What is an “averaged contract?
Averaged contracts were part of the previous CBA, but were eliminated in the current CBA. However, players whose contracts were signed under the previous CBA might still be affected by averaging. The 1995 CBA limited yearly salary increases to 20% of the first-year salary (as opposed to the current 10%/12.5%), and there was no maximum decrease. An exception called “banked room” also existed, which under certain circumstances permitted the yearly increase to exceed 20%. For contracts signed using the Larry Bird Exception, rookie “scale” extensions or banked room under the 1995 CBA, if the salary ever increased or decreased from one year to the next by more than 20% of the first-year salary, then contract averaging was triggered. In an averaged contract, the amount counted as team salary cap (and hence the player’s trade value) in each season of the contract is the average salary for the contract (minus any option years). For example, suppose a player was re-signed using the Larry Bird E
