Thanks, this helps clarify exactly how it works. It also helps explain why the Nunez buyout was exactly 2M (if I'm reading it correctly). If the buyout was 2.01M (>50% of the player option), it would have made the 2nd year "non-guaranteed" and raised the AAV up from 4M to 6.01M.Finally looked at the CBA. You are substantially correct but the CBA words it differently. In short, the CBA considers each year with a qualifying player option to be a full contract year and if the option is not exercised, then the difference is credited to the year in which the option is exercised.
So the contract is structured as 2/$50MM with protection to JDM in case of non-performance but has a lower luxury tax calculation because of the option years.
The operative language is Article XXIII ("CBT"), Section (E)(5)(a)(ii), which says: "A Player Option Year shall be considered a “Guaranteed Year” if, pursuant to the Player’s right to elect or subject to his right to nullify, the terms of that year are guaranteed within the definition in Section A(8); provided, however, that a Player Option Year shall not be considered a Guaranteed Year if the payment the Player is to receive if he declines to exercise his option or nullifies the championship season is more than 50% of the Base Salary payable for that championship season." (This applies to multiple years as well.)
Section (A)(8) reads: “'Guaranteed Year' shall mean any championship season included in a Uniform Player’s Contract for which more than 50% of the Player’s Base Salary is guaranteed by the Contract in the event of termination."
Section (E)(5)(d)(i) then states: "If a Player fails to exercise or chooses to nullify a Player Option Year that is deemed a Guaranteed Year pursuant to Section E(5)(a)(ii) above, the difference between the amount paid to the Player under his Contract (including any Option Buyout payment) and the amount that has been attributed to Actual Club Payroll of a Club under that Contract shall be added to (or subtracted from) Actual Club Payroll in the Contract Year in which the Player Option Year falls."
Note that Section (E)(5)(b)(i) states that "If a Uniform Player’s Contract contains a Club Option
Year or a Player Option Year that is not deemed a Guaranteed Year pursuant to subparagraph (a)(ii) above and the Player is to receive consideration upon the non-exercise of that option
or the nullification of a championship season (“Option Buy- out”), then such Option Buyout shall be deemed a Signing Bonus."
Essentially, the CBA makes sense in that it has certain thresholds to prevent AAV loopholes and also avoids having to go back and recalculate AAV.