Using a Loan to buy out your contract

[ScalabrineStan]

Having read a thread on Hassan Whiteside and how underpaid he will be next year, wouldn't it make sense to borrow $1MM from a bank or other investor, buy out your contract, and then sign a much larger one? You could then immediately pay the loan back.

Am I missing a legal point here? This would make a lot of sense for a Hassan Whiteside or 2013 Chandler Parsons.

[brantonli]

A buyout requires the player and the team to agree to it. There is no way in hell the Heat will agree to buyout Whites ide, it's one of the best contracts in the NBA.

[Rose'sACL]

you can bet that if whiteside doesn't get injured, heat will themselves give him a good contract from next season itself.
if heat don't do that then he will definitely leave in 2016 even if heat offers him the max money. Heat has all the cards right now given that whiteside can't leave so it gives them leverage to get him to sign a long contract from next season itself.

[Joyner82reload]

LOL @ this garbage. Every top 5 pick would buy out their own contract and sign somewhere else for a much higher contract

[navy]

LOL @ this garbage. Every top 5 pick would buy out their own contract and sign somewhere else for a much higher contract
You're confused. Do you realize how much top 5 picks make over 4 years and how risky it would be for another team to pay a higher contract than that?

[coin24]

I'm sure Riley is looking after him:oldlol:
If he keeps playing well they'll sign him to a good deal next season

[Joyner82reload]

You're confused. Do you realize how much top 5 picks make over 4 years and how risky it would be for another team to pay a higher contract than that?

lolwat. Rookies get paid garbage salaries assuming they actually perform up to their expectations and aren't busts.

Anthony Davis made 4.5 million last season. if he were capable of buying out his contract, and signing a new one as a RFA, he would have immediately been signed to the max for 13~ million per year.

[Mr.Kite]

This thread is dumb

wiggins, lillard and even curry will buy out of their current deals instantaneously

[navy]

lolwat. Rookies get paid garbage salaries assuming they actually perform up to their expectations and aren't busts.

Anthony Davis made 4.5 million last season. if he were capable of buying out his contract, and signing a new one as a RFA, he would have immediately been signed to the max for 13~ million per year.
4.5 for one year. Now do all 4 and ask yourself who is giving a loan for that. :coleman:

[ralph_i_el]

4.5 for one year. Now do all 4 and ask yourself who is giving a loan for that. :coleman:

:facepalm anybody would give you a loan for that if you were going to immediately turn around and sign a 4/$80m deal

[navy]

:facepalm anybody would give you a loan for that if you were going to immediately turn around and sign a 4/$80m deal
lol, yes because people give out 18 million dollar loans like nothing. They would need a massive return to risk that kind of money.
Teams also sign rookies for 20 million dollar contracts?

[Joyner82reload]

lol, yes because people give out 18 million dollar loans like nothing. They would need a massive return to risk that kind of money.
Teams also sign rookies for 20 million dollar contracts?

Risk? What the hell are you talking about, risk? NBA contracts are guaranteed, there is no risk involved other than them being able to get a new contract. Which in most cases would be guaranteed, someone would IMMEDIATELY give Wiggins a 4 year 60 million dollar contract, which is the max for a RFA after his rookie deal.

That would literally be one of the easiest/most secure loans in the history of finance. Are you retarded?

And of course people give out 18 million loans regularly, but this isn't a regular circumstance. This isn't some random guy trying to start up a business out of thin air. This is a person that can guarantee ROI on that loan for the lender.

Hell Goldman Sachs for instance took out a 18 BILLION dollar loan last year

[Im so nba'd out]

There has to be some rule against this or someone would of done it already.

[outbreak]

lol, yes because people give out 18 million dollar loans like nothing. They would need a massive return to risk that kind of money.
Teams also sign rookies for 20 million dollar contracts?
Banks and financial groups give out much larger loans than 18 mill with more risk than an NBA player who would already have a deal lined up once bought out

[outbreak]

There has to be some rule against this or someone would of done it already.
there is. it was covered right away. a buyout has to be agreed upon by the team and the player. I don't even know if a player can buy out their own contract in an NBA deal unless they've specifically put that clause in there?

[G-train]

900K might be an overpay next season, he has played well for a few weeks.

[UK2K]

A buyout requires the player and the team to agree to it. There is no way in hell the Heat will agree to buyout Whites ide, it's one of the best contracts in the NBA.
He could just get 'injured' like Asik if the Heat don't want to give him a new contract.

He knows he'll get 8m plus somewhere else.

[ralph_i_el]

lol, yes because people give out 18 million dollar loans like nothing. They would need a massive return to risk that kind of money.
Teams also sign rookies for 20 million dollar contracts?

remember before their was a rookie wage scale? the top picks would be getting huge deals without a cap.

and yeah, $18m loans are given out every day. It's called a business loan. If you could get a loan to get out of a contract, and then become a free agent (lets say you're Anthony Davis), there would be little risk on the loan. Banks with billion dollar balance sheets would not balk at that. If you can pay $4m to get $15m, you do it. Even if the bank wants a 10% return.

When banks give business loans, you have to show them you have a plan and prospective cash flow enough to pay them back. a $15m a year contract would be a pretty good way to pay them back.

If buying out contracts like that was a possibility, it would happen all the time.

source: I have a degree in finance.

Buyouts are usually the team paying the player a certain (smaller) amount upfront than their contract is worth, so they can be done with them.

Players "buying out" contracts usually stems from a specific clause in a contract that determines the amount it would cost the player to void their contract with the team. Very uncommon in the NBA. I couldn't name any specific instances. It's something you see in european basketball more often.

[SexSymbol]

somebody mentioned curry.
Why would you take a 10 mil loan just so you need to give that back from the salaries of next few years? He's gonna get the max anyway

[gts]

Players can't buy out their contract and contracts cannot be renegotiated

dumb thread