Inside the Supermax: How the NBA’s Economic Boom Redefined Player Contracts

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Propelled by the rise of Anthony Edwards, the Minnesota Timberwolves have made back-to-back Western Conference Finals appearances for the first time in franchise history.[2] A three-time All-Star and two-time All-National Basketball Association (“NBA”) selection, Edwards has already established himself among the league’s elite on the court. But he’s also on the brink of reaching an unprecedented financial benchmark: becoming the first NBA player to earn over $1 million per game from his salary.[3]

If Edwards earns a third All-NBA selection in the 2025–26 season, he could become eligible in the summer of 2027 to sign a four-year, projected $300 million “supermax” extension. The fourth-year salary alone would be projected to exceed $82 million. While those figures may appear extraordinary, they are a natural consequence of the NBA’s economic landscape.

Reigning League and Finals MVP Shai Gilgeous-Alexander’s recent supermax extension illustrates this concept. By the fourth year of his deal with the Oklahoma City Thunder, he’s projected to earn $75 million, or about $915,000 per game.[4]

The natural questions then become: What is a supermax contract, how does a player qualify, and why have these deals become so lucrative?

Inside the Framework of NBA Contracts:

NBA contracts are structured around a First-Year Salary (“FYS”) that is calculated as a fixed percentage of the league’s salary cap for that season. Once the FYS is established, the player’s salary in subsequent seasons can increase, decrease, or remain flat, within limits set by the most recent Collective Bargaining Agreement (“CBA”).

Teams that hold a player’s Bird Rights may re-sign that player to a contract featuring 8% annual salary increases, which is the maximum amount permitted under the CBA.[5] A team can earn a player’s Bird Rights by keeping him on its roster for at least three consecutive seasons.[6] 

Because the Minnesota Timberwolves possess Edwards’s Bird Rights, they can offer him raises each year of up to 8% of his FYS on a contract. If the FYS of Edwards’s supermax extension is, for reasons we will discuss below, $67,044,250.00—or 35% of the projected 2027–28 salary cap—Minnesota could increase his salary by approximately $5.36 million each subsequent season. By the time the fourth year of the deal arrived, his salary would have climbed to roughly $83.1 million, bringing the total contract value to about $300 million. By contrast, if Edwards were to sign with another team in free agency, not only would he be eligible for only 30% of the 2027–28 salary cap, but the annual raises in the deal would be limited to 5% of his FYS.

What is a Maximum Contract?

To understand the structure of a supermax contract, it is first necessary to grasp the rules for signing standard maximum contracts. Generally, a maximum contract is the largest deal a player can sign, but the exact numbers vary depending on the player’s total seasons played – their “Years of Service (“YOS”)” – and the salary cap.[7]When signing a maximum contract, a player’s FYS is tied to their YOS. Players with zero to six YOS can earn up to 25% of the salary cap in the first year of their maximum contracts. Those with seven to nine YOS are eligible for up to 30%, while players with ten or more YOS can receive as much as 35% in their first season.

What is a “Supermax” contract?

The supermax – officially known as the “Designated Veteran contract” – permits certain elite players to negotiate a higher starting salary than a standard maximum deal.[8] Specifically, it permits a player to negotiate up to 35% of the salary cap in the first year of the contract instead of the 30% they would otherwise get on a maximum contract.[9]

A player may sign a supermax as an extension with one or two years remaining on their current deal, provided they have seven to nine YOS.[10] Alternatively, a player may sign a supermax as a free agent if they have eight to nine YOS.[11] In both cases, the player must meet specific performance and team-based eligibility requirements.

The performance criteria can be satisfied in several ways. A player must have either been named to an All-NBA Team in the most recent season or in two of the previous three seasons; won the NBA Most Valuable Player (“MVP”) award in any of the three seasons prior to signing; or earned Defensive Player of the Year honors in the most recent season or in two of the past three seasons.[12]

Take Edwards as an example. When the 2027 offseason arrives, he will have two years remaining on his current deal and seven YOS. Having already earned All-NBA Second Team honors in 2025, Edwards will become eligible for a supermax extension in 2027 if he secures another All-NBA selection—his second in three years—by that point.

To meet the team-based requirement, a player must have remained with the same team that drafted them and must not have been traded or changed teams via free agency since the end of their rookie contract.[13] Edwards, drafted first overall by the Minnesota Timberwolves in 2020, has spent his entire career with the franchise. Assuming he stays in Minnesota and earns another All-NBA nod, he would meet both criteria and thus qualify for a supermax extension.

By contrast, consider Luka Dončić, whose midseason trade from the Dallas Mavericks to the Los Angeles Lakers in 2025 made him ineligible for the projected $345 million supermax he could have signed with Dallas.[14]

Instead, Dončić recently signed a three-year, $165 million maximum extension with Los Angeles.[15] The deal includes a player option for 2028, allowing him to opt out once he reaches ten YOS. At that point, he would qualify for a new maximum contract starting at 35% of the salary cap—essentially matching the FYS percentage he could have earned via a supermax with the Mavericks, albeit on a slightly delayed timeline.

What is the Derrick Rose Rule?

Assuming Dončić opts out of his current deal in 2028, which he is almost certain to do, it is important to note that he would not be eligible for a supermax contract that raises his FYS to 40% of the cap, even if he meets the requisite performance benchmarks. This reflects a key limitation under the CBA: a player’s FYS cannot exceed 35% of the salary cap.[16] Once a player accrues ten YOS, they become ineligible for the supermax altogether.[17]

However, the CBA includes a separate provision that mirrors the spirit of the supermax for younger players with four to six years of service.[18] Informally referred to as the “Derrick Rose Rule,” this higher max criteria allows eligible players entering their fifth season to sign a maximum contract starting at 30% of the salary cap, rather than the standard 25%.[19]

The performance requirements for this provision are nearly identical to those for the supermax. Anthony Edwards’s current contract with the Minnesota Timberwolves offers a clear example. In 2024, Edwards signed a maximum contract with an FYS equal to 30% of the 2024–25 salary cap, despite having just four YOS. Ordinarily, a player with fewer than seven YOS would be limited to 25% in the first year of a max deal. But by earning All-NBA honors in the 2023–24 season—the final year of his rookie contract—Edwards triggered eligibility for the additional 5% increase under the Derrick Rose Rule.

Economic Forces Behind the NBA’s Soaring Contract Values

The astonishing numbers associated with supermax contracts, and the Derrick Rose Rule are far from arbitrary—they are directly tied to the NBA’s salary cap, which has soared in recent years alongside the league’s explosive global growth.

In 2024, the NBA and its broadcast partners signed a groundbreaking 11-year, $76 billion media rights agreement—nearly $7 billion per season.[20] By contrast, the prior deal, which expired after the 2024–25 Finals, was valued at $24 billion over nine years, or roughly $2.7 billion per season.[21]

Every NBA contract—whether it’s a rookie-scale deal, standard max, supermax, minimum, or one signed through a salary cap exception—is fundamentally linked to the cap.[22] The cap itself is derived from the league’s Basketball Related Income (”BRI”), a comprehensive measure of revenue generated by the NBA’s basketball operations.[23]

BRI encompasses nearly every dollar the league earns: ticket sales, suites, concessions, and parking; national and local broadcasting rights; international media and streaming deals; and digital platforms such as NBA League Pass. It also includes marketing and licensing through NBA Properties, sponsorships and jersey patch agreements, merchandise sales, NBA 2K licensing, Summer League revenue, and even income from youth camps and clinics.

Because the salary cap, in part, determines a player’s FYS, and because supermax contracts are pegged to the highest allowable percentage of that cap, any increase in league revenue leads to a rise in star player earnings. Larger first-year salaries also produce larger annual raises over the life of the deal.

A decade ago, the NBA salary cap sat at $63 million. By the 2024–25 season, it had climbed to $141 million—more than doubling in ten years. As the cap continues to rise, so too does the value of player contracts tied to it. The supermax magnifies this effect, allowing the league’s most accomplished players to capture the maximum share of a rapidly expanding financial pie earlier in their careers.

Pasquale Tartaro (staff writer) is a 3L at Villanova University Charles Widger School of Law. He is a member of Basketball Negotiation Team and is interested in intellectual property, employment and contract law. After law school, he hopes to work in the sports and entertainment industry.

References:

[1] Photo by Jason Leung on Unsplash.

[2] See https://www.nba.com/news/conference-finals-appearances-minnesota-timberwolves. Prior to Edwards’ emergence, Minnesota had not reached the Western Conference Finals since 2004.

[3] Zach Kram, NBA free agency 2025: Who could be the league's first $82M player? (July 11, 2025) https://www.espn.com/nba/story/_/id/45711806/nba-free-agency-2025-the-first-82m-player.

[4] See https://www.spotrac.com/nba/player/_/id/26977/shai-gilgeous-alexander.

[5] NBA Collective Bargaining Agreement (2023), Art. VII, § 5(a)(1) (governing allowable annual increases and decreases in salary for player contracts).

[6] Id., Art. I, § 1(yy) (defining a “Qualifying Veteran Free Agent” as a player who has spent at least three consecutive seasons with the same team, thereby granting that team the player’s “Bird Rights”).

[7] Id. Art. II, § 7 (b)–(c).

[8] Id. Art. II, § 7(a)(2).

[9] Id. Art. II, § 7(b)(1)–(2).

[10] Id. Art. II, § 7(a)(2)(i)–(ii).

[11] Id. Art. II, § 7(a)(2)(ii).

[12] Id., Art. II, § 7(a)(3)(i)–(iii).

[13] Id. Art. II, § 7(a)(4).

[14] Scott Polacek, NBA Insider: Luka Dončić Ineligible for $345M Supermax Contract After Lakers Trade (Feb. , 2025). https://bleacherreport.com/articles/10153150-nba-insider-luka-doncic-ineligible-for-345m-supermax-contract-after-lakers-trade.

[15] See https://www.spotrac.com/nba/player/_/id/26969/luka-doncic.

[16] NBA Collective Bargaining Agreement (2023), Art. II, § 7(a)(1).

[17] Id., Art. II, § 7(a)(2)(iv).

[18] Id., Art. II, § 7(b)(1) – (3) (providing that a player with fewer than seven Years of Service who meets specified performance criteria may qualify for a higher maximum salary percentage).

[19] Id.

[20] Zach Kram, NBA free agency 2025: Who could be the league's first $82M player? (July 11, 2025) https://www.espn.com/nba/story/_/id/45711806/nba-free-agency-2025-the-first-82m-player.

[21] Id.

[22] Id., Art. VII § 2(a) – (b)

[23] Id., Art. VII § 1(c) (defining Basketball Related Income and enumerating the revenues included in its calculation).