Article I, Sections 1 (q)(r) and (s) of the Collective Bargaining Agreement detail the Designated Veteran Player and Designated Veteran Player Extension.
How Designated Veteran contracts work
The first new season of a Designated Veteran contract or extension must be worth at least 30% of that season’s salary cap: Other than eligibility, this is the most rigid requirement of any Designated Veteran contract. While Designated Veteran extensions do not bump up salaries on remaining seasons, the first new season of an agreement must be worth between (or exactly) 30-35% of the salary cap in that season.
Designated Veteran contracts can have raises or declines. While Designated Player extensions in the prior CBA required maximum (7.5%) annual raises, those rules are not in place for Designated Veteran contracts this time around. They can rise or fall as long as they fulfill the starting salary parameter discussed above.
Designated Veteran extensions can only be signed from after the Moratorium until the final day before the first day of the regular season: This follows the logic of rookie scale extensions only coming in the offseason but is different from other veteran extensions.
Teams can have up to two Designated Veterans at any one time: Likely inspired by developments since the last CBA when teams like Minnesota had to make a choice with their single Designated Player (which led to them refusing to offer it to Kevin Love), this CBA allows franchises to have a maximum of two Designated Veteran Players, only one of whom can have been acquired via trade. It makes no distinction between Designated Veteran Players who sign via extension or through a new contract, which makes sense. Section 1(q) also states that a Designated Veteran contract that is stretched does not count towards this figure.
Designated Veteran contracts must cover five seasons and extensions must cover six seasons- It is straight forward that Designated Veteran contracts signed by free agents must run five seasons, aligning with both the former CBA’s Designated Player and the maximum contract length for full Bird free agents. Interestingly, Article 1, Section 1(s) specifically states that any Designated Veteran Player Extension must cover exactly six seasons from the date signed. Since players can be eligible at different stages in their existing contracts, this means the added years and total money of the extension will change but the total duration of the contract (existing term plus extension) remains the same. One other note on extensions: players must have one or two years remaining on their contract when the Designated Veteran extension is agreed to.
Players cannot be traded for a year after signing a Designated Veteran contract or extension- Specified by Article VII, Section 8(f)(ii)
Eligibility for Designated Veteran contracts
There are three requirements for a player to be eligible for a Designated Veteran contract or extension:
Quality/Performance: A player must have been named to an All-NBA team or Defensive Player of the Year in either the most recent season or two of the three most recent seasons. Alternatively, they could have won the league MVP in any one of the prior three seasons. This language also works because Designated Veteran contracts can only be signed in the off-season, so the preceding season definitions are clear.
Experience: For a Designated Veteran contract, the player must have completed eight or nine years in the NBA. For a Designated Veteran extension, the player must have seven or eight Years of Service when the extension is executed.
Same Team: The player must either have spent those Years of Service on the team that he signed his first contract with or joined the current/offering team during the first four years he was under contract and that player only changed teams via trade during those first four years.
[NOTE: This required element was likely inspired by Kevin Durant]
Examples of Designated Veteran contracts
In July 2017, Stephen Curry, James Harden and John Wall became the first players to sign as Designated Veterans under the new Collective Bargaining Agreement.
Players eligible for Designated Player contracts or extensions during 2017 offseason
Stephen Curry (contract): MVP in 2014-15 and 2015-16- Signed Designated Veteran contract
Russell Westbrook (extension): MVP in 2016-17
James Harden (extension): All-NBA in 2014-15 and 2016-17- Signed Designated Veteran extension
John Wall (extension): All-NBA in 2016-17- Signed Designated Veteran extension
What is the impact of Designated Veteran contracts?
There has been some early hand-wringing because the prospect of signing certain eligible players to 35% maximum contracts is concerning to front offices. For example, DeMarcus Cousins would have been eligible for a Designated Veteran extension in 2017 if the Kings had not traded him to New Orleans but could have also felt that contract would be too rich for him and that offering less posed a problem. That same logic potentially applies for Paul George (who is not presently eligible but could be if he stays a Pacer and makes an All-NBA team in 2017-18) as well.
However, it also provided a clear advantage for the Warriors to re-sign Stephen Curry, who represents exactly the type of player the rule was intended to cover. Similarly, newly crowned MVP Russell Westbrook will be eligible for a Designated Veteran this July and the Thunder are expected to offer it.
As such, the challenge may end up coming in defining the parameters rather than the concept itself, which can be honed in future agreements and could potentially separate from the “Rose Rule” which bumps players with less experience from 25% maxes to 30% because those contracts are more manageable and typically given to younger players.