When it was reported that Jimmy Butler had agreed to a new deal with the Chicago Bulls, it was reported as a five-year, $90-plus million max contract with a fifth-year player option. But when the deal was actually signed, there were some quirks:
ESPN sources say Jimmy Butler earned a signing bonus of $4.6 million as part of his new contract with the Chicago Bulls
— Marc Stein (@ESPNSteinLine) July 10, 2015
Interesting that Jimmy Butler's contract is less than max – took $15.3 mil instead of $16.4 mil in yearr 1 @BBallInsiders
— Eric Pincus (@EricPincus) July 12, 2015
It turns out that because Butler got that signing bonus, he didn’t quite get a max contract. Danny Leroux over at Sporting News did a good job breaking down what the signing bonus means for Butler in terms of money over the length of the contract, explaining that he loses about $2 million in guaranteed dollars in exchange for getting that money up front.
For cap purposes, that $4.6 million signing bonus gets split up over four years, meaning $1.15 million gets added on top of the base salary for each of the next four years. The base salary for Butler’s first year is the $15.3 million Pincus mentions, and the 7.5 percent raise gets applied to that base salary and not the base salary plus the signing bonus value, which is a total of $16.4 million in the first year. This results in a final contract value of about $92 million-plus instead of $94 million-plus.
But as Leroux notes, there’s value in getting that $4.6 million up front rather than taking a straight max contract, as it gives him more financial flexibility now (this is especially true given his small rookie contract) and could turn into more money down the road if invested. It’ll be interesting to see if more players follow Butler’s route with their contracts.