How the NBA’s new CBA affects the Philadelphia 76ers

James Harden’s free agency

With rumors swirling about James Harden potentially returning to the Houston Rockets this summer, there’s an important caveat that needs to be discussed. The Over-38 Rule has been implemented into the CBA since 2017; however, the issue did not come to light regarding James Harden’s free agency until Bryan Toporek brought it up in a recent Liberty Ballers article. While there hasn’t been any definitive announcement whether the Over 38 Rule will be adjusted in the new CBA, I am going to assume it’s remaining in place. Typically, the Sixers would have the leverage over a team like the Rockets in James Harden’s free agency because only the team with a player’s bird rights can offer a player a five year contract, while other suitors can only offer a four year contract. Therefore, the Sixers can offer Harden a five year deal while a team like the Houston Rockets can only offer Harden a four year deal. However, this is where the Over-38 Rule makes things more complicated.

Essentially, the Over-38 Rule applies when a team signs a player to a multi-year contract and any year of their contract falls past their 38th birthday. At that point, the player’s salary after their 38th birthday will be prorated among the years prior to that year. Harden turns 34 in August; therefore, the fifth year of a five year deal would be his age 38 season for purposes of the Over-38 Rule. As a result, due to the Over-38 Rule, the Sixers can only offer Harden a four year maximum contract rather than a five year maximum contract.

"Based on the $134 million cap projection, the Rockets and any other team can offer Harden a four-year max deal worth roughly $201.7 million (a starting salary of $46.9 million with 5 percent annual raises). The Sixers’ four-year max offer tops out at roughly $210.1 million (a starting salary of $46.9 million with 8 percent annual raises). That means the Sixers can offer him roughly $8.4 million over the next four years than any other team, which is relative peanuts when you’re discussing a $200 million contract. State tax rates could also largely wipe out that difference."

Because Harden has over ten years experience playing in the league, he’s eligible for a maximum contract starting at 35% of the salary cap, which would start him at roughly $46.9 million in 2023-24 salary. However, because Harden would be on a max deal, he is unable to have his over 38 year pro rated amongst the first four years of the contract. Therefore, the Sixers can only really sign Harden to a four year maximum deal, as there’s no incentive for Harden to sign for that fifth year because he’d make the same amount of money on the four year deal. That basically jeopardizes any leverage the Sixers had over the Rockets. The only difference is that the Sixers can offer Harden 8% raises, while any other suitor, such as the Rockets, can offer Harden 5% raises, which equates to roughly $8.4 extra million the Sixers can pay him than Houston, which shouldn’t be enough to sway him financially.