start out with a lower salary per year and move upward the length of the contract. When a team is playing for a top tier championship or when a team expects the salary cap to increase, this is a logical determination. However, when a team is rebuilding and has extra cap room, it make sense to front load a contract. For example, let’s say that the Wizards decide to retain Shaun Livingston for roughly 10 million over 4 years. That’s an average salary of 2.5 million per year. The typical structure for a contract like this would be 2 million, 2.25 million, 2.5 million, and 3.25 million. Instead, the Wizards should massively frontload the contract along the lines of 6 million, 2 million, 1 million, and 1 million. First, by frontloading the contract, the contract becomes dramatically more valuable as it progresses. A player who deserves roughly 2.5 million a year is a steal in the later years of the contract since he’s making far less. This allows a rebuilding team to trade away that contract for more assets as it tries to rebuild. Alternatively, the player can be kept by the rebuilding team, because his frontloaded contract doesn’t cause problems for the team when resigning its rookies in the future. Second, a team which frontloads has more cap room in the future, which means it’s easier to add talent. In the later years, the team who frontloaded a contract can take advantage of its saving later. Any year a team fails to use its entire salary cap is a waste of a space. Teams should maximize their cap each year and pay in advance for as many things in the future as possible. I think some front offices are reluctant to maximize their cap room for a team that isn’t very good. This is an incorrect view of the salary cap dilemma. Instead, teams should realize that by filling up their salary every year, it allows them greater flexibility in the future. For example, several of the current contracts are predicated on the notion that the salary cap was going to expand every year. This was incorrect for this season and likely for next season. Since a team can not know what the salary cap will be, it’s better for them to take a risk adverse position and assume it will be lower in the future.

The only problem with a front loaded contract come into play when a team 1) wants to take on salary during the season 2) the use of team options to give greater control. 3) the danger of a player become dissatisfied if he “blows up” during the later years of a front loaded contract. I’ll address each of these.

One of the arguments against frontloading a contract is that teams want to be able to take advantage of their cap space later in the season. Many teams discover they are not as good as they thought and know want to get under the salary cap. However, this is a relatively rare circumstances. This majority of teams dump their salary earlier, usually at the draft. Also, most teams will hold on to those contracts unless they’re not a playoff team.

Second, a lot of people would argue that the use of team options are preferable to a frontloaded contract. However, these are not mutually exclusive. A contract can be both frontloaded and contain a team option. In fact, the team option is likely to less contentious if it occurs in the later years of a front loaded contract. Nevertheless, it is true that a frontloaded contract.

Third, some people would argue that a player with a frontloaded contract may become dissatisfied if he outperforms his contract. A player in that circumstances will feel that he earned his dues during the year he received a 6 million dollar, and his current salary is not appropriate given his level of play. However, while this is a concern, this could occur with any player who outperforms his contract. Additionally, there is nothing to assume that a player who gains a huge contract at the start of his contract might not develop more loyalty during his initial year.


In totality, most of the objection to frontloaded contracts are either exaggerated in their harms, and the benefits greatly exceed the harm. Teams should seek to maximize their salary cap every season when they are rebuilding in order to not have to waste cap room in years when they’re actually competing.