That’s why Bosh and Wade have laughed at the idea of giving a discount to play together. There will be no discounts.

For this summer’s free agent fest, it will be imperative for players to get the biggest, longest possible contract – more so than in other years.

First the background and it applies to all players on all teams, but especially those with the ability to hammer out a max or near max deal for their years of service. Chris Bosh can sign a three year extension with the Raptors (unlikely), or he can opt out of his deal and sign a five year contract with 8% raises with any team with cap space, or he can agree to a six year contract with 10.5% raises with the Raptors, either to remain here, or to be traded to another team. The difference is about $35 million dollars between the five year and six year deals.

However, several factors make it imperative for Bosh, Wade, Johnson, etc – any player who can reasonably be expected to perform for six years ¬– to get that full six-year $133 million deal, because where you account for each of the following, the deal won’t be worth anything like $133 million in take home pay.

1. Escrow. 8% of a player’s salary is withheld to make sure the owners get 43% of all basketball revenues, and if they don’t, that money is forfeited to the owners. In good times, the players get some or all of that back, but not this year. In fact, if the 8% isn’t enough, whatever else is owing is taken from the following season’s pay on top of the 8% escrow for that season. I'd guess that given the economy, that will happen and next year's escrow combined with the short-fall from this season will exceed 10%, possibly even 12%.

2. Taxes. With the expiration of the Bush tax cuts, all American millionaires can expect to pay more US taxes (about 39.5% in Florida/Texas/Arizona versus 35% now, more in states like NY and California).

Here's the financial reality for these guys: Between escrow, escrow carryover and higher taxes, I’d be surprised if a player will clear 48% of their next contract. And that doesn’t account for third party local income taxes – like those on visiting teams in some cities, and it doesn’t include Bosh’s child support. It also doesn’t account for a possible US Health Care tax on the rich.

But it doesn’t stop there.

There’s the next CBA, to be negotiated by the start of the 2011-12 season. There isn’t anyone who doesn’t expect the owners to play hardball, looking for shorter, smaller contracts, which makes that sixth year Bosh and other free agents can sign GOLDEN.

And there is the not inconsequential issue of a lockout. If the NBA locks out the players for half a season, or a full season, then all existing deals are shortened accordingly, which makes the larger increases and sixth year even more precious. (Any contract already signed before a lockout begins, or new CBA is signed, will be grandfathered. They always are.)

So in short, it’s a no-brainer that Bosh, Wade and all the others will put a really, really high premium on that six year deal. It’s why Bosh, Wade and LeBron signed three year deals in the first place – to be able to sign a third contract prior to the next CBA. It's also why BC has a couple of bullets in his revolver - he's not taking the terrible risk some people assume by waiting this out to the summer.

That gives BC as much leverage in the summer, and maybe more, than he would have dealing Bosh at the trade deadline. Unless some team makes a Hail Mary attempt to change his mind with an offer he can’t reasonably ignore, BC will not trade Bosh now. He will likely get comparable or better in the summer, and that’s also why Bosh is in no way closing the door on staying in Toronto. He can always sign a new deal, stay here, and after a new CBA takes effect, assuming the team hasn’t made the progress he wants, can quietly ask for a trade. That can be arranged informally during the coming negotiations, with a handshake. It’s a third option the media doesn’t talk about either because it’s too complicated to explain and would ruin their simple-minded theories and make-believe scenarios.

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that was posted on a raptors forum by a financial guy with ties to the nba.

edit: BC = bryan colangelo

TMS wrote:

djsunyc wrote:on the knicks front - it applies to david lee so don't expect hometown discounts.

what i been telling these dudes but no one wants to listen... they all think he's gonna leave upwards of $10 million bucks sitting on the table & make it up in these phantom endorsements that he's supposedly gonna get if he stays in NY.

Well, the question is which would he take: 5 years @ 12.5M per or 6 years at 10M per in NY?

Cosmic wrote:I present that this post is Raptor Fan biased in response to Chris Bosh potentially leaving the franchise scuttling them back into the depths of disaster.

This six year versus five year bit is out of control.

I especially love it when the six year team says "We can offer him 35M more!"

No, you can't. For 25M of that "more" is the EXTRA YEAR. You can offer him maybe 10M more based on the scaled percentages.

Which still isn't chump change, except, when you consider said player can easily make up that 10M in endorsements by being in a bigger city. Jersey sales alone would do it.

So, well, there's we're we are at.

cosmic - that's a very simplistic way to look at it. especially when it comes to bosh.

this isn't about staying in toronto - this is about signing a 6 year deal instead of a 5. it's clearly stated that an option is a sign and trade if he doesn't want to stay there.

you think bosh can get the type of endorsements that lebron or kobe can? you think he has the shaq once in a generation talent and charisma breakthrough ability? i don't.

the topic is about pure financials...

TMS wrote:if i were MIA i'd make a strong offer to TOR to get him in a S&T at the deadline... they have the young players & pieces to get the deal done, & MIA offers Bosh a chance to play alongside D Wade & an awesome city & market for him to land in... that also gives MIA even more leverage to keep D Wade there beyond this season cuz they can pay him the max & own his Bird Rights.

raptors are not gonna trade bosh this deadline unless something out of this world is presented. they can get more in the summer. a miami deal this february will be available in the summer. raps will not give up their playoff hopes for a miami deal.

there are other financial aspects to it as well to consider if he plans to leave toronto...

1. For Bosh, staying in Canada, he probably wouldn't pay any greater percentage of tax than he is already. Whatever tax tricks are used to level the playing field with Florida/Texas/Arizona, he probably pays a bit more than 39.5% in total income tax playing in Toronto. Our income taxes seem unlikely to change - Ontario has already opted for the sales tax harmonization, and the Conservatives in Ottawa are taking a no-tax-increase line, and if they change their minds, raising the GST would seem like the path of least resistence since most economists seem to be endorsing that. If anything, the expiration of the Bush tax cuts for the rich would create tax parity between Canada and the no-state-income-tax states like Florida.

2. Canada has lower corporate taxes. Bosh's Max Deal Technologies therefore is a nice tax dodge for his high earning years. He can effectively use it to defer income until later in life. (Note the name of his company if you think he doesn't care about such things as a six year contract).

TMS wrote:so basically ur expecting him to play a year for free... yeah, i don't really see that happening.

I am not, I am just curious to see how much he wants to stay in NY. Same $ amount, 1 extra year, that should be a good test. At the end, he may decide to take the 5 years and come back for another payday.