First, and probably most important, since 1995 the NBA has had a system set in place for first-round picks to receive four-year contracts, the first two years of which are guaranteed. The salaries are set on a sliding scale. The higher the pick, the higher the salary. For example, in this year’s draft the No. 1 pick will be slotted to earn $6,746,400 in his rookie year and $7,901,100 in his second year. The last pick of the first round will earn $1,338,900 and $1,568,000, respectively, in his first two years.
Conversely, contracts are fully negotiable for second-round draft picks. The players are only entitled to the required tender offer, which is a non-guaranteed minimum contract, in which case salaries are paid on a pro-rata basis. That means a player drafted in the second round can be cut by a team at any time and without being paid any additional money. I hope that the risk of this scenario is obvious.