When you’re one of the best NBA players to ever play, you expect full compensation. LeBron James has made a lot of money. But he could’ve made even more if not for a remote NBA rule limiting older players. James has been hit twice with this obscure rule. It’s prevented him from signing longer, more lucrative contracts.
LeBron James’ NBA contract history
Selected first overall in the 2003 NBA draft, the Cavaliers nabbed James for three years at $12.9 million. He won the NBA Rookie of the Year award and developed his skills. In 2006, the small forward/shooting guard signed a four year, $60.4 million contract extension with the Cavs. With the addition of James, the Cavs made the playoffs, a first since 1998.
James became a free agent in 2010 and signed with the Miami Heat for a six-year, $110 million deal. He went to the Heat to play alongside Dwayne Wade and Chris Bosh. Dubbed the Big 3, the trio won back-to-back finals in 2012 and 2013. His time in Miami didn’t last long. In 2014, he signed a two-year, $42.2 million deal returning him to the Cavs. The team won the NBA championship in 2016.
After becoming a free agent in 2018, James left Cleveland and signed a massive four-year, $153.5 million contract with the Lakers. Now, it’s reported that he signed a two-year extension with them for $85 million.
The obscure rule
In 2016, when James was poised to sign a massive five-year deal with the Cavs, he was hit by the “over-36” rule. The Insider reports that this rule protects the team’s payroll. It disallows players from signing long-term deals (four or five years) if they turn 36 during the contract. Money owed to players after turning 36 is meant to be spread out in the contract’s earlier years. This protects teams from paying players who won’t see those later years.
James was 31 at the time of the potential five-year contract. With the “over-36” rule in mind, his fifth-year earnings are spread over the first four years. This was problematic because those additional earnings set him above the threshold for maximum single-season earnings. Because of this, James dialed the deal down to three years instead of five. Shortly afterward, the NBA announced that it changed the “over-36” rule to the “over-38” rule.
Hitting LeBron again
The new “over 38” rule hit James again when he signed with the Lakers. He could’ve opted out of the contract in 2021 with the Lakers offering a five-year deal. Again, James would be over 38 by the end of the five-year deal. His earnings moved up to the first four years would be more than allowed. regardless, James is still worth over $480 million with his contracts, endorsement deals, and investment options, so don’t feel too bad for him.
Moving the age limit from 36 to 38 is surely meant to benefit older players still playing at a high caliber. Players like Chris Paul and others in their mid-30s now have a two-year cushion before the “over-38” rule hits. James was just unlucky enough to be hit with both the “over-36” and “over-38” rule. But his financial condition seems to be just fine even with these rules.