Contract Variability

There are two sets of rules for contract variability (how much the contract varies year to year) based on if the contract is front-loaded or back-loaded.

Front-loaded deals are defined as: 

-Total player compensation in first half of contract divided by # of years in first half of contract (if contract has odd # of years, half of the middle year is included in the first half) is called "First Half AAV"

-If First Half AAV is greater than the full contract AAV, then the contract is considered front-loaded. If not, contract is considered back-loaded

Front-Loaded Contract Variability

-The difference between compensation in any year and the year immediately before or after cannot exceed 25% of compensation in Year 1 of the contract

-Compensation in any year cannot be less than 60% of the highest compensation year

Back-Loaded Contract Variability:

-The difference between Year 1 and 2 compensation cannot be more than the lower of the 2 years (i.e., the highest compensation permitted in Year 2 is double Year 1)

-For all subsequent years, any increase from year to year cannot exceed the lower of the year 1 and year 2 compensation

-For all subsequent years, any decrease from year to year cannot exceed 50% of the lower of the year 1 and year 2 compensation