Sometimes contracts are really straight-forward.
For example, the contract Dorian Finney-Smith is completing this year is one such contract. He had a fully guaranteed three years with no options and no incentives at exactly $4 million per year. Davis Bertans and especially Spencer Dinwiddie have complications that are worth taking the time to go through.
Since Bertans is easier to explain, I’ll start with him.
His contract starts out easy enough to understand since this year and the following two seasons are fully guaranteed.
However his 2024-25 $16,000,000 only $5,000,000 guaranteed. This means if the Mavericks ever waive him then they’d only owe him $5,000,000 for the 2024-25 season. However, it can become fully guaranteed if he reaches the incentive.
The whole $16,000,000 is guaranteed if he plays 75% of games in the 2023-24 season. In an 82-game season that equals him needing to play 62 games. This seems to protect against the two likely reason he would play less.
- He gets injured and is unable to play
- His play worsens to the point that he’s not playing at all
Bertans contract also contains an Early Termination Option (ETO). This gives Bertans the right to cancel the final year of the contract if it’s to his benefit. He would be allowed to terminate the last year whether he has or has not has not triggered the year to be fully guaranteed. Bertans would have to have a career renaissance before he’d be likely to use the ETO to get out of a year where could could earn between $5,000,000 and $16,000,000
This contract has some non-guaranteed money and incentives.
Dinwiddie’s contract is fully guaranteed in his first two years.
His last season of $18,857,143 is already guaranteed for $10,000,000. The rest becomes guaranteed if he plays 50 games this year (already at 44) and 50 games next season. This seems to entirely hinge on Dinwiddie’s health next season. He’ll very likely hit the 50 games mark this season since he only needs to play in 6 of the Mavericks final 25 games.
Spencer decided to go with some of the most complicated incentives I know of.
Before I talk about them I want to give a quick explanation of “Likely Incentives” versus ‘Unlikely Incentives”.
An incentive is likely or unlikely based upon if the player (or the team he’s on if it’s a team based incentive) did it the previous season.
The five incentives in Dinwiddie’s contract for each season are:
- Dinwiddie playing 50 games
- His team getting to the 2nd round
- His team getting to the Conference Finals
- His team getting to the NBA Finals
- His team wins the title
All these team goals come with the caveat that Dinwiddie has to play in at least 50% of the games for that round.
All 5 of Dinwiddie’s incentives are unlikely because neither he nor Washington (and now, nor Dallas) did these last season.
THEREFORE none of the $2,571,428 total in incentives count in Dinwiddie’s cap charge.
According to the very reliable resource @Spotrac the monetary value of these incentives are as follows:
$1.5M for 50 games— Spotrac (@spotrac) February 12, 2022
Then with 50% playing time in the playoffs he gets:
$100,000 for making the 2nd round
$571,427 for making the conference finals
$400,00 for making the NBA finals
And an extra dollar if he wins it.
- $1,500,000 if Dinwiddie plays 50+ games
- $571,427 make Conference Finals
- $400,000 make NBA Finals
- $100,000 make 2nd round
- $1 wins Championship
I detailed in this post just how interesting the $1 bonus is for winning a championship. Short version is that Dinwiddie wants the bonus in pennies!
Now to explain the unfortunate side of Dinwiddie earning these incentives. IF he earns them this season then his estimated cap charge for next season will include the incentive, This is because with him hitting that mark the incentive would change from unlikely to likely. So if Dinwiddie plays in six more games to hit 50 then his cap charge for next season will go up by $1.5 million to $19.5.
If he hits them all then his 2022-23 contract cap charge would become $20,571,428. We’d welcome that with open arms because that would mean the Mavericks won the championship.
I’ve been saying “cap charge” because likely incentives only count against the cap, but don’t necessarily mean he’ll earn it again next year. If the Mavericks were trying to be a cap space team then this would matter but since the Mavericks will be far above the cap it won’t matter at all.
As far as tax implications, Spencer hitting incentives in the 2021-22 season wouldn’t raise the Mavericks tax for the 2022-23 season. The Mavericks tax bill for the 2022-23 season will use the incentives that he actually receives next season.
I hope this article helps you understand the nuances of the two newest Maverick’s contracts.
You might be asking “why do they make this so complicated?” Non-guaranteed and incentives are typically negotiated into contracts as a way to bridge the gap between what salary players are asking for and what the team is offering. Players occasionally use incentives to bet on themselves and teams get a reduction if the player doesn’t reach the incentives.