With the news breaking yesterday that Shai Gilgeous-Alexander of the Oklahoma City Thunder would win the NBA’s 2024-25 Most Valuable Player award came another opportunity to make NBA history.
By virtue of winning the award, Gilgeous-Alexander becomes eligible for a pay rise. Winners of the MVP award can receive a higher maximum player salary than non-winners. And Shai has won the award just in time, as his next payday is coming up.
Shai Is Due A New Extension
At the moment, Gilgeous-Alexander is partway through a five year extension that he signed all the way back in August 2021. That extension came between the third and fourth seasons of his rookie scale contract – i.e. the four-year contract that NBA first round picks get at the start of their careers – and kept him under contract to the Thunder until 2027.
The extension rules on NBA contracts are somewhat restrictive. Only a minority of contracts are eligible to be extended, and thus bypassing free agency altogether. The very best players, however, tend to be, and many can go the entirety of their careers without engaging in the free agency process. As things stand, Shai might become one of them.
Veteran contracts – i.e. any contracts other than the four-year contract that NBA first round picks get at the start of their careers – are eligible to be extended after the second anniversary of the signing of that contract. However, in the case of previously-extended contracts, if the previous extension lengthened the outstanding contract to five or six seasons (including any remaining seasons on the existing contract), further extensions can be signed after the third anniversary of the previous one.
Having signed in 2021 through until 2027, Gilgeous-Alexander has thus been eligible to sign an extension since August 2024. But having held off from doing so, he now stands to earn a bigger payday.
How Maximum Salary Is Calculated
An NBA player’s maximum salary is determined by several factors, including years of experience and the size of their previous contract. But the main determining factor is the size of the salary cap itself.
This is relevant in the case of Shai. Due to the revenues from new TV deals leading to a big increase in Basketball-Related Income – the catch-all time for the economic levers that determine the size of the salary cap – the NBA’s salary cap is about to grow substantially in the coming years.
This current season, the NBA’s salary cap has been set at $140,588,000. It is a “soft” cap, meaning there are exceptions that allow teams to go over it in certain ways to certain degrees, yet that amount is the intended cap threshold, and the amount of a player’s maximum salary is determined from this figure.
As things stand, the official NBA projection for the 2027-28 NBA salary cap amount is $187,123,000, a more than 250% increase from the even-$70 million that it was as recently as 2015-16. With this kind of growth, new record contracts will be handed out. And because of being named MVP, Shai gets to set the record first.
What Designated Veterans Are
The NBA’s Collective Bargaining Agreement contains two rules that, when combined, are designed to allow teams to give bigger and longer contracts to star players. The Designated Veteran rule allows them to sign longer contracts, and the Designated Veteran Player 35 per cent Max Criteria rule (colloquially known as the ‘supermax’) allows them to sign bigger ones.
In tandem, teams can extend certain players with eight or nine years of service – their “Designated Veterans” – to a salary that starts at up to 35% of the salary cap, for up to six years in the future. Usually, only players with ten or more years of service can receive that starting amount, with players with only eight or nine years limited to 30%. Therefore, “Designated Veterans” can receive a 5% pay increase in year one, as well as an extra year in contract length.
To be a “Designated Veteran”, that player has to have met the following criteria:
- They have been with the same team continuously during their first “rookie” extension,
- They have seven or eight years of experience at the time of the “veteran” extension,
- They must have been either:
[A] Named Defensive Player of the Year in the previous season, or both of the two prior to the previous season
[B] Named to the All-NBA first, second or third teams in the previous season, or both of the two prior to the previous season
[C] Won the MVP award in any of the three immediately prior seasons.
By winning MVP, Gilgeous-Alexander satisfies the above. After the season switches over on 1st July, he will be a seven-year NBA veteran. who has only ever played for the one team, and who has won an MVP award.
Shai’s Pay Day To Be Even Larger If He Waits
As a result, once the season switches over on 1st July, Shai has between that date and opening night to sign a Designated Veteran exception that will run through the end of the 2030-31 season. But if he waits another year, it could be even bigger.
Per the above, the maximum length of a Designated Veteran extension is six years, including seasons remaining on their incumbent contract. Also per the above, Gilgeous-Alexander is currently under contract until 2027.
If he signs an extension this summer, then, Shai can receive a “supermax” until 2031. But if he instead waits and signs an extension in the summer of 2026, Shai can sign through until 2032. And that gives him the opportunity to not just set a record, but obliterate it.
Shai To Set New Salary Standards
Putting some numbers to all these words this involves a small amount of speculation, given that exact salary cap amounts are not established until immediately prior to the relevant season commencing. However, using the NBA’s own estimate of a $187,123,000 salary cap in 2027-28, starting from 35% of that amount, and giving Shai the maximum 8% annual raise as permitted by the CBA, we arrive at the following numbers:
-
- 2026-27: $40,806,150 (current contract)
- 2027-28: $65,493,050 (first year of extension: 35% of salary cap)
- 2028-29: $70,732,494
- 2029-30: $75,971,938
- 2030-31: $81,211,382
- 2031-32: $86,450,826
- Total extension: five years, $379,859,690
To date, the largest contract in NBA history is set to be the five-year supermax extension signed by Jayson Tatum of the Boston Celtics this season. As above, the exact amount of that extension cannot be known until July, yet using the NBA’s official projections for next season, as above, Tatum’s deal is currently set to pay him $313,933,410 over the next five seasons.
Shai is set to clear that by more than $65 million. He is about to earn more than NBA entire teams earned a mere decade ago. The NBA’s own rules are about to ensure that its best player is to become its priciest. And that seems fair.
Shai Gilgeous-Alexander to Sign Largest Contract in NBA History