There has been a lot said about the rapid influx of money into the NBA in recent years. The league is now minting future billionaires. It will likely soon have its first player making $100 million annually. The owners are doing fine, too, in case anyone had their concerns — the Los Angeles Lakers just sold at a $10 billion valuation, if you hadn’t heard.
But Sunday’s contract agreement between the Houston Rockets and Jabari Smith Jr. felt like an inflection point. It felt like the NBA’s first deal where there was just too much money to pass up.
Smith intends to sign a five-year, $122 million extension with the Rockets. It was a bit surprising because Smith has not been supremely impressive since he went No. 3 in the 2022 NBA Draft, and Houston has a deep well of promising young talent it will need to pay soon, while also facing encroaching cap issues. The Rockets had until October to negotiate an extension with Smith but it did not seem like a pressing concern.
They got a deal done, though. For the Rockets, the contract makes sense. Smith is still just 22 and clearly has talent as a defender and can improve as a shooter. His extension will kick in during the 2026-27 season. If it’s a flat deal, he’ll make $24.4 million in the first year, which would account for 14.3 percent of the projected salary cap that year (assuming it makes another 10 percent jump as it will in 2025-26). The money might seem like a lot but it is actually less than what Jaden McDaniels and RJ Barrett made in the first year of their extensions as a percentage of the cap (which is how most teams and agents look at contracts and barter them). It’s about the same contract that De’Andre Hunter received with his rookie extension, again in terms of percentage of the cap, with an extra year thrown in because the collective bargaining agreement now allows for that.
This is the part that could make your eyes pop, and why it could be such a great deal for the Rockets. If it is a flat contract and Smith makes $24.4 million in each year of it, he will be making just more than the non-taxpayer midlevel exception in the fifth year (assuming 10 percent increases in the cap every year, which is no guarantee). If it’s a decreasing deal, he might be making less than the non-taxpayer MLE by the final season.
That is wild, because he would be making around $20 million in that scenario. Next season, the MLE will be about $14.1 million. That kind of contract usually goes to a helpful starter or rotation player. Smith could be just that over the course of his contract. Or, maybe, he emerges into something more and reaches the vast potential the Rockets saw when they took him third in the draft three years ago.
Smith could have waited to sign an extension. His agents could have kept negotiating for more money, perhaps, until the fall deadline. He could have played next season out and tried to make more in restricted free agency next summer. He could have signed a shorter extension and tried to make more money over the next five years. Maybe he lost out on some dollars on the margins.
Here is the big part, however: He is guaranteed $122 million. That’s life-changing money.
That is where the NBA stands now. There’s just so much money sloshing around, and even more projected to get there in the future, that it will be more difficult to turn down contracts analogous to the one Smith just signed.
Maybe a player won’t get the perfect contract. Or he won’t maximize his potential earning power in the market. But he will get a lot of money, nonetheless.
That could add some very interesting dynamics into the NBA ecosystem. The second apron has added a not hard but not soft, maybe like the size of the hole in the Death Star’s defenses, kind of permeable layer in spending for teams. It has forced teams to be more mindful of the contracts they give players and to negotiate a little harder with some of them. There was a concern about the annihilation of the middle class when the NBA inaugurated the new CBA. Perhaps the consequence will be that the middle class will continue to exist — it just won’t grow dollar for dollar with the cap, as the salaries of max players will.
The sheer amount of money available to teams to pay players could work to their benefit. It may be another weapon for teams in negotiations, especially for rookie extensions. They could offer a player 18 percent of the cap instead of 20. Next season, that would mean he receives $27.8 instead of $30.9 million. For the 2026-27 season, that would be $30.6 million instead of 34. Then that player could hit the market again and make another $150 million or more. The cap is rising fast for now.
This is not advocating for players to settle for team-friendly deals. But it is a reflection that the money might start to get too big to start betting on yourself for more. Take Julius Randle, who agreed to a three-year, $100 million deal, for example. He might have made more out there, but it’s a big risk. Teams with cap space available entering free agency are scarce and may continue to be in this CBA environment where staying out of the tax (or just above it) is the new magnet. Randle’s new deal will pay him less as a percentage of the cap in the first year than the one he just opted out of. But he’s still set to get $100 million, unless he decides to exercise his player option and hit the market again in two seasons.
If he plays out the entire new contract, Randle will have made $264 million during his career before he hits free agency again at 33 years old. That summer, the salary cap could be as much as $205.8 million. When Randle came into the league, it was at $63 million. Randle, at his current salary, would have been the league’s highest-paid player that year. Smith, at $24.4 million, would have been the highest paid NBA player as late as the 2007-08 season. Stephen Curry was the NBA’s highest paid player during the 2019-20 season and the first to crack the $40 million threshold; that would make him just the 29th-highest paid player next season. The NBA will have 16 players earn at least $50 million during the 2025-26 season; the NFL, MLB and NHL will have six between them.
It’s possible that the players and their representatives get so used to how much money is thrown around that they get back to fighting for every dollar. But for some, the subjective value of every dollar might just continue to diminish over a desire for security.
It is an enviable position for the league and its players. As the money continues to increase, it will be interesting to watch if the habits of the league and its players change too.
(Photo of Jabari Smith Jr.: Logan Riely /NBAE via Getty Images)