NBA Stars Maximize Wealth by Avoiding Free Agency

This past July, the Phoenix Suns made an irresistible offer to Devin Booker, a 28-year-old NBA All-Star recognized four times over. Despite having three years and $171 million remaining on his contract, he agreed to a two-year extension worth $145 million.

With this agreement, Booker secured an unprecedented $72.5 million average annual earnings—the highest in NBA history—ensuring his presence in Phoenix through 2030 when he will be 34. This monumental decision highlights Booker's commitment long before his free agency approached.

Traditionally, free agency offers athletes an opportunity to influence their career's trajectory, including choices about location, role, and salary.

Players often exploit this chance to secure superior pay by moving to different teams or merely considering their options. A case in point: OG Anunoby of the New York Knicks, who, upon entering free agency, opted for a lucrative five-year, $212 million contract to remain with the Knicks—one year longer and $30 million richer than offers from other teams.

Contracts akin to Booker's are becoming routine in the NBA as more athletes bypass free agency, securing some of American sports' most substantial extensions.

In the last three years alone, 17 NBA players inked extensions surpassing $200 million in total value. Some, like Booker, negotiated deals below this threshold but still commanded annual salaries exceeding $40 million. By comparison, just 15 NFL players will earn $40 million or more in 2026, with MLB having only three matching this figure.

Why Trades Are Overtaking Free Agency in the NBA

With fewer players entering free agency, why are teams offering such substantial contract extensions?

Bobby Marks, a salary cap expert at ESPN and former Brooklyn Nets assistant general manager, noted that extensions have been incentivized under the 2023 Collective Bargaining Agreement. This agreement allows teams to propose extensions earlier and at more favorable pay increases than before.

Consequently, elite players remain with their current teams rather than test the open market, eroding the traditional free-agent scene. Between the 2011-12 and 2019-20 seasons, only 41 NBA veterans signed extensions. Since the 2020-21 season, that number has surged to 104.

Greg Lawrence, an agent with Wasserman, who represented Domantas Sabonis in his $186 million extension with the Sacramento Kings, explained that guaranteed money is a powerful lure for players, reducing the appeal of market uncertainties.

Fewer teams have the necessary salary cap space, partly due to COVID-19-influenced seasons, leading to less room for free-agent signings. This limitation has encouraged more extensions that consume cap space.

Instead of free-agent signings, trades have taken precedence. Teams focus on securing players via trades, which often lead to substantial extensions for the athletes involved. De'Aaron Fox, for example, signed a $222 million extension with the San Antonio Spurs after a trade, a feat not possible as a free agent.

This has shifted NBA fans' interest from free agency speculations to anticipating potential trades. However, this shift isn't necessarily negative; a new $76 billion TV rights deal indicates strong financial health for the league.

The Impact of Diminished Free Agency on the NBA

Critics, such as Draymond Green of the Golden State Warriors and former player Austin Rivers, contend that the current CBA has marginalized the league's 'middle class.' While top players secure lucrative contracts, others face limited offers.

Nonetheless, these extension deals are poised to grow even larger. With the league's recent $76 billion TV rights deal, future salary caps will rise, boosting player earnings.

Presently, contracts valued at 25% of today's cap might seem economical in a few years. By 2028, players might secure five-year extensions with annual salaries over $100 million.

Lawrence believes this evolution hasn't damaged the NBA's popularity, traditionally driven by fan engagement. The shift away from free-agency drama has birthed a new, constant speculation about trades and player discontent.

He observed, 'The news cycle is now fixated on predicting player satisfaction and potential trades,' suggesting that this might invigorate fan interest throughout the year.

'It just never ends,' Lawrence concluded, pointing to the persistent intrigue surrounding player transactions.