NBA Salary Cap/Collective Bargaining Agreement FAQ
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Copyright © 1999-2014, Larry Coon

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7/9/2014: Revised questions 13, 15, 16, 18, 19, 21, 22, 32 with new numbers for the 2014-15 season. New questions 50, 110. Revised questions 24, 25, 29, 33, 44, 59, 65, 74, 79, 81, 82, 84, 86, 87, 95, 97, 98, 100, 119.

This FAQ is for anyone who wants to know more about the salary cap, trade rules, and other aspects of the NBA's 2011 Collective Bargaining Agreement. There is a lot of information here, so there are several ways to navigate this document. You can go to the table of contents to see a list of all the questions, or if you want to know about a particular topic you may be able to find it in the index. You can also go straight to the questions. You can find an overview of the differences between the 2011 and 2005 CBAs in the appendix. If you've been following this FAQ for a while, you can go to the revision history to see if anything has changed. Finally, you can see who wrote this thing or view the copyright notice. Enjoy!

Table of Contents

  1. What is a salary cap? Why have one?
  2. What is a soft cap? What is the difference between a soft cap and a hard cap? Which does the NBA have?
  3. Why have a soft cap?
  4. What is the Collective Bargaining Agreement?
  5. Has there always been a salary cap?
  6. What's the history of the CBA?
  7. They came to an amicable agreement in 2005. What happened in 2011?
  8. Were all issues in the 2011 labor dispute resolved in time to start the 2011-12 season?
  9. When will the current CBA expire?
  10. What changes did they make in the 2011 CBA?
  11. Were there special rules in place for the shortened 2011-12 season?
  12. What is included in Basketball Related Income (BRI)?
  13. How is the salary cap set each year?
  14. Exactly what is included when computing total team salaries? What is cap room? What is a cap hold?
  15. Is there a minimum amount each team must pay its players?
  16. What are the players' salary restrictions?
  17. Are there exceptions to the maximum salary?
  18. What percentage of revenues do the players receive?
  19. How does the escrow system work? What is it for?
  20. What happens when there's not enough money in the escrow account?
  21. What is the "luxury tax?" Why does it exist? How is it determined? Who pays it?
  22. Where does the escrow and luxury tax money go?
  23. Other than financial penalties, are there restrictions on taxpaying teams?
  24. How does revenue sharing work? How is it different from the luxury tax?
  25. What are salary cap exceptions?
  26. How do exceptions count against the cap? Does being under the cap always mean that a team has room to sign free agents? Do teams ever lose their exceptions?
  27. If a team has more than one exception available to sign a particular player, are there any rules regarding which one it has to use?
  28. What is the hard cap? When are teams subject to it? How does it work?
  29. When a player signs mid-year for the rest of the season, is his salary pro-rated?
  30. Can a team pay a player less but arrange for an affiliated company to also pay him, perhaps by way of an endorsement contract?
  31. Do players and teams ever have under-the-table agreements for future contracts? What happens when the league finds out about them? Is this what happened with the Timberwolves and Joe Smith?
  32. How is "average salary" defined?
  33. How long must a player be with one team before the Larry Bird exception can be used?
  34. Why a three-year wait before gaining Bird rights?
  35. Does having Bird rights mean that free agents can be signed and not count against the cap?
  36. I just saw that a team signed a player for more money than it has under the cap. It was another team's free agent, so the Bird exception wasn't used. What gives?
  37. Can a team with cap room sign all the free agents it wants (up to the salary cap) and THEN re-sign its own free agents using the Bird exception?
  38. How much do free agents count toward team salary?
  39. Why do free agents continue to count against team salary?
  40. When do free agents stop counting against team salary?
  41. What does renouncing a player mean?
  42. Can the renouncement be renounced? In other words, can a team un-renounce a player and then sign him using a Bird exception?
  43. Let's say a team arranges for all of its players to become free agents at the same time. If they renounce everybody, do they then have a team salary of $0 and a full cap under which to work?
  44. What is restricted free agency?
  45. What is the "Gilbert Arenas" provision?
  46. Haven't some restricted free agents gotten away anyway? How did this happen?
  47. What if a restricted free agent has no interest in staying with his original team? Is there any way he can force the issue?
  48. Does a team receive compensation when another team signs their free agent, like in some other sports?
  49. First round draft picks operate under a different set of rules?
  50. What about second round draft picks? What rules do they operate under?
  51. What if the team and their drafted player can't agree to a contract? What options does the player have? How long does the team keep his draft rights?
  52. Are draft picks included in team salary? If so, for how much?
  53. What if a team likes its first round pick and wants to sign him, but either feels he isn't worth the scale salary or doesn't want to commit to a long contract?
  54. If a first round draft pick is renounced, is he still bound to the salary scale for a first round pick?
  55. Is there a limit to the length of a contract, or to the amount a player's salary can increase or decrease from year to year?
  56. Are raises compounded? In other words, is each raise a percentage of the previous season's salary?
  57. Are there restrictions based on a player's age?
  58. What is the Over-36 Rule?
  59. What are option clauses? What kind of option clauses are there?
  60. Can existing contracts be extended?
  61. Can existing contracts be renegotiated?
  62. In what other ways can an existing contract be modified?
  63. What are the rules for retired players? What if the player suffers a career-ending injury?
  64. Are contracts always guaranteed?
  65. What happens when a player is released? What are waivers? What is the Stretch provision?
  66. How do released players apply to team salary? What is set-off?
  67. What is a contract buyout?
  68. How do buyouts affect team salary?
  69. What is the Amnesty provision?
  70. What is a summer contract?
  71. Do injured players apply to team salary?
  72. How do players who die apply to team salary?
  73. Are player contracts insured?
  74. Can incentives be built into a contract? How do they apply to team salary?
  75. How about signing bonuses? Are they allowed? How do they apply to team salary?
  76. What are the rules relating to international players and teams?
  77. What about buyouts paid to international teams? Are they allowed? How do they apply to team salary?
  78. Are teams really competing on a level playing field? Since the tax rate is different in the different states and Canada, don't the teams in a more "tax friendly" state have an advantage over the other teams?
  79. What roster size limits exist? What is the Inactive List? What is Injured Reserve? Do any other such lists exist?
  80. What is a 10-day contract?
  81. What is the NBA Developmental League (NBA D-League)?
  82. What are the rules regarding trades?
  83. What is the Traded Player exception?
  84. How do simultaneous trades work? How much salary can a team take back in a simultaneous trade?
  85. What is a non-simultaneous trade?
  86. How are minimum-salary players handled in trades?
  87. How are draft picks handled in trades? What is the Ted Stepien rule?
  88. Can exceptions be combined when making trades?
  89. What is "Base Year Compensation?" How does it affect trades?
  90. What is the Poison Pill Provision?
  91. Can a free agent be signed and immediately traded?
  92. Can a team sign a player using the sign-and-trade rule and then say, "Ha ha, we fooled you. We're not trading you!"?
  93. Why would teams or players want to do a sign-and-trade?
  94. Can a player be given an extension and traded at the same time?
  95. When can a team trade a free agent it signs? Do they have to keep him forever?
  96. Can a team trade the rights to a free agent, so the other team will inherit his Larry Bird rights?
  97. Can cash be included as part of a trade package?
  98. Can players be given a bonus when they are traded?
  99. How do trade bonuses affect team salary and trades?
  100. When can't a player be traded? Can players be given "no-trade" clauses in their contracts?
  101. I keep hearing about teams wanting to acquire "ending contracts" in trades. What are they, and why are they so valuable?
  102. How are teams able to trade players who are out of the league, like Dallas did with Keith Van Horn?
  103. What is the trade deadline?
  104. What is the July Moratorium?
  105. Can teams find loopholes in the CBA and do things the league never intended to allow? What is circumvention?
  106. How does player discipline work? Can teams fine or suspend players for any reason? Do fines and suspensions apply to team salary?
  107. Can fines or suspensions be appealed?
  108. What is the league's drug program?
  109. What is tampering?
  110. What does it mean when a contract is voided?
  111. How much are players fined for technical fouls and ejections? Where does the money go?
  112. How does it work when the league expands? Can the league also contract?
  113. Are players paid on a regular schedule? Are there other ways to pay players beside regular paychecks?
  114. How do I find out the salary for a specific player?
  115. The league instituted a dress code for players. Do they have the right to do that?
  116. What does it mean when the players union decertifies? Why would they want to do that? What effect does it have?
  117. Are there other must-read web sites for the budding capologist?
  118. What are the important CBA-related dates each season?
  119. Can I get a copy of the actual Collective Bargaining Agreement?
  120. I see reports in the newspaper or on the Internet that would be impossible if everything you say here is true. Is this FAQ wrong?
  121. What if this FAQ really is wrong? How authoritative is this FAQ?
  122. Can I e-mail you with other CBA-related questions?
  123. Can this FAQ be reproduced or distributed? Can I link my web page to it?
  124. Can you translate this FAQ into (name of language)? I'll even translate it for you!
  125. How should this FAQ be cited?
  126. Where can this FAQ be downloaded?

History of this FAQ, acknowledgements, and about the author

Copyright Notice

Index

Revision History

1. What is a salary cap? Why have one?

A salary cap is a limit on the amount teams can spend on player contracts, which helps to maintain competitive balance in the league. Without a salary cap, teams with deeper pockets could simply outspend the remaining teams for the better free agents. The basic idea behind a salary cap is that a team can only sign a free agent if its total payroll will not exceed the cap -- so a team with deep pockets is on a more level playing field with every other team.

While this is true in theory, NBA teams in big markets nevertheless have been able to significantly outspend teams in small markets. For example, for the 2010-11 season (the final season under the previous CBA) the lowest team payroll was approximately $45 million and the highest was over $90 million (plus an additional $20 million in luxury tax).

As a result, the correlation between team payroll and regular season wins is now very strong. For the 2010-11 NBA season the correlation coefficient1 between team payroll and regular season wins was 0.53 -- high enough to conclude that deep-pocket teams have been able, to a certain extent, to buy their way to success.

Interestingly, this correlation was only 0.13 (nearly orthogonal) in the 2001-02 NBA season. One possible explanation is that the NBA's luxury tax system (which started in 2003) stratified the league into the haves (teams that could afford the tax burden that came with fielding a competitive team) and the have-nots (teams that could not afford this burden).


1 A correlation coefficient is a number between -1 and 1, with a coefficient near 1 indicating a strong positive correlation (e.g., as payroll goes up, wins go up); a coefficient near -1 indicating a strong negative correlation (e.g., as payroll goes up, wins go down); and a correlation near 0 indicating no correlation (e.g., payroll and wins are unrelated).

2. What is a soft cap? What is the difference between a soft cap and a hard cap? Which does the NBA have?

The NBA has a soft cap. A hard cap cannot be exceeded for any reason. A soft cap like the NBA's contains exceptions which allow teams to sign players or make trades that exceed the cap under certain conditions. In practice, very few NBA teams are ever under the cap during a season.

Certain components of the NBA's system function as a hard cap under specific circumstances. See question number 28 for more information.

3. Why have a soft cap?

It promotes a team's ability to retain its own players. Nobody likes it when a player plays with one team his entire career, the fans love him, he wants to stay and the team wants to keep him, but he has to leave because the team cannot offer him a satisfactory contract. The exceptions under a soft cap allow teams to keep players under these kinds of circumstances.

4. What is the Collective Bargaining Agreement?

It's the legal contract between the league and the players association that sets up the rules by which the league operates. (It's commonly abbreviated as "CBA," which is not to be confused with either the Chinese Basketball Association or the Continental Basketball Association. The abbreviation CBA will be used in the remainder of this document.)

The CBA defines the salary cap, the procedures for determining how it is set, the minimum and maximum salaries, the rules for trades, the procedures for the NBA draft, and hundreds of other things that need to be defined in order for a league like the NBA to function.

The CBA also prevents the NBA from being in violation of federal antitrust laws. Many of the league's practices (such as the salary cap and draft) would violate antitrust laws were they not agreed to via collective bargaining (see question number 116).

5. Has there always been a salary cap?

It may surprise you to learn that the NBA first had a salary cap in 1946-47, its first season. The cap that season was $55,000, with most players earning between $4,000 and $5,000. Star player Joe Fulks earned $8,000, and Tom King earned a league-highest $16,500 for his combined duties as player, publicity director and business manager for the Detroit Falcons.

The "modern" NBA salary cap began in 1984-85, at $3.6 million. It made steady but gradual increases of around $1-2 million each season until 1994-95, when it was $15.964 million. Armed with a big TV contract from NBC, the salary cap jumped to $23.0 million in 1995-96, and increased to $26.9 million in 1997-98, the last season of the 1995 CBA (a 647% increase in 13 years). The ABC/ESPN TV contract, which took effect with the 2002-03 season, provided $4.6 billion over six years, but less in 2002-03 than NBC paid in 2001-02. As a result, the salary cap went down for the first time ever in 2002-03.

Under the 2005 CBA the salary cap started at $49.5 million, and finished at $58.044 million, a 17.26% increase, and averaging 3.45% per year. However the salary cap decreased in 2009-10, dropping from $58.68 million to $57.5 million.

See question number 6 for more information on NBA labor history.

6. What's the history of the CBA?

Bob Cousy began to organize the NBA players in 1954, although the league refused to recognize the union until 1957. A near strike at the 1964 All-Star game forced the league to adopt a pension plan. The first CBA was established in 1970, and new agreements followed in 1973, 1976 and 1980. The 1976 CBA coincided with the settlement of the "Oscar Robertson" suit, which was filed by the players association in 1970 to block the NBA-ABA merger. The 1976 agreement also provided limited free agency through the elimination of "option" clauses that bound players to teams in perpetuity.

With the 1983 CBA the parties agreed to share league revenues. This agreement also instituted the modern salary cap, which went into effect in 1984. When this agreement expired the players filed an antitrust lawsuit, resulting in the "Bridgeman" agreement which brought unrestricted free agency, reduced the draft to two rounds, and added anti-collusion provisions.

Another antitrust lawsuit ensued in 1994 following the expiration of the 1988 CBA, challenging the salary cap, college draft, and right of first refusal provisions. The parties eventually reached a "no-strike, no-lockout" agreement that allowed the 1994-95 season to be played.

The parties came to terms on a new agreement in 1995, but the players tabled a ratification vote and instead filed for union decertification. The league responded by imposing a lockout. The parties quickly came to an agreement, and the players subsequently voted against decertification. A new six-year agreement was ratified which lifted the lockout before any games were missed, although the agreement was not actually signed until 1996.

The NBA exercised its option to terminate the 1995 CBA following the 1997-98 season, eventually imposing a lockout which took effect on July 1, 1998 and resulted in the cancellation of the start of the 1998-99 season and the 1999 All-Star weekend. The parties reached agreement on a new six-year agreement in early 1999, just in time to salvage a minimal 50-game season. The new agreement introduced maximum salaries, the Mid-Level exception, and the escrow and luxury tax systems. The league invoked its option to extend this agreement through the 2004-05 season.

The NBA and players association ratified a new agreement in July 2005, which expired at the end of the 2010-11 season. The league had the option to extend it through the 2011-12 season, but elected not to do so, citing $300 million in losses during the 2010-11 season alone.

When the 2005 CBA expired in July 2011, the league once again imposed a lockout (see question number 7), which was settled in late November 2011. As a result, the 2011-12 season was reduced to 66 games.

Here is a summary of the league's collective bargaining agreements:

Start Year End Year Milestones
1970 1973 First CBA. Increased minimum salaries. Added playoff pool and per diem.
1973 1976 Arbitration.
1976 1979 Suit blocking NBA/ABA merger settled. Added limited free agency (with team compensation).
1980 1983 No-trade clauses eliminated.
1983 1987 Added Salary cap, "Bird" rights.
1988 1994 Added unrestricted free agency. Length of draft reduced.
1994 1995 Temporary "No-strike, no-lockout" agreement.
1995 1998 Ended 1995 lockout. Added rookie scale contracts. Not actually signed until 1996, and re-opened in 1998.
1999 2005 Settled 1998-99 lockout. Added maximum salaries, Mid-Level exception; escrow & luxury tax.
2005 2011 Luxury tax in effect every season. Reductions in contract lengths & raises.
2011 2021 Players' guaranteed share of revenue reduced. Further reductions in contract lengths & raises. Greater penalties for taxpaying teams.

For more information on the history of NBA labor relations, visit the Association for Professional Basketball Research website at www.apbr.org.

7. They came to an amicable agreement in 2005. What happened in 2011?

The league started to bleed money. The 2005 CBA guaranteed the players 57% of BRI (see question number 13). Coupled with sharply rising expenses, slowing revenue growth caused in part by the economic downturn in 2007-08, and other factors, 22 of the 30 teams lost money in 2009-10, collectively losing a reported $370 million. As a result, the owners sought a complete reset of the league's economic system.

The players agreed that the league lost money under the 2005 CBA, but disagreed over the extent of the losses. They contended that only a small number of teams were losing money, and that the league's problems could be addressed through better management and revenue sharing.

The owners' early proposals sought a $45 million hard cap coupled with rollbacks of existing salaries. The players considered any proposal with a hard cap to be a non-starter, and submitted a counterproposal which included robust revenue sharing, but left most of the features of the 2005 agreement in place.

As a result, the sides were nowhere near an agreement when the 2005 CBA expired in July 2011, with Commissioner David Stern characterizing their differences as "a gulf, not a gap." The league imposed a lockout on July 1, 2011, which lasted until the sides ratified the 2011 CBA in early December.

The following is a chronology of the milestones in the 2011 lockout:

8. Were all issues in the 2011 labor dispute resolved in time to start the 2011-12 season?

The sides reached a tentative agreement on the principal issues in the 2011 labor dispute on November 25-26, 2011, with a stated goal of opening the season on Christmas Day, 2011. This left very little time to recertify the union, draft and ratify a new CBA, and hold training camps and a preseason before the season started. As a result the sides agreed to table several issues, and agreed to convene a joint committee to review these issues and implement resulting rule changes. The committee will consist of coaches, general managers, players, league personnel and union personnel. The issues to be discussed include:

A separate panel is also being convened to determine whether there is a valid test for Human Growth Hormone (HGH), and if so, to recommend testing procedures (see question number 108).

9. When will the current CBA expire?

The CBA runs through the 2020-21 season, although either side may opt out after the 2016-17 season. To do so, notice must be given by December 15, 2016.

The CBA also may be terminated early under certain conditions:

10. What changes did they make in the 2011 CBA?

Please see the appendix for a summary of the differences between the 2011 and 2005 CBAs. The appendix includes links to questions with additional information.

In addition, the final version of this FAQ for the 2005 CBA may be found here, and the final version for the 1999 CBA may be found here.

11. Were there special rules in place for the shortened 2011-12 season?

Due to the 2011 labor dispute (see question number 7), the 2011-12 season consisted of 66 games played over 124 days beginning on December 25, rather than the usual 82 games played over approximately 170 days beginning in late October or early November. Due to this unique situation a number of adjustments needed to be made, which applied to 2011-12 only.

Calendar and roster adjustments:

Financial adjustments:

The following items were not adjusted for the shortened 2011-12 season:

12. What is included in Basketball Related Income (BRI)?

Basketball Related Income (BRI) essentially includes any income related to basketball operations received by the NBA, NBA Properties1, NBA Media Ventures, or any other subsidiaries. It also includes income from businesses in which the league, a league entity or a team has an ownership stake of at least 50%. BRI includes:

Some of the things specifically not included in BRI are proceeds from the grant of expansion teams, fines, all forms of revenue sharing, interest income, and the sale of assets.


1 NBA Properties controls the licensing rights for the names, logos, photos & footage, uniforms, league & team programming, and editorial content for the league and teams.

13. How is the salary cap set each year?

For 2011-12 the league and players association agreed to use a set figure of $58.044 million, which was the same as the 2010-11 cap.

Starting in 2012-13 the salary cap is calculated based on projected amounts for Basketball Related Income (BRI) and benefits for the upcoming season. The projected BRI is a matter of negotiation between the league and players association. Each year the sides meet to try to agree on an amount. If they cannot agree before the end of the July Moratorium, they instead use:

The salary cap calculation beginning in 2012-13 takes 44.74% of projected BRI, subtracts projected benefits, and divides by the number of teams in the league1.

In 2012-13 the salary cap was guaranteed to be at least $58.044 million if the calculation produced a lower amount. This prevented a drop in the salary cap as a result of a drop in revenues due to the 2011 lockout.

Starting in 2013-14, the following adjustments are made to the salary cap calculation each season:

Here are the salary cap amounts for each season under the 2011 CBA:

Season Salary cap
2011-12 $58.044 million
2012-13 $58.044 million
2013-14 $58.679 million
2014-15 $63.065 million

The salary cap adjusts each year on the first day following the July Moratorium (see question number 104).


1 All formulas that divide by the number of teams in the NBA (currently 30) ignore any expansion teams in their first two seasons in the league.

14. Exactly what is included when computing total team salaries? What is cap room? What is a cap hold?

A team's cap room (referred to simply as "room" in the CBA) refers to its ability to sign players to free agent contracts. If a team is above the cap, then its room is limited to the exceptions it possesses. If the team is below the cap, then its room is how far it is below the cap when all salaries and cap holds are included. Cap holds are "placeholders" for players the team is expected to sign in the future. For example, a team is expected to sign its unsigned first round draft pick, so an amount is reserved for this signing in the form of a cap hold. A team $10 million below the cap with $4 million in cap holds really has $6 million in room. A team $5 million under the cap with $6 million in cap holds is not considered under the cap at all, and must use exceptions to sign players. The following are included in team salary:

They use a slightly different calculation for determining the team salary in relation to the apron -- the point $4 million over the tax line. This applies to the Bi-Annual, Non-Taxpayer Mid-Level, and Taxpayer Mid-Level exceptions (see question number 25), and for Sign-and-Trade transactions (see question number 91). For these purposes they use the team salary as defined above, with the following modifications:3

They do this because those exceptions and sign-and-trade transactions affect whether the team is subject to a hard cap (see question number 28), and these modifications to the team salary calculation ensure that subject teams remain below the apron.

The following are not included in team salaries:


1 The scale amount is applied immediately upon selection in the draft, but is applied to the team salary for the next salary cap year, which is the salary cap year in which a rookie scale contract can be signed. For example, as soon as a team makes a pick in the 2013 draft, the scale amount is applied to the team's 2013-14 team salary. Nothing is applied to the team's 2012-13 team salary.
2 Since teams are required to have at least 13 players on their rosters (see question number 79), the roster charge reserves a minimum amount of cap space to sign 13 players. For example, if a team has 11 players on its roster, the roster charge reserves cap space to sign the team's 13th player, and the remainder can be used to sign the 12th player.
3 Roster charges for empty roster spots are not excluded for apron purposes, however they are not added to replace other things that are excluded. For example, a team that has nine players under contract, two free agent cap holds and one empty roster charge is considered to have nine players under contract and one empty roster charge for apron purposes.

15. Is there a minimum amount each team must pay its players?

There is a minimum team salary (see question number 14), which for this purpose includes the salaries of players who were amnestied (see question number 69) or suffered a career-ending injury or illness (see question number 63), and excludes all cap holds. The team salary must be at or above a defined percentage of the salary cap on the date of the team's last regular season game:

Season Minimum Amount
2011-12 80% of the cap $46.435 million
2012-13 85% of the cap $49.337 million
2013-14 90% of the cap $52.811 million
2014-15 90% of the cap $56.759 million
2015-16 90% of the cap
2016-17 90% of the cap
2017-18 90% of the cap
2018-19 90% of the cap
2019-20 90% of the cap
2020-21 90% of the cap

Teams with a team salary below the minimum are surcharged for their shortfall, with the money distributed among the players on that team.

Amounts paid as buyouts to international teams (see question number 77) do not count toward the minimum team payroll.

16. What are the players' salary restrictions?

Players have both minimum and maximum salaries, and both are based on how long the player has been in the league. The minimum salaries scale upward each season starting in 2013-14. Here are the minimum salaries:

Years in NBA1 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
0 $473,604 $473,604 $490,180 $507,336 $525,093 $543,471 $562,493 $582,180 $602,557 $623,646
1 $762,195 $762,195 $788,872 $816,482 $845,059 $874,636 $905,249 $936,932 $969,725 $1,003,665
2 $854,389 $854,389 $884,293 $915,243 $947,276 $980,431 $1,014,746 $1,050,262 $1,087,021 $1,125,067
3 $885,120 $885,120 $916,099 $948,163 $981,348 $1,015,696 $1,051,245 $1,088,038 $1,126,120 $1,165,534
4 $915,852 $915,852 $947,907 $981,084 $1,015,421 $1,050,961 $1,087,745 $1,125,816 $1,165,220 $1,206,002
5 $992,680 $992,680 $1,027,424 $1,063,384 $1,100,602 $1,139,123 $1,178,992 $1,220,257 $1,262,966 $1,307,170
6 $1,069,509 $1,069,509 $1,106,942 $1,145,685 $1,185,784 $1,227,286 $1,270,241 $1,314,700 $1,360,714 $1,408,339
7 $1,146,337 $1,146,337 $1,186,459 $1,227,985 $1,270,964 $1,315,448 $1,361,489 $1,409,141 $1,458,461 $1,509,507
8 $1,223,166 $1,223,166 $1,265,977 $1,310,286 $1,356,146 $1,403,611 $1,452,738 $1,503,583 $1,556,209 $1,610,676
9 $1,229,255 $1,229,255 $1,272,279 $1,316,809 $1,362,897 $1,410,598 $1,459,969 $1,511,068 $1,563,956 $1,618,694
10+ $1,352,181 $1,352,181 $1,399,507 $1,448,490 $1,499,187 $1,551,659 $1,605,967 $1,662,176 $1,720,352 $1,780,564

Here are the league-wide maximum salaries. Note that there are exceptions to the maximum salary (see question number 17).

Years in NBA1 Defined maximum salary 2011-12 2012-13 2013-14 2014-15
0 - 6 25% of cap2 $12,922,194 $13,668,750 $13,701,250 $14,746,000
7 - 9 30% of cap2 $15,506,632 $16,402,500 $16,441,500 $17,695,200
10+ 35% of cap2 $18,091,071 $19,136,250 $19,181,750 $20,644,400

A free agent's maximum salary in the first year of a new contract is never less than 105% of his salary in the last year of his previous contract. For example, a ten-year veteran free agent who most recently earned $20 million has a maximum salary of at least $21 million, even if that is above the league-wide maximum. A free agent does not need to remain with the same team in order to receive 105% of his previous salary, although the team that signs him is subject to the same salary cap restrictions as with any other free agent.

A first round draft pick who completed all four years of his rookie scale contract, or a second round draft pick or an undrafted player who has four years of service, is eligible to receive a higher maximum salary if he meets certain criteria (called the "5th Year 30% Max criteria" -- see question number 17).

Players may receive salary advances, loans, and deferred compensation (see question number 113 for more information).

When a player has been in the NBA for three or more seasons, and is playing under a one-year, 10-day or rest-of-season contract at the minimum salary, the league reimburses the team for part of his salary -- any amount above the minimum salary level for a two-year veteran3. For example, in 2011-12 the minimum salary for a two-year veteran is $854,389, so for a ten-year veteran, with a minimum salary of $1,352,181, the league would reimburse the team $497,792. Only the two-year minimum salary is included in the team salary, not the player's full salary. They do this so teams won't shy away from signing older veterans simply because they are more expensive than younger veterans.

First round draft picks have a more restrictive salary scale, based on their draft position (see question number 49 for more information).


1 A player is credited with a year of service for each season in which he is on a team's active list or inactive list for at least one day during the regular season.
2 They use a different cap calculation to determine the maximum salaries, which is based on 42.14% of projected BRI rather than 44.74%. In 2005 the sides negotiated a different formula for setting the salary cap but not maximum salaries, so the two became decoupled, and this continued in the 2011 agreement. For this reason the maximum salaries are not actually 25%, 30% or 35% of the cap, and instead are a slightly lower amount. For example, even though the salary cap for 2011-12 is $58.044 million and 25% of this amount is $14.511 million, the 0-6 year maximum salary is actually $12,922,194. In addition, for 2012-13 a 5.8% increase in maximum salaries was agreed to, even though the salary cap stayed the same as 2011-12.
3 The team is reimbursed even if the player is waived during the season, as long as the player was paid more than the minimum salary for a two-year veteran.

17. Are there exceptions to the maximum salary?

Yes. In multi-year contracts only the first season's salary is subject to the maximum, but there are restrictions about how big raises can be from year to year (see question number 55).

In addition, a player in his fifth season can qualify for more than the 0-6 year (25%) maximum, and up to the 7-9 year (30%) maximum if he has met the "5th Year 30% Max criteria" (see question number 60). However, a player's eligibility for the higher maximum salary doesn't imply he will actually receive this amount -- as with all salaries, it's a matter of negotiation between the player and his team.

18. What percentage of revenues do the players receive?

Contracts are individually negotiated between players and teams, and several factors control the amount each player individually can receive.

Collectively, the players are guaranteed to receive at least 51.15% of revenues in salaries & benefits for the 2011-12 season. Starting in 2012-13 they are guaranteed to receive 50% of forecasted revenues1, plus (or minus) 60.5% of the amount by which revenues exceed (or fall short of) the forecasts, with a lower limit of 49% of BRI and an upper limit of 51% of BRI.

Here are the revenue forecasts for 2012-13 through 2020-21, with 50% of the forecast value (upon which the guarantee is based):

Season BRI Forecast 50% of Forecast
2012-13 $4.308 billion $2.154 billion
2013-14 $4.481 billion $2.2405 billion
2014-15 $4.660 billion $2.330 billion
2015-16 $4.870 billion $2.435 billion
2016-17 $5.089 billion $2.5445 billion
2017-18 $5.318 billion $2.659 billion
2018-19 $5.557 billion $2.7785 billion
2019-20 $5.807 billion $2.9035 billion
2020-21 $6.069 billion $3.0345 billion

For example, if BRI for 2012-13 is $4.408 billion, then the players collectively are guaranteed $2.2145 billion, which comes from:

If instead BRI for 2012-13 was $3.9 billion, then the players' guarantee would be $1.911 billion, which comes from:

Here is what actually happened in each season:

2012-13 2013-14
Forecasted BRI: $4.308 billion $4.481 billion
Actual BRI: $4.293 billion $4.522 billion
Excess or shortfall: $15 million shortfall $41 million excess
60.5% of excess or shortfall: $9.1 million $24.8 million
50% of forecasted BRI: $2.154 billion $2.2405 billion
Players' guarantee (50% of forecast plus/minus
60.5% of excess/shortfall):
$2.145 billion $2.265 billion
Actual guarantee percentage: 49.96% 50.09%

Since individual salaries are negotiated before the season starts (in many cases years before), and BRI is not determined until the season concludes, there are mechanisms in place to adjust when salaries miss their target. If the players receive less than their guaranteed share of BRI, the league cuts a check to the players association for the difference, and this amount is distributed to the players (this happened in 2010-11, under the 2005 CBA).

The escrow system adjusts the players' salaries when they earn more than their guaranteed share (see question number 19).

A new benefits pool is funded with 1% of BRI, which comes out of the players' share. The pool is used to fund post-career benefits and annuities for players who have vested. The specific benefits to be provided will be negotiated by the league and players association. If there is an escrow overage (see question number 20) and the escrow fund is insufficient to bring salaries & benefits down to the players' designated share, they take the remainder out of this benefits pool.


1 BRI forecasts were determined when the CBA was originally negotiated. This differs from projected BRI, which is determined each July (see question number 13).

19. How does the escrow system work? What is it for?

The escrow system works hand-in-hand with the players' revenue guarantee (see question number 18) to control the amount of league revenues that go to the players.

The escrow system tries to ensure that salaries & benefits do not exceed the players' guaranteed share of BRI. To do this, 10% of the players' salaries is withheld from their paychecks and deposited into an escrow account. At the end of each season they compare the players' guaranteed share of BRI to the amount they were actually paid in salaries & benefits. If there was an overage (i.e., if the players were paid more pre-escrow than they were guaranteed), then the amount of the overage is returned to the teams from the escrow account. The players then receive any escrow money that remains.

It is also possible that they find themselves at the end of the season with insufficient escrow funds to cover the overage. Here are some examples to illustrate what could happen in the escrow process. In Example A there is not an overage. In Example B there is an overage, but the escrow is sufficient to reduce salaries to the designated percentage. In Examples C there is an overage, which the escrow is insufficient to cover.

Example A Example B Example C
BRI: $4.308 billion $4.308 billion $4.308 billion
Designated share: $2.154 billion $2.154 billion $2.154 billion
Salaries: $2.00 billion $2.15 billion $2.30 billion
Benefits: $120 million $120 million $120 million
Amount held in escrow: $200 million $215 million $230 million
Overage (amount salaries & benefits
exceeded designated share):
$0 $116 million $266 million
Returned to owners: $0 $116 million $230 million
Given to players: $234 million1 $99 million $0

In Example A, salaries & benefits are less than the designated share, so the escrow money isn't needed. The players get to keep it all, in addition to receiving a supplemental payment to meet their guaranteed share. In Example B the escrow system successfully lowers salaries back down to the designated share, and the players get to keep what's left over. In Example C there isn't enough escrow money to lower salaries back down to the designated share. The players "owe" $266 million, but the escrow account contains only $230 million. The owners receive the entire balance of the escrow account, but the players don't have to pay any additional money (see question number 20 for more information on this situation).

Here is what actually happened in each season:

2011-12 2012-13 2013-14
BRI: $3.375 billion $4.293 billion $4.522 billion
Designated share: $1.727 billion $2.145 billion $2.265 billion
Salaries: $1.610 billion $2.109 billion $2.134 billion
Benefits: $173.8 million $204.9 million $207.4 million
Amount held in escrow: $162 million $212.2 million $214.4 million
Overage/underage (amount salaries & benefits
exceeded designated percentage):
$57.0 million $168.7 million $76.4 million
Overage amount retained by NBA: $57.0 million $168.7 million $76.4 million
Remainder of escrow given to players: $105.0 million $43.5 million $138.0 million
Supplemental check to players
(in event of an underage):
N/A N/A N/A

Question number 22 describes how the escrow money is distributed to the teams.


1 Includes the entire escrow balance, plus a supplemental payment to meet the players' revenue guarantee (see question number 18)

20. What happens when there's not enough money in the escrow account?

Players never lose more than 10% of their salaries to the escrow system1. If they reconcile the numbers after the season and discover that the escrow fund is insufficient to return salaries & benefits back down to the players' designated share, they take the shortfall out of the new benefits pool that is funded with 1% of BRI (see question number 18). If they use the entire benefits pool and still haven't brought salaries down to the designated share, they stop there. The players don't lose any additional money, and will have earned more than their designated share that season.

However, there is a system in place to try to prevent this from happening. If there is an overage -- i.e., if the players were paid more than their guaranteed amount in the previous season (pre-escrow) -- and the system is getting close to exceeding what the league can get back through the escrow system, then the cap and tax levels may be reduced in the following season in order help put on the brakes.

For example, if the total salaries and benefits for 2013-14 are $2.27 billion and this resulted in an overage of $170 million (7.5% of total salaries and benefits), and if the projected BRI for 2014-15 exceeds the BRI for 2013-14 by 9%, then the 2014-15 salary cap is adjusted downward by $500,000, and the tax level is reduced by $380,000.

If the players ever end up earning more than their designated share due to a substantial decline in revenues, then both sides will negotiate in good faith to revise the CBA in order to address the issue.


1 The exception is when there is money that should be on deposit with the escrow agent but is not, for example if there is a procedural or accounting error. Any such shortfall is deducted from the players' salaries the following season.

21. What is the "luxury tax?" Why does it exist? How is it determined? Who pays it?

The luxury tax is a mechanism that helps control team spending. While it is commonly referred to as a "luxury tax," the CBA simply calls it a "tax" or a "team payment." It is paid by high spending teams -- those with a team salary exceeding a predetermined tax level. These teams pay a penalty for each dollar their team salary (with a few exceptions, see below) exceeds the tax level. The tax level is determined prior to the season, and is computed as follows:

Starting in 2012-13, the tax level may be adjusted based on what happened during the previous season:

The amount of tax a team pays depends on the season, the team salary as of the team's last regular season game, and whether the team is a "repeat offender":

Here are the tax rates beginning 2013-14:

Team salary above tax level Non-repeater Repeater
Lower Upper Tax rate Incremental maximum Tax rate Incremental maximum
$0 $4,999,999 $1.50 $7.5 million $2.50 $12.5 million
$5,000,000 $9,999,999 $1.75 $8.75 million $2.75 $13.75 million
$10,000,000 $14,999,999 $2.50 $12.5 million $3.50 $17.5 million
$15,000,000 $19,999,999 $3.25 $16.25 million $4.25 $21.25 million
$20,000,000 N/A $3.75, and increasing $.50 for
each additional $5 million.
N/A $4.75, and increasing $.50 for
each additional $5 million.
N/A

For example:

When determining the amount of tax a team owes, the league uses its team salary (see question number 14) on the date of its last regular season game (i.e., if a player is traded away before the end of the season, then none of his salary is taxed), with the following adjustments:

Here are the tax levels in each season, and the teams that paid the tax:

Season Tax Level Taxpaying Teams (amount paid in $millions)
2011-12 $70.307 million Lakers ($12.6), Celtics ($7.4), Heat ($6.1), Mavericks ($2.7), Spurs ($2.5), Hawks ($0.7)
2012-13 $70.307 million Lakers ($29.3), Heat ($13.3), Nets ($12.9), Knicks ($10.0), Bulls ($3.9), Celtics ($1.2)
2013-14 $71.748 million Nets ($90.6), Knicks ($36.3), Heat ($14.4), Lakers ($9.0), Clippers ($1.3)
2014-15 $76.829 million

In addition to the financial penalties, a number of restrictions are placed on taxpaying teams, which are described in question number 23.

Where does the tax money go? This is described in question number 22.


1 All formulas that divide by the number of teams in the NBA (currently 30) ignore any expansion teams in their first two seasons in the league.
2 If a player in this situation was non- or partially-guaranteed and waived prior to Jan 10 (when all contracts become guaranteed for the remainder of that season), his salary is taxed at the two-year veteran minimum salary, pro-rated for the number of days the player was on the roster. For example, if the player's contract was terminated on the third day of the regular season, his salary for tax purposes is 3/170 of the two-year veteran minimum salary.

22. Where does the escrow and luxury tax money go?

The money collected from the escrow (see question number 19) and luxury tax (see question number 21) systems may be distributed to teams or used for league purposes, subject to certain rules:

Escrow money:
Tax money:

"League purposes" essentially means for any purpose the league decides, including distributing the money back to teams. The league decided that in 2011-12, 100% of the tax revenue will be used as a funding source for the league's revenue sharing program (see question number 24). Starting in 2012-13, 50% of the tax revenue will be used as a funding source for the revenue sharing program, and the remaining 50% will be distributed to non-taxpaying teams in equal shares.

To understand the consequence of crossing the tax line, consider a team just below the tax line that suffers injuries and needs to sign a replacement player. This team would pay the player's salary, pay tax on the amount by which they are now above the tax line, and forfeit any tax distribution they otherwise may have received.

Here is what actually happened to the escrow and tax money in each season:

2011-12 2012-13 2013-14
BRI: $3.375 billion $4.293 billion $4.522 billion
Designated percentage: $1.727 billion (51.15% of BRI) $2.145 billion (49.96% of BRI) $2.265 billion (50.09% of BRI)
Total salaries and benefits: $1.784 billion $2.314 billion $2.341 billion
Escrow collected: $162 million $212.2 million $214.4 million
Overage1: $57 million $168.7 million $76.4 million
Escrow share per team: $1,899,756 $5,622,650 $2,547,001
Tax level: $70.307 million $70.307 million $71.748 million
Total tax collected: $31.972 million $70.566 million $151.631 million
Tax share per team: $02 $1.470 million $3.033 million
Used to fund revenue sharing: $31.972 million $35.283 million $75.815 million

1 Salaries & benefits minus designated percentage.
2 In 2011-12 100% of the tax revenues were used to fund revenue sharing.

23. Other than financial penalties, are there restrictions on taxpaying teams?

In addition to the tax payments described in question number 21, taxpaying teams have the following restrictions. Note that most of these restrictions aren't triggered unless the team would be over the "apron" -- the point $4 million above the tax level -- following a signing or trade.

In addition, taxpaying teams do not receive a distribution from the league wide tax fund. However, they do receive a distribution from the escrow fund (see question number 22).

24. How does revenue sharing work? How is it different from the luxury tax?

The high revenues generated by the big-market teams increases BRI, which increases the salary cap, which increases the amount all teams (including low-revenue, small-market teams) are forced to spend on player salaries -- leading to an unsustainable system. The league's revenue sharing plan works in parallel with the CBA (including the luxury tax) as a one-two punch to address franchise economic disparity. It is designed to help redistribute money from high-revenue teams (generally in big markets) to needier teams (generally in small markets). All 30 teams were projected to be profitable under this system by 2013-14 if they met reasonable revenue and expense standards1.

The NBA also had a revenue sharing system in place with the 2005 CBA. It was funded entirely through luxury tax revenues, and redistributed an average of $40 million per season. However in many cases teams were getting back money they had put into the pool themselves, so the net redistribution of money was much lower than the gross distribution. Under the old plan teams received much less than under the new plan, with the highest individual receipts averaging $5 million. With the new plan, $231.8 million was projected to be redistributed in 2013-142, with two teams receiving over $20 million each, and five additional teams over $17 million each.

The concept behind the plan is that teams contribute an equal percentage of their total revenues into a common pool (minus certain expenses such as arena expenses), then receive an allocation equal to a 1/30 share of the pool3. Small market teams with lower revenues will therefore contribute less than they receive, and will be net beneficiaries under the plan. Large market teams will contribute more than they receive, and will be net payers under the plan. Other components of the plan are as follows:

The following chart is a simplified illustration of what might happen to teams under the revenue sharing plan. Team A is a low-revenue, small-market team, and Team B is a high-revenue, big-market team:

Team A Team B
Total revenues (minus expenses): $84.0 million $281.0 million
Profit before revenue sharing: ($20.0 million loss) $165.0 million
Percentage to fund pool: 55.8% 55.8%
Amount contributed into pool3: $46.9 million $156.8 million
Total pool size: $2.073 billion $2.073 billion
Amount received (1/30 of pool): $69.1 million $69.1 million
Net paid/received: $22.2 million received $87.7 million paid
Contribution limits: N/A $48.0 million
Actual amount paid/received: $22.2 million received $48.0 million paid
Profit after revenue sharing: $2.2 million $117.0 million

The revenue sharing pool is always "fully funded," i.e., it is always funded to its full amount despite some teams having contribution limits. When there is a shortfall, the difference is made up through luxury tax receipts and collective league sources4. This full funding guarantee did not apply to the 2011-12 season, due to the effects of the 2011 lockout. In order to ensure adequate funding of the revenue sharing pool, 100% of the 2011-12 tax revenues was earmarked to fund the revenue sharing plan. Starting with the 2012-13 season, 50% of tax revenues goes to fund revenue sharing, with the remaining 50% distributed back to non-taxpaying teams.

The revenue sharing plan will be reviewed following the 2013-14 season to see if any adjustments are warranted.


1 The actual results for 2013-14 were that 21 teams were profitable after revenue sharing and luxury tax redistributions, and the remaining nine teams lost money.
2 As of June 2014.
3 The pool itself really exists only on paper. A team that "contributes" $150 million into the pool and "receives" $70 million really just sends in a check for the $80 million difference.
4 As of June 2014, $3.6 million from collective league sources was projected to be used to fully fund the pool for the 2013-14 season.

25. What are salary cap exceptions?

The basic rule of the NBA's salary cap is that a team can't sign a player or make a trade that leaves the team's team salary above the cap, unless the team is using an exception. In a system with a soft cap, exceptions are the mechanisms that allow teams to function while above the cap. Some exceptions are available only for making trades, and are described in detail starting in question number 82. The exceptions available for signing players are as follows1:

LARRY BIRD EXCEPTION -- This exception allows teams to exceed the cap in order to re-sign their own free agents, up to the player's maximum salary. Teams are said to have "Bird rights" to players who qualify. To qualify for this exception a player essentially must play for three seasons without clearing waivers or changing teams as a free agent, however there are nuances to this rule, which are explained in question number 33. This means a player can qualify by playing under three consecutive one-year contracts, a single contract of at least three years, or any equivalent combination. It also means that when a player is traded, his Bird rights are traded with him, and his new team can use the Larry Bird exception to re-sign him. These contracts can be up to five years in length, with raises up to 7.5% of the salary in the first season of the contract. Players who qualify for this exception are called "Qualifying Veteran Free Agents" in the CBA, and this exception is formally a component of the Veteran Free Agent exception.

The 1983 CBA introduced the modern salary cap, and with it the provision allowing a team to exceed the cap to re-sign its own players. It is commonly believed that this exception acquired its common moniker because Larry Bird was the first such player to be re-signed. However, this is apocryphal, as Bird signed a seven-year contract in 1983 (before this provision took effect), and did not sign another until 1988.

Starting January 10 of each season, this exception begins to reduce in value. See question number 26 for details.

EARLY BIRD EXCEPTION -- This is a weaker form of the Larry Bird exception. It also allows teams to exceed the cap to re-sign their own free agents, but with more limited contracts than the Larry Bird exception. To qualify for this exception the player must play for two seasons without clearing waivers or changing teams as a free agent (see question number 33 for details and nuances to this rule). A team may use the Early Bird exception to re-sign its own free agent for up to 175% of his salary in the previous season2 (not over the maximum salary, of course) or 104.5% of the average salary in the previous season, whichever is greater (see question number 32 for the definition of "average salary"). Early Bird contracts must be at least two seasons in length, which prevents teams from using the Early Bird to sign a one-year contract, then signing the same player with the full Larry Bird exception the following season. Early Bird contracts can be up to four years in length, with raises up to 7.5% of the salary in the first season of the contract. Early Bird is also a component of the Veteran Free Agent exception, and qualifying players are called "Early Qualifying Veteran Free Agents" in the CBA.

If the player is a restricted free agent with two years of service and qualifies for the Early Bird exception, then the player's prior team may use the Early Bird exception to match an offer sheet he receives from another team (see question numbers 44 and 45). This is true even if the starting salary for the Early Bird exception is lower than the starting salary of an offer sheet, which is based on the Non-Taxpayer Mid-Level exception.

A team can renounce its Early Bird rights to a player, and instead re-sign him with the Non-Bird exception (see below). They might do this in order to sign the player to a one-year contract, instead of the minimum two years required by the Early Bird exception.

Starting January 10 of each season, this exception begins to reduce in value. See question number 26 for details.

NON-BIRD EXCEPTION -- This is also a component of the Veteran Free Agent exception. Its name is somewhat of a misnomer, since Non-Bird really is a form of Bird rights. Players who qualify for this exception are called "Non-Qualifying Veteran Free Agents" in the CBA. They are veteran free agents who are neither Qualifying Veteran Free Agents nor Early Qualifying Veteran Free Agents, and include the following:

This exception allows a team to re-sign its own free agent to a salary starting at up to 120% of his salary in the previous season2 (not over the maximum salary, of course), 120% of the minimum salary, or the amount needed to tender a qualifying offer (if the player is a restricted free agent -- see question number 44), whichever is greater. Raises are limited to 4.5% of the salary in the first year of the contract, and contracts are limited to four seasons when this exception is used.

A partial season counts as a full season for the tenure calculation related to Bird rights. If a team signs another team's free agent to a rest-of-season contract mid-way through the season, then at the end of that season the player is a non-Bird free agent.

Starting January 10 of each season, this exception begins to reduce in value. See question number 26 for details.

NON-TAXPAYER MID-LEVEL EXCEPTION -- This exception is available only when a team is below the "apron" (i.e., not paying luxury tax, or less than $4 million above the tax line). This determination is made after the exception is used, so a team below the apron cannot use this exception if doing so takes it above the apron. It cannot be used by a team that has already used the Taxpayer Mid-Level Exception or the Room Mid-Level exception. It allows a team to sign any free agent to a contract with a starting salary up to the following amounts3:

Season First-year salary
2011-12 $5.000 million
2012-13 $5.000 million
2013-14 $5.150 million
2014-15 $5.305 million
2015-16 $5.464 million
2016-17 $5.628 million
2017-18 $5.797 million
2018-19 $5.971 million
2019-20 $6.150 million
2020-21 $6.335 million

This exception may be split and given to multiple players. It may be used for contracts up to four years in length, with raises up to 4.5% of the salary in the first year of the contract. Signing a player to a multi-year contract does not affect a team's ability to use this exception every year -- for example, a team can use this exception to sign a player to a four-year contract, and use it again the following year to sign another player. Also see question number 26 for more information on the availability and use of this exception.

If the player is a restricted free agent with one or two years of service and receives an offer sheet from a new team, the player's prior team may use the Non-Taxpayer Mid-Level exception to match the offer sheet (see question numbers 44 and 45).

Again, this exception is only available to teams that are below the "apron," i.e., below the point $4 million above the tax line. Teams above the apron instead must use the smaller Taxpayer Mid-Level exception (see below). Further, any team that uses its Non-Taxpayer Mid-Level exception cannot go above the apron for the remainder of that season. In other words, once a team uses its Non-Taxpayer Mid-Level exception, it is hard-capped at the apron (see question 28 for more information).

However, if a team uses its Non-Taxpayer Mid-Level exception but does not exceed the constraints of the Taxpayer Mid-Level exception (e.g., in 2011-12 they use the Non-Taxpayer Mid-Level exception to sign a player for $3 million or less), then the team is allowed to later exceed the apron (i.e., it is not hard-capped). If the team later exceeds the apron, then it is considered to have used the Taxpayer Mid-Level exception rather than the Non-Taxpayer Mid-Level exception. But the converse is not true -- if a team is above the apron and spends any of its Taxpayer Mid-Level exception, it cannot drop below the apron and spend the remaining money as part of its Non-Taxpayer Mid-Level exception. Finally, a team that was above the apron but did not spend any of its Taxpayer Mid-Level exception has full access to the Non-Taxpayer Mid-Level exception if it later drops below the apron.

A different team salary definition is used for determining whether a team is above or below the apron. See question number 14 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 29), and expires following the last day of the team's regular season.

TAXPAYER MID-LEVEL EXCEPTION -- This exception is available only when a team is above the "apron" (i.e., with a team salary $4 million or more above the tax line). This determination is made after the exception is used, so a team below the apron must use this exception rather than the Non-Taxpayer Mid-Level exception if doing so takes them above the apron. This exception cannot be used if the team has already used the Bi-Annual, Non-Taxpayer Mid-Level or the Room Mid-Level exception. Starting in 2013-14, it cannot be used if the team has received a player that season in a sign-and-trade transaction (see question number 91).

This exception allows a team to sign any free agent to a contract with a starting salary up to the following amounts3:

Season First-year salary
2011-12 $3.000 million
2012-13 $3.090 million
2013-14 $3.183 million
2014-15 $3.278 million
2015-16 $3.376 million
2016-17 $3.477 million
2017-18 $3.581 million
2018-19 $3.688 million
2019-20 $3.799 million
2020-21 $3.913 million

This exception may be split and given to multiple players. It may be used for contracts up to three years in length, with raises up to 4.5% of the salary in the first year of the contract. Signing a player to a multi-year contract does not affect a team's ability to use this exception every year -- for example, a team can use this exception to sign a player to a three-year contract, and use it again the following year to sign another player. Also see question number 26 for more information on the availability and use of this exception.

If the player is a restricted free agent with one or two years of service and receives an offer sheet from a new team, the player's prior team may use the Taxpayer Mid-Level exception to match the offer sheet, but only if the offer is within the constraints of the Taxpayer Mid-Level exception (see question numbers 44 and 45).

If a team uses its Non-Taxpayer Mid-Level exception but does not exceed the constraints of the Taxpayer Mid-Level exception (e.g., in 2011-12 they use the Non-Taxpayer Mid-Level exception to sign a player for $3 million or less) and the team later exceeds the apron, then the team is considered to have used the Taxpayer Mid-Level exception rather than the Non-Taxpayer Mid-Level exception. But the converse is not true -- if a team is above the apron and spends any of its Taxpayer Mid-Level exception, it cannot drop below the apron and spend the remaining money as part of its Non-Taxpayer Mid-Level exception. Finally, a team that was above the apron but did not spend any of its Taxpayer Mid-Level exception has full access to the Non-Taxpayer Mid-Level exception if it later drops below the apron.

A different team salary definition is used for determining whether a team is above or below the apron. See question number 14 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 29), and expires following the last day of the team's regular season.

ROOM MID-LEVEL EXCEPTION -- This exception is available only to teams that drop far enough below the cap to use cap room, and lose their Bi-Annual, Non-Taxpayer Mid-Level and Taxpayer Mid-Level exceptions (see question number 26). This exception cannot be used if the team has already used the Bi-Annual, Non-Taxpayer Mid-Level or Taxpayer Mid-Level exceptions. This exception becomes available once the team salary drops far enough that the team loses its other exceptions, and expires following the last day of the regular season.

This exception allows a team to sign any free agent, starting at up to the following amounts:

Season First-year salary
2011-12 $2.500 million
2012-13 $2.575 million
2013-14 $2.652 million
2014-15 $2.732 million
2015-16 $2.814 million
2016-17 $2.898 million
2017-18 $2.985 million
2018-19 $3.075 million
2019-20 $3.167 million
2020-21 $3.262 million

This exception may be split and given to multiple players. It may be used for contracts up to two years in length, with raises up to 4.5% of the salary in the first year of the contract. Signing a player to a multi-year contract does not affect a team's ability to use this exception every year -- for example, a team can use this exception to sign a player to a two-year contract, and use it again the following year to sign another player. Also see question number 26 for more information on the availability and use of this exception.

Once a team has used this exception, it can no longer use the Bi-Annual, Non-Taxpayer Mid-Level or Taxpayer Mid-Level exception.

BI-ANNUAL EXCEPTION -- This exception is available only to teams that are below the "apron" (i.e., not paying luxury tax, or less than $4 million above the tax line). This determination is made after the exception is used, so a team below the apron cannot use this exception if doing so takes them above the apron. It cannot be used if the team has already used the Taxpayer Mid-Level Exception or the Room Mid-Level exception. It allows a team to sign any free agent, starting at up to the following amounts:

Season First-year salary
2011-12 $1.900 million
2012-13 $1.957 million
2013-14 $2.016 million
2014-15 $2.077 million
2015-16 $2.139 million
2016-17 $2.203 million
2017-18 $2.269 million
2018-19 $2.337 million
2019-20 $2.407 million
2020-21 $2.479 million

This exception may not be used two years in a row (and if this exception was used under the previous CBA in 2010-11, it may not be used in 2011-12). It may be split and given to more than one player, and can be used to sign players for up to two years, with raises limited to 4.5% of the salary in the first season of the contract. Also see question number 26 for more information on the availability and use of this exception.

A team that uses its Bi-Annual exception cannot go above the apron for the remainder of that season. In other words, once a team uses its Bi-Annual exception, it is hard-capped at the apron (see question 28 for more information).

A different team salary definition is used for determining whether a team is above or below the apron. See question number 14 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 29), and expires following the last day of the regular season.

ROOKIE EXCEPTION -- Teams may sign their first round draft picks to rookie "scale" contracts even if they will be over the cap as a result (see question number 49).

MINIMUM PLAYER SALARY EXCEPTION -- Teams can offer players minimum salary contracts even if they are over the cap. Contracts can be up to two years in length. For two-year contracts, the second season salary is the minimum salary for that season. The contract may not contain a bonus of any kind. This exception can also be used to acquire minimum salary players via trade. There is no limit to the number of players that can be signed or acquired using this exception.

This exception begins to reduce in value after the first day of the season. For example, if there are 170 days in the season, then this exception reduces in value by 1/170 of its initial value each day. So if a team signs a minimum salary player 90 days into the season, it can pay the player only 80/170 of the minimum salary.

See question number 86 for more information on how minimum salary players are handled in trade.

DISABLED PLAYER EXCEPTION -- This exception allows a team which is over the cap to replace a disabled player who will be out for the remainder of that season (it can also be granted in the event of a player's death). This exception is granted by the league, based on an application from the team and a determination by an NBA-designated physician that the player is substantially more likely than not to be unable to play through the following June 15.

If this exception is granted, the team can acquire one player via free agent signing, trade or wavier claim, to replace the disabled player:

Teams can apply for this exception from July 1 through January 15, and cannot apply after January 15. Once granted, the exception expires when a player is acquired, when the disabled player is traded or returns to the team, or on March 10 of that season, whichever comes first. This exception is granted on a season-by-season basis -- if the player will also be out the following season, the team needs to apply for this exception again the following season.

This exception can only be granted to the team for which the player was playing when his injury or illness was known, or reasonably should have become known. A team cannot trade for an injured player and subsequently apply for a Disabled Player exception for that player.

If a team's application for a disabled player exception is denied, the team must wait 90 days before submitting another request related to the same player, and then only for a new injury or aggravation of the same injury. Whether the application was approved or denied, the team can apply again (including for the same injury) the following season.

If the disabled player comes back sooner than expected he may be activated immediately, and the replacement player is not affected.

Don't confuse the Disabled Player exception with the salary cap relief teams sometimes receive after losing a player to a career-ending injury or death (see question number 63). The Disabled Player exception allows a team to acquire a replacement player. The salary cap relief removes a contract from the team's books.

Also see question number 26 for more information on the availability and use of this exception.

REINSTATEMENT -- If a player was banned from the league for a drug-related offense and later reinstated, his prior team may re-sign him for up to his previous salary, or the average salary for the season in which he is reinstated, whichever is less.

See question number 108 for more information on reinstatement.

Summary of Salary Cap Exceptions
Larry Bird Early Bird Non-Bird Non-Taxpayer Mid-Level Taxpayer Mid-Level Room Mid-Level Bi-Annual Rookie Minimum Disabled Player Reinstatement
Who Qualifies Own free agent, 3 seasons without changing teams as a free agent Own free agent, 2 seasons without changing teams as a free agent Own free agent, if not Larry Bird or Early Bird Any Any Any Any Team's first round draft pick(s) Any Any Reinstated players re-signing with their prior team
Minimum Years 1 2 1 1 1 1 1 2 plus two team options 1 1 1
Maximum Years 5 4 4 4 3 2 2 2 plus two team options 2 1 4
Maximum Salary Maximum salary (see note in text) Greater of 175% of previous salary or average salary Greater of 120% of previous salary or 120% of minimum salary Set amount (see text) Set amount (see text) Set amount (see text) Set amount (see text) 120% of scale amount Minimum salary Lesser of 50% of injured player's salary or average salary Player's prior salary
Maximum Raises 7.5% 7.5% 4.5% 4.5% 4.5% 4.5% 4.5% Defined in salary scale Salary always minimum N/A 4.5%
Can be split? No No No Yes Yes Yes Yes No No No No
Other Cannot be used in consecutive seasons Restricted free agency following option years Approval from the league required. Can be used for a limited time only.


1 The Traded Player exception is not listed because it cannot be used to sign players.
2 If the player was awarded to the team through a partial waiver claim under the amnesty provision (see question number 69), his full salary prior to amnesty is used as the basis for determining the amount that can be offered under the non-Bird and Early Bird exceptions.
3 In the previous CBA the Mid-Level exception was tied to the average salary. This is no longer the case.

26. How do exceptions count against the cap? Does being under the cap always mean that a team has room to sign free agents? Do teams ever lose their exceptions?

If a team is below the cap, then its Disabled Player, Bi-Annual, Mid-Level (either the Taxpayer or Non-Taxpayer Mid-Level, whichever applies to the team) and/or trade exceptions are added to their team salary, and the league treats the team as though they are over the cap1. This is to prevent a loophole, in a manner similar to free agent amounts (see question number 39). A team can't act like it's under the cap and sign free agents using cap room, and then use their Disabled Player, Bi-Annual, Mid-Level and/or trade exceptions. Consequently, the exceptions are added to their team salary (putting the team over the cap) if the team is under the cap and adding the exceptions puts them over the cap. If a team is already over the cap, then the exceptions are not added to their team salary. There would be no point in doing so, since there is no cap room for signing free agents.

So being under the cap does not necessarily mean a team has room to sign free agents. For example, assume the cap is $58 million, and a team has $51.5 million committed to salaries. They also have a Non-Taxpayer Mid-Level exception for $5 million and a trade exception for $5.5 million. Even though their salaries put them $6.5 million under the cap, their exceptions also count toward their team salary, increasing their total to $62 million, or $4 million over the cap. So the team actually has no cap room to sign free agents, and instead must use its exceptions to sign players.

Teams have the option to renounce their exceptions in order to reclaim their cap room. So in the example above, if the team renounced their Traded Player and Mid-Level exceptions, then the $10.5 million is taken off their team salary, which then totals $51.5 million, leaving them with $6.5 million of cap room which then can be used to sign free agent(s).

Starting January 10 (February 10 in 2011-12) of each season, the Mid-Level (Non-Taxpayer, Taxpayer and Room), Bird (Larry Bird, Early Bird and Non-Bird) and Bi-Annual exceptions begin to pro-rate2 (reduce in value). For example, if there are 170 days in the season, then these exceptions reduce in value each day by 1/170 of the amount remaining on January 10. So if a team had a $5 million Non-Taxpayer Mid-Level exception and spent $1 million before the start of the season, then on January 10, and each day thereafter, it would reduce in value by 1/170 of $4 million, or $23,529. If the team signs another player on February 1 for $1 million, the daily pro-ration would still be 1/170 of $4 million.

A team's exceptions may be lost entirely, or the team may never receive them to begin with. This happens when their team salary is so low that when the exceptions are added to the team salary, the sum is still below the salary cap. If this happens when the exceptions arise, then the team doesn't get their exceptions at all. If the team salary ever drops below this level during the year, then any unused portions of their exceptions are lost (and do not return if the team salary increases).

For example, assume there is a $58 million salary cap, and during the offseason a team has $50 million committed to salaries, along with a Non-Taxpayer Mid-Level exception for $5 million, a trade exception for $2.5 million, and an unrenounced free agent whose free agent amount is $2 million. Their salaries and exceptions total $59.5 million, or $1.5 million over the cap. What if their free agent signs with another team? The $2 million free agent amount comes off their cap, so their team salary (including their remaining exceptions) drops to $57.5 million. This total is below the cap so the team loses its Non-Taxpayer Mid-Level and trade exceptions.

There is logic behind this. The whole idea behind an "exception" is that it is an exception to the rule which says a team cannot go over the salary cap. In other words, an exception is a mechanism which allows a team to function above the cap. If a team isn't over the cap, then the concept of an exception is moot. Therefore, if a team's team salary ever drops this far, its exceptions go away. A rule of thumb is that a team may have either exceptions or cap room, but it can't have both at the same time. However, a team in this situation does qualify to use the Room Mid-Level exception (see question number 25).


1 This is just for determining a team's ability to sign free agents and use salary cap exceptions. It has no effect on such things as the luxury tax.
2 The Traded Player and Disabled Player exceptions do not pro-rate this manner. The Minimum Salary exception also pro-rates, beginning on the first day of the regular season.

27. If a team has more than one exception available to sign a particular player, are there any rules regarding which one it has to use?

The team has the right to choose which of its available exceptions to use to sign a player. However, teams may not combine exceptions, or combine exceptions with cap room, in order to sign a player. For example, a team $2 million under the salary cap that has not used its $5 million Non-Taxpayer Mid-Level exception may not combine the exception and the cap room to sign a player for $7 million. This is explained more thoroughly in question number 88.

28. What is the hard cap? When are teams subject to it? How does it work?

As described in question number 23, teams above the apron -- the point $4 million above the tax line -- have a smaller Mid-Level exception, cannot use the Bi-Annual exception, and cannot receive a player in a sign-and-trade transaction. These exceptions are reserved for teams that are below the apron. This applies to the entire season in which one of these exceptions is used -- for example, if a team is below the apron and utilizes its Bi-Annual exception, it commits itself to remaining below the apron for the remainder of that season (through the following June 30).

In other words, when a team is below the apron and uses its Bi-Annual exception, receives a player who is signed-and-traded, or uses its Mid-Level exception to sign a player to a contract larger than the Taxpayer Mid-Level exception allows, the team becomes hard-capped at the apron for the remainder of that season. This eliminates any potential loophole where a team could first use one of these exceptions and subsequently add salary to go above the apron, since adding salary first and then using the exception would be illegal.

If a team is hard-capped, it cannot exceed the apron under any circumstance. If the team subsequently needs to sign a player (for example, to replace injured players) it must first create room under the apron by waiving player(s) with non-guaranteed salary, waiving player(s) with guaranteed salary and utilizing the stretch provision, trading downward in salary, etc. A team that is hard-capped can sign players to non-guaranteed contracts for training camp or the regular season, but must rid themselves of such players before their salary would take the team above the apron. A team subject to the hard cap can also sign players to rest-of-season contracts during the season, as long as the salary pro-ration keeps the team below the apron.

A modified version of the team salary calculation is used for all transactions related to the apron and to the hard cap. See question number 14 for details.

29. When a player signs mid-year for the rest of the season, is his salary pro-rated?

Even though the exceptions that enable players to be signed pro-rate (see question number 26), salaries themselves are not pro-rated during the season. For example, a team that has not used its Non-Taxpayer Mid-Level exception could use it to sign a player on the last day of the regular season. By that day the Non-Taxpayer Mid-Level exception will have pro-rated down to less than half its original value. However a player could sign a rest-of-season contract for the entire remaining amount on that day, earning it all for just one game.

Raises are based on the actual salary in the first season of the contract. For example, if a free agent signs a two-year contract on the last day of the regular season and the salary for the first season is $1 million, then the second season salary may range from $955,000 to $1.045 million.

The minimum salary begins to pro-rate on the first day of the regular season. The minimum salary on a rest-of-season contract is based on the fraction of the season remaining when the contract is signed. For example, if there are 170 days in the season, then a minimum salary contract signed on the 60th day of the season is worth 110/170 of the full minimum salary amount. If a player signs a multi-year minimum salary contract partway through the first season, then the first season is pro-rated and the salary in subsequent seasons is the full minimum salary.

10-day contracts (see question number 80) are also pro-rated. The salary on a 10-day contract is based on the number of days actually covered by the contract (a 10-day contract lasts 10 days or three games, whichever is longer).

30. Can a team pay a player less but arrange for an affiliated company to also pay him, perhaps by way of an endorsement contract?

I suppose it could happen, but the NBA will investigate if it suspects that an outside person or organization is paying a player on behalf or at the request of a team (even if the compensation is ostensibly for non-basketball services). If they find out that such circumvention has occurred, they will penalize the team. For the first offense the fine can be up to $3 million, forfeiture of a first round draft pick, and/or voiding the player's contract (see question number 110). The penalties increase for subsequent violations.

See question number 105 for more information on circumvention.

Incidentally, players are no longer allowed to become player-coaches. This is because it would be possible to circumvent the cap by signing a player as a player-coach, and paying him less as a player but overpaying him as a coach.

31. Do players and teams ever have under-the-table agreements for future contracts? What happens when the league finds out about them? Is this what happened with the Timberwolves and Joe Smith?

Teams and players are not allowed to negotiate terms a new contract (other than an extension) prior to the July 1 when the player becomes a free agent1. Teams are required to notify the league office immediately upon reaching any verbal or written agreement with a player, and all contracts must be filed with the league office within 48 hours of signing. If a team makes an agreement with a player that is not reported to the league, the penalties can be even harsher than those described in question number 30. Such a violation is considered by the league to be among the most serious a team can commit. Again, the league will investigate any allegations of wrongdoing. A violation can result in a fine up to $6 million, forfeiture of draft picks, voiding the player's contract(s) (see question number 110), and/or the suspension for up to one year of any team personnel who were involved. In addition, the player himself can be fined up to $250,000, and prohibited from ever signing with that team.

This is what happened in 2000 with Joe Smith and the Minnesota Timberwolves. Smith left the Philadelphia 76ers in 1999 (following the lockout) to sign with the Minnesota Timberwolves for their $1.75 million Mid-Level exception. They made an under-the-table agreement that Smith would play under three consecutive one-year contracts at below market value, and the Timberwolves would reward him by using their Bird rights to sign him to a huge contract beginning with the 2001-02 season. Unfortunately, they reduced this agreement to writing, and the written agreement eventually found its way into the league's hands.

It had long been rumored that such under-the-table agreements existed, but this was the first time the league had hard evidence in the form of a signed contract. The league responded by fining the team the maximum (at the time) $3.5 million, taking away their next five draft picks (two were later returned), and voiding Smith's then-current contract. Owner Glen Taylor and GM Kevin McHale also agreed to leaves of absence (in lieu of suspensions, at which time the fifth draft pick was returned). Most interestingly, the league also voided Smith's two previous, already-completed contracts. This essentially stripped the Timberwolves of any Bird rights to Smith, preventing them from re-signing Smith for any salary above the minimum (they had already used their other exceptions). Smith left Minnesota and signed with the Detroit Pistons, but returned to Minnesota in 2001.


1 Nor can a team negotiate before July 1 with an unrestricted free agent who did not play in the NBA during the prior season.

32. How is "average salary" defined?

The league computes the average player salary for a season by dividing the total salaries paid during that season1 by 13.2 times the number of teams (other than expansion teams in their first two seasons). The current denominator is 13.2 times 30, or 396.

The average player salary for a season is not determined until the league audit in July, following the conclusion of the season. Before the average salary is determined they use an estimated average salary, which is 104.5% of the average salary for the previous season. The estimated average salary figure is used when determining the amount of the Early Bird exception, the cap hold for unsigned free agents, and the salaries of reinstated players. Here are the average salary values for each season:

Season Estimated average salary Average salary
2011-12 $5.38 million $5.048 million
2012-13 $5.276 million $5.325 million
2013-14 $5.565 million $5.389 million
2014-15 $5.632 million

1 Including any supplemental payment to the players in the event of a shortfall in the players' share of BRI (see question number 18).

33. How long must a player be with one team before the Larry Bird exception can be used?

The basic idea is that a player must play for the same team for three seasons for his team to gain Bird rights (two seasons for Early Bird rights). It can be a single three-year contract, a series of three one-year contracts, or any combination that adds up to three seasons (or two for Early Bird). However there are a number of complications:

34. Why a three-year wait before gaining Bird rights?

It closed a salary cap loophole. There used to be no waiting period, but this was abused by Portland with Chris Dudley and Phoenix with Danny Manning. Both teams signed these players to one-year deals at small salaries. The next year, Bird rights in hand, they signed new contracts far in excess of the cap. The three-year rule prevents these types of cap circumventions.

35. Does having Bird rights mean that free agents can be signed and not count against the cap?

With very few exceptions, all salaries are included in team salary. The Bird exception simply enables a team to exceed the cap to sign certain players. The player's new salary applies toward the team salary just like the salaries of the team's other players. So if a team is over the cap and uses the Bird exception to re-sign its own free agent, it will end up farther over the cap.

36. I just saw that a team signed a player for more money than it has under the cap. It was another team's free agent, so the Bird exception wasn't used. What gives?

If one of the other exceptions wasn't used, it may just be the way the deal was reported. In most cases, only the first season's salary must fit under the cap, but signings are often reported using the total salary for the entire contract. For example, if a team is $10 million under the cap, they can sign a player to a four-year contract for $10 million, $10.45 million, $10.9 million and $11.35 million, respectively, for the four seasons. The deal then gets reported as four years for $42.7 million. But only the first-year salary counts when determining whether the team has enough cap room, and the first-year salary fits perfectly.

37. Can a team with cap room sign all the free agents it wants (up to the salary cap) and THEN re-sign its own free agents using the Bird exception?

A team's ability to do this is very limited. The team's free agents continue to be included in team salary. This charge is called the "free agent amount," which is a form of cap hold. There may not be enough money available under the cap to sign another team's free agent, because the team's own free agents are taking up all its cap room.

38. How much do free agents count toward team salary?

The free agent amount depends on the player's previous salary and what kind of free agent he is:

Kind of free agent Previous salary Free agent amount
Any Minimum salary Portion of minimum salary not reimbursed by the league (see question number 16)
Larry Bird, not coming off rookie scale contract At least the estimated average salary1 150% of his previous salary2
Larry Bird, not coming off rookie scale contract Below the estimated average salary1 190% of his previous salary2
Larry Bird, following the fourth season of his rookie scale contract At least the estimated average salary1 200% of his previous salary2
Larry Bird, following the fourth season of his rookie scale contract Below the estimated average salary1 250% of his previous salary2
Larry Bird, following the third season of his rookie scale contract Any The maximum amount the team can pay the player using the Larry Bird exception (see question number 25)
Early Bird, following the second season of his rookie scale contract Any The maximum amount the team can pay the player using the Early Bird exception (see question number 25)
Early Bird (all others) Any 130% of his previous salary2
Non-Bird Any 120% of his previous salary2

Note that if a player was amnestied and claimed by another team in a partial waiver claim (see question number 69), the percentages in the above chart are based on the player's full season salary, and not just the portion paid by the claiming team.

A restricted free agent is included in team salary by the greatest of:

Here's an example of how to use this chart: Let's say a player who made $5 million during the previous season becomes an Early Bird free agent, and is not coming off the second season of his rookie scale contract. According to this chart, the player's free agent amount is 130% of his previous salary. So $6.5 million is included in team salary while he is a free agent.

See question number 49 for more information on rookie "scale" contracts, question number 41 for information on renouncing players, and question number 44 for information on restricted free agency.


1 See question number 32.
2 A player's free agent amount is never less than his minimum salary or greater than his maximum salary, based on his years of service (see question number 16).

39. Why do free agents continue to count against team salary?

It closes a loophole. Teams otherwise would be able to sign other teams' free agents using their cap room, and then turn their attention to their own free agents using the Bird exception. This rule restricts their ability to do that. It uses the player's current status (type of free agent, whether coming off a rookie contract, and previous salary) as a rough guideline to predict the amount the player is likely to receive in his next contract, and sets that amount aside in the form of a cap hold. But while it functions as a rough guideline, it's obviously not perfect -- for example, in 2005 Michael Redd's free agent amount was just $6 million, even though the Bucks intended to re-sign him for the maximum salary. By waiting to sign Redd last, the Bucks were able to take advantage of the difference by signing Bobby Simmons. Had they signed Redd first, they would not have had enough cap room to sign Simmons.

40. When do free agents stop counting against team salary?

Free agents continue to be included in team salary until one of the following three things happens:

41. What does renouncing a player mean?

As detailed in question number 38, free agents continue to be included in team salary. By renouncing a player, a team gives up its right to use the Larry Bird, Early Bird, or Non-Bird exceptions (see question number 25) to re-sign that player. A renounced player no longer counts toward team salary, so teams use renouncement to gain additional cap room. Teams are still permitted to re-sign renounced players, but only with cap room or an exception other than the Bird exception. The exception to this rule is that an Early Bird free agent who is coming off the second season of his rookie scale contract. Such players, when renounced, are treated as Non-Bird free agents.

If the player does not sign with any team (his prior team or any other team) for the entire season, then his renouncement continues. In other words, the team is not permitted to renounce a player, let him sit idle for the year, and then re-sign him the following summer using Bird rights. However, if the player re-signs with his prior team, then his renouncement is no longer in effect when his contract ends. For example, if a team renounces their Larry Bird rights to a player, then re-signs that player to a one-year contract using cap room, the player will be a Larry Bird free agent once again the following summer.

After renouncing a player, a team can still trade the player in a sign-and-trade agreement (see question number 91).

42. Can the renouncement be renounced? In other words, can a team un-renounce a player and then sign him using a Bird exception?

Only in one specific circumstance -- when they renounce one or more of their players in order to create enough cap room to sign another team's restricted free agent, but the restricted free agent's original team matches the offer sheet and keeps him. If that happens, the team can rescind the renouncement.

However, a team can't rescind a renouncement if doing so takes them from below the salary cap to above it; or if they are already above the cap and rescinding the renouncement takes them farther above the cap than they were before the renouncement. This closes a loophole -- it prevents a team from rescinding a player in order to make an offer, then if the offer isn't accepted using the resulting cap space to sign another free agent, before rescinding the renouncement to get back the renounced player's Bird rights.

Incidentally, they use a different system for teams that submit partial waiver claims in conjunction with the Amnesty provision (see question number 69). If a team needs to renounce a free agent to create cap room for a partial waiver claim, they can submit a bid without renouncing their free agent. If they are the winning bidder, then the renunciation must occur immediately when the amnestied player is awarded to the team.

See question number 44 for more information on restricted free agency.

43. Let's say a team arranges for all of its players to become free agents at the same time. If they renounce everybody, do they then have a team salary of $0 and a full cap under which to work?

No. There are lots of things that are included in team salary besides active contracts -- see question number 14 for a full list. Note especially that there is a roster charge when a team has fewer than 12 players under contract, free agents included in team salary, players given offer sheets, and first round draft picks -- so even if a team has no contracts and renounces all its free agents, exceptions and draft picks, it will still have a non-zero team salary.

44. What is restricted free agency?

There are two types of free agency: unrestricted and restricted. An unrestricted free agent is free to sign with any other team, and there's nothing the player's original team can do to prevent it. Restricted free agency gives the player's original team the right to keep the player by matching a contract the player signs with another team. This is called the "right of first refusal."

Restricted free agency exists only on a limited basis. It is allowed following the fourth year of rookie "scale" contracts for first round draft picks (see question number 49). It is also allowed for all veteran free agents who have been in the league three or fewer seasons. However, a first round draft pick becomes an unrestricted free agent following his second or third season if his team does not exercise its option to extend his rookie scale contract for the next season. All other free agency is limited to unrestricted free agency.

In order to make their free agent a restricted free agent, a team must submit a qualifying offer to the player between the day following the last game of the NBA Finals and June 30. The qualifying offer is a standing offer for a one-year guaranteed contract, which becomes a regular contact if the player decides to sign it. This ensures that the team does not gain the right of first refusal without offering a contract themselves. The amount of the qualifying offer for players on rookie "scale" contracts is based on the player's draft position. The qualifying offer for all other players must be for 125% of the player's previous salary, or the player's minimum salary (see question number 16) plus $200,000, whichever is greater. However, a player may qualify for a higher or lower qualifying offer based on whether or not he met the "starter criteria" in the previous season, or in the average of the previous two seasons. The starter criteria are based on starting 41 games or playing at least 2,000 minutes in the regular season1.

A qualifying offer automatically expires on October 1, unless it is extended by the team (which is rarely done). A qualifying offer cannot be extended past March 1. If the deadline passes and the qualifying offer is neither withdrawn nor accepted, the player continues to be a restricted free agent. The team and player are free to negotiate a new contract after the qualifying offer expires -- the deadline only affects the player's ability to accept his qualifying offer.

If the player is coming off the fourth year of his rookie scale contract, then in addition to a qualifying offer, his team can also submit a maximum qualifying offer. A maximum qualifying offer is for five seasons at the maximum salary with 7.5% annual raises. It can contain no options, ETOs or bonuses of any kind, and must be fully guaranteed. When a team submits a maximum qualifying offer (in essence "stepping up" with a maximum contract offer before the player hits the free agent market), it places a more stringent requirement on other teams' offer sheets (see below).

A player can elect to accept his qualifying offer and play the following season under its terms. This is sometimes done in order to become an unrestricted free agent the following summer (see question number 46).

When a restricted free agent wants to sign with another team, the player and team sign an offer sheet, the principal terms of which the original team is given three days to match.4 The offer sheet must be for at least two seasons (not including option years). If the player's prior team also submitted a maximum qualifying offer, then the offer sheet must be for at least three seasons (not including option years). If the player's original team exercises its right of first refusal within three days, the player is then under contract to his original team, at the principal terms of the offer sheet (but not the non-principal terms). If the player's original team does not exercise its right of first refusal within three days (or provides written notice that it is declining its right of first refusal), the offer sheet becomes an official contract with the new team.

The principal terms of an offer sheet consist of the following. Any other terms of an offer are not considered to be principal terms, and the player's original team is not required to match:

As with any contract offer, a team must have enough room -- either cap room or room provided by an exception -- for the offer sheet. It must maintain the necessary room from the time the offer sheet is signed until the time the new contract is in place or the player's prior team exercises its right of first refusal.

Likewise, the player's prior team cannot match an offer sheet that is greater than its room -- again, either cap room or a satisfactory exception -- and must maintain the necessary room from the time it gives notice of first refusal to the time the new contract is in place.

There are additional restrictions placed on offer sheets for players with one or two years in the league, under a rule known as the "Gilbert Arenas provision." This provision helps enable teams to retain their restricted free agents under certain circumstances. This is described in question number 45.

An offer sheet cannot be signed after March 1. If the player does not sign an offer sheet by that date, his only choice is to re-sign with his previous team (or remain unsigned for the rest of the season). This happened with Wilson Chandler, who signed in China during the 2011 lockout and did not return to the NBA until after March 1, 2012. Chandler ended up re-signing with the Nuggets to a five-year contract shortly after returning to the United States.

A team may relinquish its right of first refusal, making the player an unrestricted free agent. If a qualifying offer is outstanding, the team can withdraw it unilaterally through July 23. It can be withdrawn after July 23 if the player consents, in which case the player is also renounced as a free agent7 (see question number 41). If a qualifying offer is not outstanding, then a team can relinquish its right of first refusal at any time by providing written notice.

To summarize, a restricted free agent essentially has five options:

There can be no compensation given to a team in return for their submitting or not submitting an offer sheet, or for matching or not matching an offer to a restricted free agent. For example, Houston could not sign Golden State's restricted free agent to an offer sheet, then send Golden State a draft pick in exchange for their not matching the offer.

If a team matches an offer sheet and retains its free agent, then for one year they cannot trade him without his consent, and during that year cannot trade him at all to the team that signed him to the offer sheet. They also can't trade the player in a sign-and-trade transaction (see question number 91). A restricted free agent's resulting contract (whether with the new team or the contract is matched by the player's prior team) cannot be amended in any manner for one year.


1 For 2011-12 the player's games started and minutes played were multiplied by 82/66 when determining whether he met the starter criteria.
2 Determined by taking 120% of that pick's scale amount for the third season, adding the percentage raise for the fourth season specified in the salary scale, and then adding the percentage raise for the qualifying offer specified in the salary scale.
3 For example, in 2014 a qualifying offer is based on the scale amount for the 21st pick in the 2010 draft class, since the rookie scale contracts for the 2010 draft class are finishing in 2014. The amount is determined by taking 100% of that pick's scale amount for the third season, adding the percentage raise for the fourth season specified in the salary scale, and then adding the percentage raise for the qualifying offer specified in the salary scale.
4 The team must submit a First Refusal Exercise Notice within three days -- the actual contract usually comes a couple days later. The First Refusal Exercise Notice creates a binding agreement where the principal terms of the offer sheet will need to be part of the new contract.
5 By definition, an offer sheet cannot contain an Early Termination Option (ETO) since an ETO cannot occur prior to the end of the fourth season, and the maximum length of an offer sheet is four seasons.
6 Generally recognized league honors includes MVP, Finals MVP, Defensive Player of the Year, Sixth Man, Most Improved Player, All-NBA Team (first, second and third), All-Defensive Team (first and second), and All-Star selection.
7 If a team withdraws its qualifying offer on or before July 23 it retains its Bird rights to the player.

45. What is the "Gilbert Arenas" provision?

Before 2005 it was sometimes possible to sign restricted free agents to offer sheets their original teams couldn't match. This happened when a player was an Early Bird or Non-Bird free agent (see question number 25) and the team didn't have enough cap room to match a sufficiently large offer. For example, Gilbert Arenas was Golden State's second round draft pick in 2001, and became an Early Bird free agent in 2003. Golden State could only match an offer sheet (or sign Arenas directly) for up to the amount of the Early Bird exception, which was about $4.9 million at the time. Washington signed Arenas to an offer sheet with a starting salary of about $8.5 million, which Golden State was powerless to match.

This loophole was addressed starting with the 2005 CBA (although not closed completely -- see below). Teams are now limited in the salary they can offer in an offer sheet to a restricted free agent with one or two years in the league. The first-year salary in the offer sheet cannot be greater than the Non-Taxpayer Mid-Level exception (see question number 25). Limiting the first-year salary in this way enables the player's original team to match the offer sheet by using the Early Bird exception (if applicable -- see question number 25), or Non-Taxpayer Mid-Level exception (provided they have it and haven't used it already)1.

The second-year salary in such an offer sheet is limited to the standard 4.5% raise. The third-year salary can jump considerably -- it is allowed to be as high as it would have been had the first-year salary not been limited by this rule to the Non-Taxpayer Mid-Level exception2. The salary in the fourth season may increase (or decrease) by up to 4.1% of the salary in the third season. The offer sheet can only contain the large jump in the third season if it provides the highest salary allowed in the first two seasons, it is fully guaranteed, and it contains no bonuses of any kind.

If the raise in the third season exceeds the standard raise (4.5% of the salary in the first season of the contract), then an additional restriction exists. In order to determine how large the offer can be, the team doesn't just have to fit the first-year salary under the cap. Instead, they must fit the average salary in the entire contract under the cap. So a team $8 million under the cap is limited to offering a total of $24 million over three years, or $32 million over four years. If the offer sheet does not contain a third-season raise larger than 4.5% of the first-season salary, then they only have to fit the first season salary under the cap.

Putting this all together, if a team that is $9 million under the cap in 2011-12 wants to submit a four-year offer sheet, and wants to provide a large raise in the third season, they can offer a total of $36 million over four years. The first-year salary is limited to the Non-Taxpayer Mid-Level exception, or $5 million. The second-year salary will be $5.225 million (4.5% raise). This leaves $25.775 million to be distributed over the final two seasons of the contract, with a 4.1% raise from year three to year four. So the entire contract looks like this:

Season Salary Notes
1 $5,000,000 Non-Taxpayer Mid-Level amount for 2011-12
2 $5,225,000 4.5% raise over season 1
3 $12,628,613 This is the amount that yields $25.775 million over the final two seasons with a 4.1% raise3
4 $13,146,387 Raise is 4.1% of season 3 salary
Total $36,000,000 Average is $9 million, which equals the team's cap room

For the team making this offer, this contract would count for $9.0 million (i.e., the average salary in the contract) of team salary in each of the four seasons if they sign the player. If the player's prior team matches the offer and keeps the player, then the actual salary in each season counts as team salary.4 The player's original team is allowed to use any available exception (e.g., the Non-Taxpayer Mid-Level or the Early Bird) to match the offer.

Since a team must fit the average salary from the entire contract under the cap in order to offer the large third-season raise, it must have some amount of cap room above the Non-Taxpayer Mid-Level exception amount in order to utilize this provision. For example, suppose the Non-Taxpayer Mid-Level exception amount is $5 million, and a team wants to provide a four-year offer sheet. If they want to offer a third-year raise greater than 4.5%, their cap room will be determined by the contract's average salary, so the total contract must pay $20.4 million or less. However, since a four-year offer starting at $5 million with standard 4.5% raises would total $21.35 million, the Arenas provision would be ineffective unless it offered more than this amount. So the team in this example would need at least $5.3375 million in cap room in order to utilize the provision.

As I said above, the loophole was addressed with this rule, but not closed completely. The Gilbert Arenas provision is primarily intended to protect teams from losing their successful second round picks, who are typically Early Bird free agents after two years. There are several situations where a team still might be unable to match an offer sheet:


1 Teams can also use cap room to match, of course.
2 To determine whether the team has enough cap room to offer a contract with a substantial increase in the third season, they compare the cap room to the average salary in the offer sheet.
3 If you want to know how I got that exact amount, you solve for (4R - 2.045E) / 2.041. R is the room the team has under the cap, so the entire four-year contract pays 4R. E is the Non-Taxpayer Mid-Level Exception amount, which is the maximum the team can offer in the first season. The second season has a 4.5% raise, and the first two seasons together account for E + 1.045E, which is 2.045E. So the last two seasons total 4R - 2.045E, and with a 4.1% raise from year three to year four, we can say (if Y is the year 3 amount) Y + 1.041Y = 4R - 2.045E, so the year three amount is (4R - 2.045E) / 2.041.
4 If a player signed pursuant to the Gilbert Arenas provision is later traded, his trade value is equivalent to his cap amount, and new team inherits the same cap hit as the team that traded him. In other words, if the player goes to the team submitting the offer sheet and that team later trades him, the average salary of the contract is charged to his new team's cap. If instead the player's original team matches the offer sheet, keeps the player, and subsequently trades him, the player's actual salary is charged to his new team's cap.

46. Haven't some restricted free agents gotten away anyway? How did this happen?

For one, the team can simply decide not to match the offer sheet. If this happens, the offer sheet becomes an official contract with the new team after three days. The team can also provide the league with a written statement declining their right to match the offer sheet, in which case the player becomes a member of his new team right away.

It is sometimes possible to sign a player to an offer sheet his prior team cannot match, as described in question number 45.

47. What if a restricted free agent has no interest in staying with his original team? Is there any way he can force the issue?

If the player really wants to leave, he can sign his original team's qualifying offer, which constitutes a one-year contract at a scale salary. He must then play with his original team for one season, and following that season he will become a free agent again. If he meets the tenure requirement he will be an unrestricted free agent, and then can sign with any other team.

This strategy typically would not be effective for players who would continue to be subject to restricted free agency. For example, if a second round pick completes a two-year contract, he will be a restricted free agent at the end of his second year. But if he accepts his qualifying offer and plays an additional season with his previous team, he would be a three-year veteran the following summer and therefore still subject to restricted free agency.

48. Does a team receive compensation when another team signs their free agent, like in some other sports?

No. A team that loses a free agent does not receive anything. It used to be the case in the NBA a long time ago, but not any longer. Perhaps the most famous example of this is when the Lakers' Gail Goodrich signed as a free agent with the New Orleans Jazz. The Lakers received a draft pick as compensation, which turned out to be Magic Johnson.

49. First round draft picks operate under a different set of rules?

Yes. There's a salary scale for first round draft picks and their first contracts. They do this because it was previously common for rookies to hold out, not signing with their team until they got the contract they wanted. There was also backlash from the veteran players who saw rookies with no NBA experience getting more money than they were. The last year without a salary scale was 1994, when it was rumored that first overall pick Glenn Robinson was going to hold out for $100 million, and he eventually signed a 10-year, $68.15 million contract.1

Beginning in 1995, salaries for first round picks were set according to a strict scale, determined by their draft position. The salary scale is determined for all picks in all seasons when the CBA is written. Rookie scale contracts are always for two seasons, with team options for the third and fourth seasons. Scale amounts are provided for the first three years (two guaranteed years and the first team option year), and the fourth year (second team option year) is defined in terms of the percentage raise over the year-three salary (with all other terms and conditions unchanged from the first option year). The salary scale also dictates the amount of the qualifying offer should the player become a restricted free agent (see question number 44) following his fourth season.

For example, here are the scale salary figures for the #1 overall draft pick in each season from 2011-12 through 2020-21:

Season 1st year salary 2nd year salary 3rd year team option salary 4th year team option (% raise over 3rd year salary) Qualifying offer (% raise over 4th year salary)
2011-12 $4,286,900 $4,479,800 $4,672,700 26.1% 30.0%
2012-13 $4,286,900 $4,479,800 $4,672,700 26.1% 30.0%
2013-14 $4,436,900 $4,636,600 $4,836,300 26.1% 30.0%
2014-15 $4,592,200 $4,798,900 $5,005,500 26.1% 30.0%
2015-16 $4,753,000 $4,966,800 $5,180,700 26.1% 30.0%
2016-17 $4,919,300 $5,140,700 $5,362,100 26.1% 30.0%
2017-18 $5,091,500 $5,320,600 $5,549,700 26.1% 30.0%
2018-19 $5,269,700 $5,506,800 $5,744,000 26.1% 30.0%
2019-20 $5,454,100 $5,699,600 $5,945,000 26.1% 30.0%
2020-21 $5,645,000 $5,899,100 $6,153,100 26.1% 30.0%

By comparison, the 30th and last pick in the first round has a first-year scale salary figure of $850,800 in 2011-12, and $1,120,300 in 2020-21. A listing of the salary figures for all draft picks and all years can be found HERE.

A team may sign a player for as little as 80% or as much as 120% of the scale salary figure. Teams usually spring for the full 120%, but there have been exceptions. Teams over the salary cap use the Rookie exception to sign their first round picks (see question number 25).

As an example, for the first pick in the 2013 draft, here are the scale amounts for each season (from the chart above), along with the minimum and maximum amounts the player can be paid each season:

Season Scale amount Minimum salary Maximum salary
2013-14 $4,436,900 $3,549,520 $5,324,280
2014-15 $4,636,600 $3,709,380 $5,563,920
2015-16 $4,836,300 $3,869,040 $5,803,560
2016-17 26.1% raise $4,878,859 $7,318,289
Qualifying offer 30% above 2016-17 salary $6,342,517 $9,513,776

If the player is not signed by January 10, the scale amount pro-rates (reduces in value) each day for the remainder of the season. For example, if there are 170 days in the season, then the scale amount reduces by 1/170th each day starting January 10, until the player is signed.

The exact percentage increase for the fourth (second team option) year and qualifying offer varies by the player's draft position. For the fourth (second team option) year it is 26.1% for the first pick, scaling up to 80.5% for the 30th pick. For the qualifying offer it's 30.0% for the first pick, scaling up to 50.0% for the 30th pick.

Teams have until the October 312 preceding the player's second regular season to exercise their option for the player's third season. Likewise, they have until the October 312 preceding the player's third regular season to exercise their option for the player's fourth season (see question number 59 for more information on options). If the team invokes both options (keeping the player for all four seasons) and submits a qualifying offer after the fourth season, then the player becomes a restricted free agent (see question number 44 for more information on restricted free agency). If the team declines either option, then the player enters free agency as an unrestricted free agent.

However, if the team declines either option and the player becomes a free agent, the team cannot re-sign him to a salary greater than he would have received had the team exercised its option. In other words, teams can't decline an option year in order to get around the rookie salary scale and give the player more money. This applies to all types of signing, including the Bird exception, the Mid-Level exception, and cap room.

The qualifying offer for a player coming off a rookie scale contract is a defined percentage over his fourth-year salary. The percentage is set in the rookie scale based on the player's draft position. However, the player may qualify for a higher or lower qualifying offer based on whether or not he met the "starter criteria" in the previous season, or in the average of the previous two seasons (see question number 44).

A buyout to an international team or organization is the only form of signing bonus allowed in a rookie scale contract (see question number 77). Performance bonuses are allowed in rookie scale contracts, but only with respect to the salary above 80% of the scale amount (see question number 74). Loans are not permitted with rookie scale contracts (see question number 113).

Teams select players in the draft at their own risk. If a player's draft eligibility is contested, the league will investigate. If the player is determined to be ineligible, the team will have forfeited the pick it used to select the player.


1 Dan Rosenbaum analyzed the effectiveness of the salary scale system and concluded that it has resulted in the annual redirection of $200 million from non-veterans to veterans. Rosenbaum's paper currently is unavailable online.
2 Or the next business day, if October 31 falls on a weekend or holiday. For 2011-12 the exercise period is December 9, 2011 to January 25, 2012.

50. What about second round draft picks? What rules do they operate under?

Unlike first round picks, who have a scale salary (see question number 49), second round picks do not have any specific salary restrictions. They may sign for any amount from the minimum to the maximum, but players who last to the second round of the draft seldom command more than the minimum salary.

Also unlike first round picks, teams do not receive a salary cap exception specifically for their second round picks. These players must be signed using cap room or an available exception (see question number 25), such as the Minimum Salary exception or the Mid-Level exception. It is most common for a second round pick to receive the minimum salary and be signed using the Minimum Salary exception. However, since the Minimum Salary exception limits contracts to two seasons, it is not uncommon for teams to use a portion of their Mid-Level exception in order to sign the player for three seasons. This gives the team full Bird rights at the end of the contract, and avoids the Gilbert Arenas provision (see question number 45).

Unsigned second round draft picks do not have a cap hold.

51. What if the team and their drafted player can't agree to a contract? What options does the player have? How long does the team keep his draft rights?

The player's options are limited. What happens depends on a number of factors:

In any of the above cases, if the team does not sign the player in the allotted time, the player can enter the next draft. If the team that selects the player in the next draft doesn't sign him either, he becomes a rookie free agent on the date of the following draft.

When a team signs a first round draft pick within three years after he is drafted, they use the salary scale for the year in which he signs (usually the player signs in the same year he is drafted). After three years they have the option of either using the salary scale or signing him as if he was a free agent -- using their cap room or any available exception, with the standard raises. They can only do the latter if the player did not play intercollegiately in the interim. Such a contract must be for at least three seasons, and the salary in the first season must be greater than 120% of the applicable rookie scale amount.

52. Are draft picks included in team salary? If so, for how much?

Unsigned first round picks are included in team salary immediately upon their selection in the draft. They count as 100% of the scale salary for that pick, unless there is a verbal agreement for a higher salary. An incident occurred in 1997 when Vancouver selected Antonio Daniels with their first pick, and Daniels subsequently revealed in an interview that he and the team had verbally agreed to a contract starting at the maximum allowed salary (120% of the scale amount). Since verbal agreements apply to team salary, the league then changed Daniels' cap figure from the scale amount to 120% of scale.

Once a first round pick signs a contract, his actual salary is included in the team salary, of course.

An unsigned first round pick is removed from team salary if the team and player both agree in writing not to sign any contract through the following June 30. The scale amount is returned to the team salary the following July 1. If the team renounces its draft rights, the player's scale amount is removed from the team salary permanently, and the team relinquishes its draft rights to the player (see question number 54).

If a first round pick signs with a non-NBA team, his scale amount is excluded from the team salary on the date he signs his non-NBA contract or the first day of the regular season, whichever is later. The scale amount goes back onto the team salary on the following July 1 or when his non-NBA contract ends, whichever is earlier. In other words, these cap holds are removed for players playing outside the NBA, but only during the regular season.

Unsigned second round picks are not included in team salary. This is a loophole teams sometimes leverage by trading late first round picks for second round picks in order to clear cap room.

As described in question number 87, the trade value of an unsigned first or second round draft pick is always $0.

53. What if a team likes its first round pick and wants to sign him, but either feels he isn't worth the scale salary or doesn't want to commit to two seasons?

They're stuck. In essence, this makes late first round picks less valuable, because they force teams to make a two-year commitment to a marginal player. In 1996, rather than give their first round pick Travis Knight (29th overall) a three-year guarantee, the Bulls renounced him, making him a free agent.

The guaranteed portion of a rookie scale salary was shortened from three seasons to two with the 2005 CBA.

54. If a first round draft pick is renounced, is he still bound to the salary scale for a first round pick?

No. The salary scale only applies to the team that drafts the player or the team to which the player's draft rights are traded. When Chicago renounced first round pick Travis Knight in 1996, he then signed with the Lakers for one year at the league minimum salary.

Since a renounced draft pick is not constrained by the rookie scale, he is also free to negotiate a larger contract. It is therefore possible for the renouncement to work to the player's advantage.

55. Is there a limit to the length of a contract, or to the amount a player's salary can increase or decrease from year to year?

The maximum years and raises depend on the type of contract, however the "standard" maximum length is four seasons and the "standard" maximum raise is 4.5% -- for example, when a team signs another team's free agent using cap room. The following are exceptions to the standard:

Type of contract Maximum years Maximum raise Notes
Larry Bird exception 5 7.5% See question number 25
Early Bird exception 4 7.5% See question number 25
Non-Bird exception 4 4.5% See question number 25
Non-Taxpayer Mid-Level exception 4 4.5% See question number 25
Taxpayer Mid-Level exception 3 4.5% See question number 25
Room Mid-Level exception 2 4.5% See question number 25
Bi-Annual exception 2 4.5% See question number 25
Disabled Player exception 1 N/A See question number 25
Minimum Salary exception 2 Both seasons at minimum salary See question number 25
First round draft pick 2 plus 2 team option years Defined in salary scale See question number 49
"Arenas" restricted free agents 4 Can have a substantial raise in year 3 See question number 45
Sign-and-Trade 4 4.5% See question number 91
Extensions (veteran) 41 7.5% of the salary in the first season of the extension See question number 60
Extensions (rookie scale contracts) 51 7.5% of the salary in the first season of the extension See question number 60
Extensions (Designated Players) 61 7.5% of the salary in the first season of the extension See question number 60
Extend-and-Trade 31 4.5% of the salary in the first season of the extension See question number 94

The raise limit also applies to salary decreases -- for example, since the Larry Bird exception limits raises to 7.5% of the first-year salary, the salary may also decrease by up to 7.5% of the first-year salary.

The percentage (4.5% or 7.5%) applies to regular salary, i.e., the player's base salary, not including signing bonuses or anything treated like a signing bonus (see question number 75), and not including incentives (see question number 74). The maximum amount (determined from the base salary in the first season) applies to both the base salary and the total salary (which includes signing bonuses and anything treated like a signing bonus). Because of this rule, certain combinations of signing bonuses and non-guaranteed salary are incompatible.

For example, suppose a team has $5 million of cap room and uses it to sign a player for four years with 4.5% raises. The first three seasons are fully guaranteed and the fourth season is non-guaranteed. The player also receives a 15% signing bonus. This contract would not be legal. Here's why (see question number 75 for more information on the allocation of signing bonuses):

Year Base salary Guarantee Signing bonus Total
1 $3,946,719 100% $1,053,281 $5,000,000
2 $4,124,322 100% $1,053,281 $5,177,602
3 $4,301,924 100% $1,053,281 $5,355,205
4 $5,532,807 0% $0 $5,532,807

The base salary in the first season is $3,946,719, and 4.5% of that amount is $177,602 which is the maximum amount that either the base salary or the total salary (the rightmost column) can change from year to year. However, in this example the base salary changes from the third season to the fourth season by $1,230,883 -- which makes this contract illegal. In fact, it is not possible to construct a legal four-year contract with 4.5% maximum raises, utilizing $5 million in room where the final season is non-guaranteed and containing a 15% signing bonus. This contract could be fixed in a number of ways, by adjusting the raises, the guarantees and/or the signing bonus. For example, the following contract is legal with a 58% guarantee in the final season:

Year Base salary Guarantee Signing bonus Total
1 $4,130,582 100% $869,418 $5,000,000
2 $4,316,458 100% $869,418 $5,185,876
3 $4,502,334 100% $869,418 $5,371,752
4 $4,688,210 58% $504,262 $5,192,472

Incidentally, raises take effect July 1 of each year.


1 Extensions always include the remaining seasons of the current contract.

56. Are raises compounded? In other words, is each raise a percentage of the previous year's salary?

No. Raises are limited to a percentage of the base salary in the first season of the contract. Raises in extensions are based on a percentage of the base salary in the first season of the extension. If a team signs another team's free agent (4.5% maximum raises) to a four-year contract starting at $10 million, the maximum raise is $450,000 each year. This player's four-year salary would be:

Year 1 $10,000,000
Year 2 $10,450,000
Year 3 $10,900,000
Year 4 $11,350,000

57. Are there restrictions based on a player's age?

There are rules regarding the minimum age for draft eligibility. A player can't play in the NBA unless he's been eligible for at least one draft (he doesn't have to actually be drafted, he just has to have been eligible). A player who is eligible for a draft must be at least 19 during the calendar year of that draft, and if a U.S. player, at least one year removed from high school. In addition, at least one of the following must be true:

The league and players association decided to table the discussion of raising the age for draft eligibility in order to facilitate a settlement of the 2011 lockout and start the 2011-12 season on December 25, 2011. The sides will form a joint committee to review and implement new rules regarding the age of eligibility. The rules from the 2005 CBA have been left in place until this committee has made its determinations (only the timing of contracts for players playing professionally outside the U.S. was changed in the meantime).

There are also rules which prevent teams from padding extra years onto contracts for older players. The "Over-36" rule is described in question number 58.

58. What is the "Over-36" rule?

The Over-36 rule addresses a loophole. Suppose a player is nearing retirement, and he wants to finish his career with a team that can only offer him their Non-Taxpayer Mid-Level exception. If they want to give this player more money than is allowed by the exception, they could instead offer a contract for more years than they expect the player to play -- continuing to pay the player past his retirement.

For example, suppose the Non-Taxpayer Mid-Level exception is $5 million. With 4.5% raises, a three-year contract would total $15.675 million. But if they added a fourth year to the contract, the salary would total $21.35 million. If the player retires after three seasons and continues drawing his salary for the additional season, then he effectively will be paid $21.35 million for three years' work. In essence, they are giving the player a three-year contract with additional deferred compensation.

This loophole is addressed by the Over-36 rule.

Certain contracts that extend past the player's 36th birthday are deemed Over-36 contracts. In an Over-36 contract, the presumption is that the seasons at the end of the contract are likely to come after the player retires. Therefore, the salaries in those seasons are classified as deferred compensation as described above. This is significant because deferred compensation is charged to team salary in the year it is earned, not the year it is paid.

As with the previous example, suppose the Non-Taxpayer Mid-Level exception is $5 million, and a 34-year-old player signs a contract with 4.5% raises. Here are the three-year and four-year versions of the contract:

Season Three-year Four-year
1 $5 million $5 million
2 $5.225 million $5.225 million
3 $5.45 million $5.45 million
4 N/A $5.675 million
Total $15.675 million $21.35 million

The four-year contract is classified as an Over-36 contract. In this contract, salary in the fourth season is classified as deferred compensation earned in the first three seasons. Therefore, the $5.675 million from the fourth season counts toward team salary in each of the first three seasons, in proportion to the salary in each of those seasons. The next chart shows the salary paid, the amount reclassified as deferred salary, and the total (paid plus deferred) counted against the cap in each season, at the time the contract is signed:

Season Paid Deferred Team Salary Amount
1 $5,000,000 $1,810,207 $6,810,207
2 $5,225,000 $1,891,667 $7,116,667
3 $5,450,000 $1,973,126 $7,423,126
4 $5,675,000 $0 $0
Total $21,350,000 $21,350,000

Some things to note from this chart:

But this shifting of salaries creates a big problem -- note that the cap amount in the first season is now greater than the team's $5 million Non-Taxpayer Mid-Level exception! To make the contract fit within the exception, the salaries need to be reduced:

Season Paid Deferred Team Salary Amount
1 $3,670,960 $1,329,040 $5,000,000
2 $3,836,154 $1,388,847 $5,225,000
3 $4,001,347 $1,448,653 $5,450,000
4 $4,166,540 $0 $0
Total $15,675,000 $15,675,000

As before, the salary from the fourth season is divided up and shifted onto the first three seasons, in proportion to the salaries earned in those seasons. In the first season, the reduced salary and deferred amounts now add up to exactly $5 million -- so the total fits within the team's Non-Taxpayer Mid-Level exception.

Note the effect the Over-36 rule has on the contract -- since the salary had to be reduced, the player earns exactly the same amount ($15.675 million) over four years as he would have earned with a three-year contract that was not subject to the Over-36 rule. In other words, the Over-36 rule completely eliminates the advantage of adding the additional year onto the contract, effectively closing the loophole described earlier. It does not matter how many additional years are added on -- as more years are added, more salary is classified as deferred and counted against the cap in the earlier seasons, and the base salary in the earlier seasons has to be reduced further to fit the total within the maximum allowed amount. The player therefore receives no more money in a longer contract than he would receive in a three-year contract.

It is often reported that the Over-36 rule prevents teams from signing older players to long contracts, but this is false. Teams are not prevented from signing longer contracts -- the Over-36 rule simply removes any incentive for doing so.

The Over-36 rule is mostly a remnant of earlier CBAs, when contracts could be longer and therefore more salary could be paid after the player retires. With contracts now limited to four or (in a few cases) five seasons, the overall impact of the Over-36 rule has been reduced.

So what contracts are classified as Over-36 contracts, and in those contracts, what are the zero years? Like everything else related to this rule, it's complicated -- it depends on the length of the contract, the player's birthdate and age when the contract is signed, and whether the player was a full Bird free agent.

The following chart indicates what free agent contracts are subject to the Over-36 rule, and which years are zero years. For example, if a 33-year-old Qualifying Veteran Free Agent (a player with full Bird rights) re-signs with his prior team for five seasons, then his contract is classified as Over-36, and the fifth season is considered a zero year. "N/A" indicates that the contract is not Over-36 because it is specifically excluded from the Over-36 rule in the CBA1.

Qualifying Veteran Free Agents Other Free Agents
Age 4 year contract 5 year contract 4 year contract
32 N/A 5 N/A
33 or 34 N/A 5 4
35+ 4 4 and 5 4

So why the odd span of time ending September 30? For the Over-36 rule only, seasons are defined to commence on October 1. If the player's birthday is October 1 or later, then the season will commence before his birthday. Also, if the player was born during the July Moratorium and signs his contract within the first five days after the July Moratorium ends, then he is not charged with being a year older. For example, if the July Moratorium ends on July 7, the player's birthday is July 3, and he signs his contract on July 9 -- just after turning 33 -- then for Over-36 purposes he is considered to be 32 when he signs his contract.

Other notes about Over-36 contracts:

The Over-36 rule has an additional component. As the player continues playing, and therefore proves the assumption (that the player will retire before earning all his salary) wrong, the deferred salary stops being classified as deferred, and is shifted back onto the zero years of the contract. This begins to happen two seasons before the first zero year, and continues for each remaining year of the contract. In the previous example, the first (and only) zero year was the fourth season of the contract, so beginning with the second season, the team salary amount is readjusted. Here is the remainder of the contract at that point in time (copied from the previous example):

Season Paid Deferred Team Salary Amount
2 $3,836,154 $1,388,847 $5,225,000
3 $4,001,347 $1,448,653 $5,450,000
4 $4,166,540 $0 $0

To readjust the team salary amount, they take that season's team salary amount, plus the cap amounts for the following two seasons (or however many remain if there are fewer than two), average them together, and distribute that amount evenly among those seasons. In this case there are three seasons with team salary amounts of $5.225 million, $5.45 million and $0. The average of these amounts is $3,558,333. This becomes the team salary amount for those three seasons:

Season Paid Team Salary Amount
2 $3,836,154 $3,558,333
3 $4,001,347 $3,558,333
4 $4,166,540 $3,558,333

Prior to the third season they repeat this process, averaging the team salary amounts for the third and fourth seasons. Since these team salary amounts were both $3,558,333, the average doesn't change:

Season Paid Team Salary Amount
3 $4,001,347 $3,558,333
4 $4,166,540 $3,558,333

Repeating the process prior to the fourth season, the team salary amount stays the same:

Season Paid Team Salary Amount
4 $4,166,540 $3,558,333

1 A 32-year-old whose birthday falls after the July Moratorium and before September 30, and who signs a contract prior to his birthday is considered to be 33 for the purpose of the Over-36 rule.

59. What are option clauses? What kind of option clauses are there?

An option clause allows a contract to be extended for one additional season after the date it is scheduled to end. For example, a three-year contract with an option for the fourth year means that if the option is exercised, then the contract extends through the fourth season, but if the option is not exercised, then the contract ends after the third season. Once exercised, an option cannot be revoked (for example, a player cannot invoke an option on June 20 and change his mind on June 25). Conditional options are not allowed -- the availability of the option may not be contingent on some condition, such as the number of games the team wins or the player's points per game1.

There are three types of options:

A contract may not contain more than one option in the same season (for example, the last season cannot contain both a player option and a team option). In fact, a contract may not contain more than one option at all, with the following two exceptions:

Here's a summary of the differences between an option and an ETO:

All contracts with player options contain a clause that indicates whether the player receives his salary for the option year in the event his contract is terminated (i.e., he is waived and clears waivers) prior to invoking his option. See question number 66 for an interesting implication of this rule.

While the salary in an option year may be greater (but not less) than the salary in the prior season, all other contract terms, including the payment schedule and the percentage of salary that is guaranteed, must be the same as the prior season.

Options have a window of time during which they may be exercised. The specific opening and closing dates of this window are a matter of individual negotiation, except in the following circumstances:

Interestingly, there is no mechanism to notify the league that an option or ETO will not be exercised. Teams and players might want to do this in order to make the player tradable after the season ends but before July 1 (see question number 100), or because the player wants to be traded to a team which does not want the player if he might become a free agent. As described in question number 62, under these circumstances the team and player can mutually amend the contract to remove the option or ETO.

Player options were previously used as a way to give the player more money. A long-term deal was agreed upon with a player option after the player obtained Larry Bird rights. The player invoked the option, became a free agent, and then the team & player signed a new contract for more money using the Bird exception. However they closed this loophole by preventing player options and ETOs before all but the last season of a contract.


1 Conditional options can be simulated using non-guaranteed salary.
2 Or the next business day, if October 31 falls on a weekend or holiday. For 2011-12 the window is open from December 9, 2011 to January 25, 2012.

60. Can existing contracts be extended?

Contracts for fewer than four seasons may not be extended. Longer contracts can be extended under certain circumstances:

Type of contract Can be extended
Four, five or six1 seasons Three years after contract signed
Extended contracts Three years after extension signed
Renegotiated contracts Three years after renegotiation signed, if a salary was renegotiated upward by more than 10%
Rookie scale contracts From the day following the July moratorium to the October 31 preceding the player's last option season2

The rules for extensions depend on whether the contract being extended is a rookie scale (first round draft pick) contract, or other (veteran) contract.

Rookie scale contract extensions:

Rookie scale contracts may be extended for up to four seasons beyond the last option season in the contract, bringing the total contract length to five seasons. Teams can also select one player (called their "Designated Player") who can receive a five-year extension, bringing the total contract length to six seasons. A team can have at most one player on its roster whom they have designated for a longer extension, plus at most one player designated by another team whom they acquired in trade.

For example, the Oklahoma City Thunder extended Russell Westbrook's rookie scale contract in 2011 (with the extension taking effect in 2012-13). They selected Westbrook as their Designated Player and extended him through 2016-17 (five new years, six total). The Thunder therefore are not allowed to designate another player for a five-year extension (Kevin Durant signed his five-year extension under the 2005 CBA) until 2017, as long as Westbrook is on their roster. However, they can trade for one (and only one) player who was designated by another team.

The complete list of Designated Players is as follows:

Team Designated Player Expires
Chicago Derrick Rose 2017
Houston James Harden 2018
Indiana Paul George 2018
LA Clippers Blake Griffin 2018
Oklahoma City Russell Westbrook 2017
Washington John Wall 2019

The salary in the first year of an extension to a rookie scale contract (other than for a team's Designated Player) may be any amount up to the player's maximum. This is usually the 0-6 year maximum, which is based on 25% of the salary cap (see question number 16). However, a player may receive up to the 7-9 year maximum, which is based on 30% of the cap, if he meets any of the following criteria (called the "5th Year 30% Max criteria"):

The salary in the first year of an extension to a rookie scale contract for a team's Designated Player must be the player's maximum salary. If the player has also met the 5th Year 30% Max criteria, the player's salary may be any amount between the 0-6 year maximum and the 7-9 year maximum.

Since the maximum salaries for the following season are not known at the time the extension is signed, and the player may meet the 5th Year 30% Max Criteria during his fourth season (also after the extension is signed), the following amounts can be specified in lieu of a specific salary:

When the first season of the extension arrives and the maximum salaries for that season have been defined, the salaries in the extension are filled-in (or amended downward, if necessary).

Extensions for players signed using the 5th Year 30% Max criteria must be at least four seasons (not including the fourth season of the player's rookie scale contract).

The following players were signed using the 5th Year 30% Max criteria:

Team Player
Chicago Derrick Rose
Houston James Harden3
Indiana Paul George
LA Clippers Blake Griffin
Sacramento DeMarcus Cousins
Washington John Wall

Raises in a rookie scale extension are limited to 7.5% of the salary in the first year of the extension4. If the salary in the first year of the extension is filled-in or amended downward, the salaries in all subsequent seasons are filled-in or amended as well.

Rookie scale contracts can be extended even if the team receives the player in trade. For example the Oklahoma City Thunder traded James Harden to the Houston Rockets on October 27, 2012, and the Rockets signed him to an extension four days later.

A rookie scale contract can be extended through an extend-and-trade transaction, although there is no benefit in doing so (see question number 94).

Veteran extensions:

Extensions to contracts that are not rookie scale contracts (i.e., veteran extensions) may be signed up to June 30, the day before the player would have become a free agent.

A contract that contains an Early Termination Option (ETO) cannot be extended if the ETO is exercised (ending the contract early). A contract with an option can be extended if the player (or team) opts-in. A contract with an option can also be extended if the player (or team) opts-out, as long as the extension adds at least two new seasons onto the contract (excluding any new option year) and the salary in the first year of the extension is not less than the salary in the non-exercised option year. See question number 59 for more information on options and ETOs.

A veteran extension can contain an option (player or team), but cannot contain an ETO.

If the player agrees to waive a portion of his trade bonus in order to facilitate a trade (see question number 99), his contract may not be extended for six months following the trade.

Veteran extensions are limited to four seasons, including the seasons remaining on the current contract. Even if the extension is signed in late June, the current season counts as one full season toward the total. For example, a contract with two seasons remaining may be extended for up to two additional seasons. However, an extension signed in conjunction with an Extend-and-Trade transaction (see question number 94) is limited to three seasons, including the seasons remaining on the current contract.

The salary in the first year of a veteran extension may be any amount up to 107.5% of the player's previous salary5, but no more than the player's maximum salary in that season (i.e., the maximum salary the player can receive if he were to sign a new contract that year as a free agent -- see question numbers 16 and 17).

Since the maximum salaries for an upcoming season are not known at the time the extension is signed, it is possible that the extension will specify a salary that is greater than the maximum salary. If this happens, the salaries in the extension are amended downward once the maximum salaries are defined.

Raises in each year of a veteran extension are limited to 7.5% of the salary in the first year of the extension6. If the salary in the first year of the extension is amended downward, the salaries in all subsequent season are amended as well. If the contract being extended contained bonuses, then the extension must contain the same bonuses -- teams can increase or decrease the bonus amounts by up to 7.5%, but they can't leave them off.

An extension can contain a signing bonus, which is payable no sooner than July 1 of the year the extension takes effect. The signing bonus may be for up to 15% of the total salary of the extension. The signing bonus is charged to team salary in all guaranteed years of the extension, in proportion to the percentage of salary in each season that is guaranteed. For example, if an extension adds two additional years to a contract, with the first 100% guaranteed and the second 50% guaranteed, then 2/3 of the signing bonus is charged to the cap in the first year, and 1/3 of the signing bonus is charged to the cap in the second year. If the extension is entirely non-guaranteed, then the entire signing bonus is charged to the first season of the extension.

If the team is under the cap when the extension is signed, then the signing bonus may be paid before the first season of the extension (i.e., it can be paid right away). When this happens, the extension is treated as a renegotiation (see question number 61). The signing bonus is charged to team salary in all remaining years of the current contract and the extension, in proportion to the percentage of salary in each season that is guaranteed (as described in the previous paragraph). If all remaining years of the contract and the extension are entirely non-guaranteed, then the entire signing bonus is charged to the season in which the extension is signed. The signing bonus cannot exceed 15% of the total salary in the extension, and the portion of the signing bonus charged to the year in which the extension is signed also can't exceed the team's cap room.

Other rules related to extensions:


1 Six-year contracts are not permitted under the current CBA, but some six-year contracts remain from the 2005 CBA.
2 Provided the team had previously picked up the option for that season. The deadline is the following business day if October 31 falls on a weekend or holiday. For 2011-12 the window is open from December 9, 2011 to January 25, 2012.
3 Signed as a 5th Year 30% Max player contingent upon meeting the criteria, but did not meet the criteria so received the 25% maximum.
4 Raises in a rookie scale extension for a team's Designated Player must be 7.5%.
5 If the player has played with his current team for 10 or more seasons and there was a decrease in salary from the second-to-last to the last season before the extension, then the salary in the first year of an extension can be 107.5% of the contract's average salary (back to when the contract was signed or most recently extended), if this is higher than 107.5% of the salary in the last season before the extension.
6 Except extend-and-trade transactions, which are limited to 4.5% (see question number 94).

61. Can existing contracts be renegotiated?

A contract for four or more seasons can be renegotiated after the third anniversary of its signing, extension, or previous renegotiation (if the previous negotiation increased any season's salary by more than 4.5%). Contracts for fewer than four seasons cannot be renegotiated. A contract cannot be renegotiated between March 1 and June 30 of any year.

Only teams under the cap can renegotiate a contract, and the salary in the then-current season can be increased only to the extent that the team has room under the cap (and cannot increase the player's salary beyond the maximum salary). A renegotiation can only be used to provide a salary increase -- players can't take a "pay cut" in order to create more cap room for the team.

If the player agrees to waive a portion of his trade bonus in order to facilitate a trade (see question number 99), his contract may not be renegotiated for six months following the trade.

Every category of compensation (base salary, likely bonuses, and unlikely bonuses) that are increased in the renegotiated season must also increase in all subsequent seasons of the contract. Raises (and decreases) in subsequent seasons are limited to 7.5% of the salary in the first renegotiated season.

A renegotiated contract can be extended simultaneously (see question number 60). If a player's contract is extended and renegotiated simultaneously in this manner, his salary may not decrease by more than 40% from the last season before the extension (after it is renegotiated) to the first season of the extension. For example, if the salary in the last season of a contract is renegotiated to $10 million and the contract is simultaneously extended, the salary in the first season of the extension cannot be less than $6 million.

Other rules for renegotiations:

62. In what other ways can an existing contract be modified?

Other than extensions (see question number 60) and renegotiations (see question number 61), a team and player can mutually modify an existing contract as follows:

The contracts of both Dwight Howard and Chris Paul were amended during the 2011-12 season. Paul was traded from the Hornets to the Clippers during the preseason with one season remaining on his contract, plus a player option for 2012-13. The Clippers would not agree to the trade without a two-year commitment from Paul, so Paul agreed to alter his contract to remove the option (locking him in for 2013-13) as a part of the trade. Howard had an ETO in 2012, and was widely reported to be on the verge of exercising his ETO and leaving the Magic as a free agent. Right before the 2012 trade deadline Howard decided to remain with the Magic through 2012-13, and agreed to the Magic's request to alter his contract to remove his ETO.

63. What are the rules for retired players? What if the player suffers a career-ending injury?

There's nothing binding about a player announcing his retirement. The player can still sign a new contract and continue playing (if he's not under contract), or return to his team (if he is still under contract) and resume his career.

The only exception to this is when a player is still under contract, wants to quit, and his team doesn't want to let him out of his contract. Under these circumstances the player can file for retirement with the league. The player is placed on the league's Voluntarily Retired list (see question number 79), forgoes his remaining salary, and cannot return to the league for one year. The latter requirement prevents players from using retirement as an underhanded way to change teams, and can be overridden with unanimous approval from all 30 teams. For example, guard Jason Williams signed with the LA Clippers in August 2008, then changed his mind the following month, announcing his retirement. He applied for reinstatement in early 2009, but his request was denied by a vote of 24-6. Williams later signed with the Orlando Magic once the one-year anniversary of his retirement announcement had passed.

Any money paid to a player is included in team salary, even if the player is no longer playing or has retired.

There is one exception whereby a player can continue to receive his salary, but the salary is excluded from team salary. This is when a player suffers a career-ending injury or illness. The team must waive the player, and can apply for this salary exclusion following a waiting period. Only the player's team at the time the injury or illness was discovered (or reasonably should have been discovered) can apply for this salary exclusion.

The waiting period depends on the number games in which the player played in the season:1

The determination as to whether an injury or illness is career ending is made by a physician jointly selected by the league and players association. The determination is based on whether the injury or illness will prevent the player from playing for the remainder of his career, or if it is severe enough that continuing to play constitutes a medically unacceptable risk.

If the injury exclusion is granted, the player's salary is removed from the team salary immediately.

If the player later "proves the doctors wrong" and resumes his career, then his salary is returned to the team salary when he plays in his 25th game1 in any one season, for any team. This allows a player to attempt to resume his career without affecting his previous team unless his comeback is ultimately successful. If the 25th game was a playoff game, then the player's salary is returned to the cap effective on the date of the team's last regular season game (i.e., the returned salary counts toward the luxury tax).

There are a few additional nuances to the salary exclusion:


1 They count only regular season and playoff games, and do not count preseason games. This was not specified prior to the 2011 CBA. During the 2008-09 season Darius Miles (whose salary was excluded from Portland's cap) played in 10 games for Boston and Memphis (the limit was 10 games at the time), which included preseason games. The league counted the preseason games toward the total, and returned Miles' salary to Portland's cap.

64. Are contracts always guaranteed?

There are only a few specific types of contracts that must be guaranteed. All other guarantees are a matter of individual negotiation between the player and team. In practice, the majority of NBA contracts (especially for established veterans) are fully guaranteed. Non-guaranteed salary is most often used for fringe players (either at the beginning or end of their careers) or for the later years of long-term contracts (often in conjunction with benchmarks that allow the salary to become fully guaranteed over time).

Only a player's base salary can be guaranteed -- not bonuses or incentives. The percentage of base salary that is guaranteed cannot increase from one year to the next (e.g., if 50% of a player's salary is guaranteed one season, then no more than 50% can be guaranteed in any subsequent season of the contract).

There are actually several types of guarantees:

Each type of guarantee is independently negotiated, so, for example, a contract might be fully guaranteed for injury or illness, but not for mental disability. Players do not qualify if their condition was caused by participation in a prohibited activity (for example, skydiving), suicide, alcohol or substance abuse.

Some salaries are only partially guaranteed, and/or the guaranteed amount can change based on certain conditions. For example, the salary in the final season of a player's contract might be unprotected for lack of skill, with the protection changing to full if the team has not requested waivers on the player (see question number 65) prior to the team's first regular season game of that season1. The protection can even be tied to performance benchmarks -- for example a player's guaranteed amount might increase if he played 1,600 minutes the previous season. However, in practice these types of performance-based guarantees are rare.

The required guarantees are as follows:

In addition, on January 102 the base salary in all contracts becomes guaranteed for the remainder of that season (except for one case -- see question 67). A player must clear waivers before this date, so teams have to waive players by 5:00 PM Eastern Time on January 7th in order to have them off their rosters before January 10.

Also, if a player is waived prior to January 10 but is injured as a direct result of playing basketball with his team, then his salary is guaranteed until he is ready to play again or until the end of that season, whichever comes first. However, this does not apply to players whose contracts utilize Exhibit 9 of the Uniform Player Contract (see question number 70).

Due to the rules for the allocation of signing bonuses and the limits on raises, certain combinations of signing bonuses and non-guaranteed salary are incompatible. See question number 55 for more information.


1 A non-guaranteed season can be similar in function to a team option. Teams often prefer the additional flexibility provided by non-guaranteed salary -- the guarantee can change on a date of their choosing, they can guarantee partial amounts, and they can attach different conditions to the protection.
2 February 10 in 2011-12.

65. What happens when a player is released? What are waivers? What is the Stretch provision?

Waivers are a temporary status for players who are released by their team. A team initiates the waiver process by "requesting waivers" on the player they are releasing. The player stays "on waivers" for 48 hours (including weekends and holidays), during which time other teams may claim the player and assume his contract. If no team has claimed the player before the end of the waiver period (which is always 5:00 PM Eastern Time), he "clears waivers." The player's contract is terminated and he becomes a free agent. The only way to terminate a contract early (other than with an ETO -- see question number 59) is through the waiver process.1

The term "waived" is ambiguous -- it can be used as a verb to refer to a waiver request (for example, "The Bulls just waived Michael Jordan"), or as an adjective to refer to a player who has cleared waivers (for example, "A team can sign a waived player."). This ambiguity is usually easily resolved by the context in which the term is used. In this document the term "waived" is used as an adjective, unless otherwise made clear.

A team can claim a player on waivers only if one of the following is true:

If a team makes a successful waiver claim, it acquires the player and his existing contract, and pays the remainder of his salary -- the waiving team is relieved of all responsibility for the player. There is a fee of $1,000, payable to the league office, for claiming a player on waivers. If more than one team tries to claim a player on waivers, the team with the worst record gets him.

If the player clears waivers he becomes a free agent, and is free to sign with the team of his choice. The player's roster spot is freed-up as soon as the team places the player on waivers. It can sign a new player or acquire one via trade immediately, without waiting for the player to be claimed or to clear waivers.

The waiving team continues to pay the guaranteed portion of the terminated contract (see question number 64). For contracts signed or extended before the current CBA took effect, the team and player may negotiate a revised payment schedule (see question numbers 67 and 68). The revised payment schedule may call for the guaranteed portion of the player's salary to be paid over a longer or shorter period of time than originally specified in the contract, or even as a lump sum.

Individually negotiated revisions to the payment schedule are not allowed for contracts signed or extended under the current CBA2. For these contracts or extensions the remaining guaranteed salary for a waived player is "stretched" and paid in equal amounts over a greater time span, as follows:

The effect of stretched players on the team's salary cap is described in question number 66.

When a player clears waivers and signs with a new team, his new salary is a matter of negotiation. Few players are actually claimed while on waivers, since the claiming team inherits his entire contract. It is far more common for teams to wait for the player to clear waivers, and then sign him to a much smaller (even minimum salary) contract.

Other rules related to waivers:


1 This does not apply to 10-day contracts, which can be terminated upon written notice to the player, without utilizing the waiver process.
2 In the special case of a contract signed under the 2005 CBA and extended under the 2011 CBA, individually negotiated revisions to the payment schedule are allowed for the seasons that were on the contract prior to the extension.
3 Therefore the effective deadline for stretching the salary of a player with one season remaining on his contract is August 31. If the player is waived after this date, his one remaining season will continue to be paid (and charged to the cap) normally.
4 Per an arbitration settlement on June 29, 2012, the league and players association agreed that Chauncey Billups and J.J. Hickson would have full Bird rights in the 2012 offseason, and that Jeremy Lin and Steve Novak would have Early Bird rights. This assigned greater Bird rights to Novak than should have been allowed -- as a player who was traded while playing under a one-year contract, Novak should have become a non-Bird free agent (see question number (100).
5 For contracts with options or ETOs, the end date of the contract is interpreted as the June 30 before an option year, and the June 30 after an ETO year.
6 Interestingly, by the letter of the rule a player could be traded to a third team, waived by the third team, and be eligible to re-sign with his original team before the waiting period expires. However, the league likely would disallow such signing per the general prohibition on circumvention (see question number 105) if this was done in order to circumvent the rule.
7 The salary can doesn't adjust until the end of the moratorium, so the previous season's cap is used to determine whether a team in this situation has the necessary cap room to make a waiver claim.

66. How do released players apply to team salary? What is set-off?

Guaranteed salary must be paid even if the player is released, and continues to be included in team salary after the player is waived.1 For example, if a player is waived with $10 million in guaranteed base salary remaining on his contract, then that $10 million will be included in team salary. If a player is waived part-way through a season, then the portion of team salary that is charged to the cap for that season reflects either the guarantee or the salary that was actually paid, whichever is greater. For example, if a player has a $6 million salary with $3 million guaranteed and is waived 1/3 through the season, then $3 million (reflecting the 50% that is guaranteed) continues to be included in the team salary. If instead he is waived 2/3 through the season, then $4 million (reflecting the salary actually paid) continues to be included. Players on non-guaranteed "summer contracts" are not included in team salary at all unless they make the team's regular season roster (see question number 70).

As described in question number 65, if the contract or extension was signed under the previous CBA, then the team and player may negotiate a revised payment schedule. If the contract or extension was signed under the current CBA, the remaining guaranteed salary is paid over twice the number of remaining years, plus one, per the Stretch provision:

The remainder of the contract includes any seasons following an Early Termination Option (ETO), but not a season following a player or team option. However, as mentioned in question number 59, all contracts with player options contain a clause indicating whether the player receives his salary for the option year in the event he is waived before the option is picked-up. This clause states that the benefit is "to the same extent" as if the option had been exercised. The league interprets this to mean that the team salary is charged to all seasons of the contract, including the unexercised option season. For example, when Derek Fisher was waived by the Houston Rockets during the 2011-12 season, his player option for the 2012-13 season was unexercised. His remaining guaranteed salary (he agreed to take less in a buyout arrangement) was charged to the Rockets' cap in both 2011-12 and 2012-13.

If another team signs a player who has cleared waivers, the player's original team is allowed to reduce the amount of money it still owes the player (and lower their team salary) by a commensurate amount. This is called the right of set-off. This is true if the player signs with any professional team -- it does not have to be an NBA team. The amount the original team gets to set off is limited to one-half the difference between the player's new salary and the minimum salary for a one-year veteran (if the player is a rookie, then the rookie minimum is used instead).

For example, suppose a fifth-year player is waived with one guaranteed season remaining on his contract for $5 million. If this player signs a $1 million contract with another team for the 2011-12 season, his original team gets to set off $1 million minus $762,195 (the minimum salary for a one-year veteran in 2011-12), divided by two, or $118,902. The team is still responsible for paying $4,881,098 of the original $5 million. Note that between his prior team and new team the player will earn a combined $5,881,098, which was more than he earned prior to being waived.

Teams and players may negotiate a waiver of the team's set-off rights. Typically this is done when a contract is altered as part of a buyout (see question number 67), but not at other times.3


1 The exception is the Amnesty provision, which does remove the player's salary from team salary. See question number 69 for details.
2 A team is not permitted to stretch the team salary charge if in any future season the team salary charges for all the team's waived players (and other former players) would add up to more than 15% of the salary cap for the season in which the player is waived. For example, if a player is waived in 2011-12, the team cannot elect to stretch the player's team salary charge if the sum of the team salary charges for all of its waived players in any future season would exceed $8,706,600 (15% of the salary cap in 2011-12). Teams are not allowed to stretch only a portion of a waived player's salary, either to conform to the 15% limit, or for any other reason.
3 Teams typically do not waive their set-off rights when waiving players through the amnesty process.

67. What is a contract buyout?

Sometimes players and teams decide to divorce each other. They do this by mutually agreeing that:

After the player clears waivers, he and his former team are free to go their separate ways. There is a quid-pro-quo between the player and team regarding contractual obligation and salary -- in exchange for gaining his freedom, the player agrees to give the team a break on the remaining salary he is owed.

But there's a twist, which needed an arbitrator's ruling to resolve. As detailed in question number 64, on January 10 all contracts become guaranteed for the remainder of that season. Although compensation protection ensures the player is paid after he is waived, the compensation protection does not kick-in if the player is waived after January 10, because the player does not lose any salary. Even though the team and player can mutually agree to reduce or eliminate the player's compensation protection, he is still owed his full salary if waived after January 10.

This was challenged by John Starks during the 1999-2000 season. Starks had been traded to the Bulls, and wanted to sever ties with the team after January 10. The arbitrator ruled that in the last season of a player's contract a team and player can choose to eliminate the protection that kicks-in on January 10. Starks and the Bulls were therefore free to walk away from each other with no money owed.

The Voluntarily Retired List (see question number 79) can also be utilized when the player wishes to end his employment with his team. However, since the player is not free to sign with another team, it is typically utilized when the player really intends to retire, and not when the parties are simply seeking a divorce.

68. How do buyouts affect team salary?

Any guaranteed salary still owed to the player as the result of a buyout continues to be included in team salary, just as with any waived player. See question number 66 for details.

69. What is the Amnesty provision?

Amnesty is a one-time opportunity for teams to release one player via the waiver process (see question number 65) and remove him from their team salary and luxury tax computations. For a player to be eligible for the Amnesty provision he must be on his team's roster continuously from July 1, 2011 to the date he is amnestied, without any new contract, extension, renegotiation or other amendment to his contract in the meantime. Players who were waived prior to July 1, 2011 and are still receiving guaranteed salary are also eligible. Teams cannot amnesty players they sign, receive in trade, extend, renegotiate, or otherwise amend after July 1, 2011.

Amnesty can be used prior to the 2011-12 through 2015-16 seasons, although teams may use the provision only once in total -- not once per season. For the 2011-12 season the Amnesty provision was available from December 9-16, 2011. For the 2012-13 through 2015-16 seasons it is available for the first seven days that follow the July moratorium (see question number 104). The waiver period for amnestied players is 48 hours, the same as for all other waivers.

Players waived using this provision are not counted in team salary (see question number 14) or luxury tax (see question number 21) computations, except for the following:

As with any other waived player, teams must continue to pay the guaranteed base salary of their amnestied players. The player's full salary comes off the team salary as soon as he is placed on waivers.

Also as with any other waived player, another team may place a waiver claim in order to acquire the player before he clears waivers (see question number 65). But amnesty is different from the normal waiver process in that it allows teams to make either a full or partial waiver claim. When a team makes a full waiver claim it acquires the player, assumes his full contract, and pays all remaining salary obligations (and the waiving team has no further salary obligation to the player). Full waiver claims have precedence over partial waiver claims -- if one team makes a full waiver claim and another makes a partial waiver claim, the team making the full waiver claim is awarded the player. If multiple teams make full waiver claims, the player is awarded to the team with the worst record.

A partial waiver claim is a bid for a single dollar amount. If no team makes a full waiver claim, the player is awarded to the team submitting the highest bid in a partial waiver claim. If multiple teams bid the same amount, the player is awarded to the team with the worst record. When a team is awarded a player via a partial waiver claim, it pays the following portion of the player's salary:

The waiving team continues to pay the remainder of the player's salary -- any portion that is not paid by the claiming team1. For example, the New York Knicks amnestied Chauncey Billups in 2011 with one year remaining on his contract for $14.2 million. The Los Angeles Clippers submitted the only bid, for $2,000,032. The Clippers paid Billups the amount of their bid, with the Knicks responsible for the remaining $12,199,968. This system (plus the rules for minimum bids, as described below) helps ensure that the waiving team doesn't have to pay the player more than they would have paid had they waived their player without amnesty.

The minimum bid for a partial waiver claim is whichever of the following is larger:

For example, if a 10+ year veteran is amnestied in 2012 with three years remaining on his contract at $10 million each season, and his salary is guaranteed 100% in 2012-13, 60% in 2013-14, and 0% in 2014-15, then the minimum bid for a partial waiver claim is $4 million -- the unprotected amount in the partly-protected 2013-14 season, which is larger than the sum of the minimum salaries for the 2012-13 and 2013-14 seasons. Since the 2014-15 season is completely unprotected, it is ignored when determining the minimum bid amount.

If instead the above player's salary was 100% guaranteed in all three seasons, the minimum bid amount would be $4,200,178 -- the sum of the minimum salaries for a 10+ year veteran for those three seasons.

In order to submit a bid for a partial waiver claim, the bidding team must have cap room equivalent to the portion of their bid that would be charged to team salary in that season, plus the amount of any likely bonuses (see question number 74) for that season. If necessary, teams can create this cap room by waiving non-guaranteed players, but not by making trades. The team must make the cap room available immediately upon being awarded the amnesty claim.

An amnestied player's Bird clock does not reset when he is awarded to the team with the winning bid. In addition, for the purpose of the Bird exceptions (see question number 25) his prior salary is considered to be his full season salary. For example, if a player with a $10 million salary is amnestied, claimed by another team for $1 million, and subsequently becomes an Early Bird free agent, his free agent cap hold (see question number 38) is $13 million (130% of $10 million), and his team can re-sign him for up to 175% of his full $10 million salary (subject to maximum salary restrictions) using the Early Bird exception.

The waiving team may not re-sign or re-acquire the player for the length of his contract (which includes seasons following an ETO or option), and the claiming team is prohibited from trading the player until the following July 1. If the player is eventually traded, his new team becomes the claiming team.

When an amnestied player is claimed on a partial waiver claim and subsequently waived by the claiming team, any guaranteed salary in partially-guaranteed seasons continues to be split among the two teams, in proportion to the split of the full salary. For example, suppose an amnestied player has a $10 million salary that is 50% guaranteed, with the claiming team paying $6 million and the amnestying team paying $4 million. If the claiming team waives the player prior to the start of that season, he will receive $3 million from the claiming team and $2 million from the amnestying team.

The above only applies to salary that was guaranteed at the time the player was amnestied. The claiming team is responsible for any salary that becomes guaranteed subsequent to the amnesty. If the player in the above example earned an additional $1 million of salary protection subsequent to the amnesty (bringing the total protection to $6 million) and is later waived, he will receive $4 million from the claiming team and $2 million from the amnestying team.

If instead the player walks away from the claiming team without being waived or agreeing to a buyout, neither the amnestying team nor the claiming team owes him any additional money. The player is contractually obligated to provide services as a player, and if he walks away he walks away from his contract and not just his current team. Just as the claiming team no longer would be obligated to continue paying his salary in this situation, neither would the amnestying team.

The players on whom the Amnesty provision was used each year are as follows:

Team Year Amnestied player Claimed by Bid amount
Charlotte 2013 Tyrus Thomas
Chicago 2014 Carlos Boozer LA Lakers $3,251,000
Cleveland 2011 Baron Davis
Dallas 2012 Brendan Haywood Charlotte $6,150,000
Denver 2012 Chris Andersen
Golden State 2011 Charlie Bell
Houston 2012 Luis Scola Phoenix $13,525,513
Indiana 2011 James Posey
LA Lakers 2013 Metta World Peace
LA Clippers 2012 Ryan Gomes
Miami 2013 Mike Miller
Milwaukee 2013 Drew Gooden
Minnesota 2012 Darko Milicic
New Jersey/Brooklyn 2011 Travis Outlaw Sacramento Kings $12,000,000
New York 2011 Chauncey Billups LA Clippers $2,000,032
Orlando 2011 Gilbert Arenas
Philadelphia 2012 Elton Brand Dallas $2,100,500
Phoenix 2012 Josh Childress
Portland 2011 Brandon Roy
Toronto 2013 Linas Kleiza
Washington 2012 Andray Blatche

1 Teams have been known to check with other teams in order to "test the waters" prior to deciding whether to amnesty a player, and only amnesty the player if another team indicates it would assume a significant portion of the player's salary in a partial waiver claim.
2 A protected year is one in which any of the salary is guaranteed. Seasons following ETOs and player options are considered to be protected years, but not seasons following team options (see question number 59). The minimum bid does not include salary in seasons that are completely non-guaranteed, however the team with the winning bid is responsible for paying this salary. Interestingly, the CBA does not specify the minimum bid amount when the entire remaining contract is non-guaranteed, although there is no reason for such a contract to be amnestied.

70. What is a summer contract?

A summer contract is typically used for training camp invitees, because the player's salary is not included in team salary until the first day of the regular season. In other words, it is a "make-good" contract -- the player must make the team's opening day roster in order to receive his salary and for his contract to be included in team salary.

If the player is a veteran free agent who last played for that team, the contract must be for one season at the minimum salary (see question number 16). In all other cases there are no special limits to the salary or number of years -- a team could theoretically sign a player to a summer contract for four seasons at the maximum salary. However, summer contracts frequently utilize Exhibit 9 of the Uniform Player Contract, which adds further limitations (see below).

A summer contract can be signed from the first day after the July Moratorium (see question number 104) to the last day before the regular season. To avoid counting as team salary, the player must clear waivers prior to the first day of the regular season. To qualify as a summer contract no compensation of any kind can be earned or paid prior to the start of the regular season. The salary cannot be guaranteed or insured. However, the player may receive per diem, lodging and transportation expenses, and disability insurance covering summer leagues and training camp.

Since summer contracts do not count against the team's cap until the start of the regular season, teams can effectively sign players to summer contracts when they do not have room (cap room or an exception) for the contract, and delay creating the necessary room until the start of the regular season.

A summer contract does not need to utilize Exhibit 9 of the Uniform Player Contract (One Season, Non-Guaranteed Training Camp Contracts), but doing so limits the team's liability in the event the player becomes injured. If a player with an Exhibit 9 becomes injured and unable to play basketball prior to the team's first regular season game and the injury is a direct result of playing basketball for the team, then the team pays the player $6,000 when it waives him. This is in lieu of the rule for ordinary contracts guaranteeing the salary of an injured player until he is ready to play again or until the end of that season, whichever comes first (see question number 64). If Exhibit 9 is used, the contract must be for one season at the minimum salary, with no bonuses of any kind.

A team cannot sign a player using Exhibit 9 unless it has at least 14 players on its roster, not including summer contracts.

When a player on a summer contract is traded before the start of the regular season, his salary for trade purposes is $0 and the trade is treated the same as a trade for draft rights. Teams cannot receive trade exceptions (see question number 85) when trading summer contracts, and the acquiring team does not need to match salaries, have cap room, or use an exception. However, the acquiring team must create the necessary room or designate an exception prior to the start of the regular season, when the player's salary is added to the team's cap.

71. Do injured players apply to team salary?

Injured players are included in team salary. An exception is made for players who are forced to retire for medical reasons -- see question number 63 for details.

In certain cases, teams can gain an exception which allows them to exceed the cap to sign a replacement. See question number 25 for more information on the Disabled Player exception.

72. How do players who die apply to team salary?

Sadly, a number of players have died while they were active, including Jason Collier, Reggie Lewis, Drazen Petrovic, Bobby Phills, Malik Sealy and Nick Vanos.

A player who dies is treated the same as one who has suffered a career-ending injury or illness. See question number 63.

73. Are player contracts insured?

There is a league-wide policy that insures the contracts of around 150 players each season. Each team submits at least five players for coverage from their five most expensive contracts based on total remaining salary (with two or more years remaining) and their five most expensive contracts based on current season salary. Teams also have the option of submitting additional names for coverage. The carrier has the right to exclude 14 contracts per season, such as when they consider a player with a very large remaining contract to be a medical risk. For example they excluded Luol Deng in 2008-09 because he had $71 million remaining and a history of back injuries. The list of excluded players changes each year, so a player who is not covered one season might be covered the following season. However, once a player is covered the carrier can't exclude the player for the remainder of his current contract.

If an insured player is disabled, there is a 41 game waiting period, after which the insurance company pays 80% of the guaranteed portion of the player's remaining base salary, up to $175,000 per regular season game. The waiting period can span seasons, and the player even can attempt to come back -- if he does and finds that he is unable to play, the 41-game count resumes (as long as he stopped playing due to the same injury).

If the player is traded, his new team receives the benefit -- for example, even though Cuttino Mobley's heart condition was discovered prior to his trade to the Knicks, the Knicks received the insurance payout.

74. Can incentives be built into a contract? How do they apply to team salary?

There are three categories of allowable incentives: performance, academic/physical achievement, and extra promotional. The latter two categories are always included in the player's salary and team salary amounts. Performance incentives are classified as either "likely to be achieved" or "not likely to be achieved," with only the likely incentives included in the player's salary and team salary amounts. The determination of whether an incentive is likely or unlikely is based on whether the criterion was achieved in the previous season. For example, if a player had seven assists per game the previous season, then an incentive based on seven assists per game would be classified as likely to be achieved, but one based on eight assists per game would be classified as not likely.

If either the league or players association feels that the previous season does not fairly predict the performance in the current season, then a jointly-selected expert determines whether the default classification should be overruled. This can happen when the player was injured the previous season.

Unlikely bonuses in any season are limited to 15% of the player's regular salary in that season. In the first season of a contract the base salary, likely bonuses and unlikely bonuses must all fit within the salary cap or exception. The league determines a team's available room under the cap or an exception by adding in the unlikely bonuses for all players who signed that season. This prevents a team from signing multiple players to lower salaries but with lots of unlikely bonuses that collectively exceed the cap room it has to offer. For example, if the Non-Taxpayer Mid-Level exception is $5 million and this exception is used to sign a player to a contract with $2 million in base salary and $200,000 in unlikely incentives, then only $2.8 million of their Non-Taxpayer Mid-Level exception can be used to sign other players.

Incentives must be structured so that they provide an incentive for positive achievement by the player or team, and are based upon numerical benchmarks (such as points per game or team wins) or generally recognized league honors1. The numerical benchmarks must be specific -- for example, a bonus may be based on the player's free throw percentage exceeding 80%, but may not be based on a relative measure such as the player's free throw percentage improving over his previous season's percentage. Certain kinds of incentives are not allowed, such as those based on the player being on the team's roster on a specific date or for a specific number of games.

All performance incentives are re-evaluated at the start of each season to determine whether they should be classified as likely or not likely to be achieved. Performance incentives are recomputed when a player is traded, but only if they are team-related and based on the previous-season performance of the team. For example, suppose Team A won 25 games last season, and Team B (with the league MVP) won 55. Also suppose the MVP has a performance incentive that is based on his team winning 30 games. Going into the season this incentive would be classified as likely to be achieved, since his team (Team B) won 55 games the previous season. Now suppose this player is traded to Team A in exchange for draft picks. The incentive would be recomputed upon the trade, and in this case would be reclassified from likely to unlikely to be achieved, since the player's new team won fewer than 30 games the previous season (even though adding the MVP should easily push Team A's win total above 30).2

Other rules related to incentives:


1 Generally recognized league honors includes MVP, Finals MVP, Defensive Player of the Year, Sixth Man, Most Improved Player, All-NBA Team (first, second and third), All-Defensive Team (first and second), and All-Star selection.
2 An interesting case of bonus recomputation occurred during the 2013-14 season. Luke Ridnour had a performance bonus that was based on his team making the playoffs. At the start of the season he played for Milwaukee, which had made the playoffs the previous season, so his bonus was classified as likely. Ridenour was later traded to Charlotte, which had missed the playoffs the previous season, so his bonus was reclassified to unlikely upon the trade. Therefore, Ridnour ironically went from having a likely bonus he wasn't going to earn, to having an unlikely bonus he was going to earn.

75. How about signing bonuses? Are they allowed? How do they apply to team salary?

Teams are allowed to offer the players they sign a bonus worth as much as 15% of the total compensation.1 The total compensation includes the signing bonus itself, but excludes any incentive compensation. It also includes seasons following an option or ETO. A signing bonus is paid up-front, but it is charged to the salary cap across the guaranteed seasons in the contract (not including option years or years following an ETO), in proportion to the percentage of salary in each of those seasons that is guaranteed2. This can create a problem when a player is signed to the maximum salary or the team's room under the salary cap or an exception. For instance, if the Non-Taxpayer Mid-Level exception is $5 million, then a team could sign a player to a four-year contract with 4.5% raises (without a signing bonus) as follows:

Without Signing Bonus
Year Salary
1 $5,000,000
2 $5,225,000
3 $5,450,000
4 $5,675,000
Total $21,350,000

The maximum (15%) signing bonus is $3,202,500. It must be allocated to each season of the contract (assume there is no option year or ETO). But in order to fit the first-year salary plus the portion of the signing bonus allocated to the first season within the $5 million exception, the first-year salary must be reduced, and the bonus recalculated:

With Signing Bonus
Year Base salary Portion of signing bonus Total
1 $4,207,400 $792,600 $5,000,000
2 $4,396,733 $792,600 $5,189,333
3 $4,586,066 $792,600 $5,378,666
4 $4,775,399 $792,600 $5,567,999
Total $17,965,598 $3,170,400 $21,135,998

Note that in order to fit the first-year amount (salary plus a pro-rated portion of the signing bonus) within the $5 million exception, the first-year salary had to be reduced to $4,207,400. The net effect is that the player gets more money in the first year (he receives his base pay of $4,207,400 plus his entire signing bonus of $3,170,400, for a total of $7,377,800), but he receives less in the subsequent years. Also note that the total value of the contract ($21,135,998) is lower, because raises are based on the lower base salary in the first season3.

For extensions, the signing bonus can be paid no sooner than July 1 of the year the extension takes effect, and the signing bonus is allocated to team salary over the years of the extension (per the same formula as described above for contracts). However, if the team is under the salary cap when the extension is signed, then the signing bonus may be paid before the extension takes effect. If this happens, then the extension is deemed to be a renegotiation (see question number 61) and the signing bonus is charged to team salary over both the extension and the remaining seasons of the current contract. Under these circumstances the amount of the signing bonus is limited -- the portion of the signing bonus charged to the season in which the extension is signed must fit within the team's cap room. Except in this special case of a renegotiation in conjunction with an extension, a renegotiation cannot contain a signing bonus.

The following are also treated like signing bonuses for the purpose of determining a player's salary and the allocation of the player's salary to the team salary:

Except for international player buyouts, rookie scale contracts for first round draft picks cannot contain signing bonuses.

Also see question number 91 for information on including signing bonuses in sign-and-trade contracts.


1 10% in offer sheets to restricted free agents.
2 The calculation for allocating the signing bonus to the years of a contract is somewhat confusing. It is not proportionate to the salary, but rather to how much of the salary in each season is guaranteed. If there are four years in the contract, there is no option year or ETO, and each year is 100% guaranteed, then 25% of the signing bonus is allocated to each season of the contract, even if the salary increases throughout the contract. However, if the fourth season of this contract was only 50% guaranteed, then 2/7 of the bonus would be allocated to the first three seasons, and 1/7 would be allocated to the fourth season. If the entire contract is non-guaranteed, then the entire bonus is charged to the first season.
3 In the example note that the signing bonus of $3,170,400 is 15% of the final contract ($21,135,998) and not the original contract ($21,350,000). How are the final results calculated? It's kind of complicated, and I go over the details in a separate (and more technical) document available here. I also provide a spreadsheet for calculating contracts (including contracts with signing bonuses) here. Also note that due to the bonus allocation and the limits on raises, certain combinations of signing bonuses and non-guaranteed salary are incompatible. See question number 55 for more information.

76. What are the rules relating to international players and teams?

A player is considered to be an international player if he has maintained permanent residence outside the U.S. for the three years prior to the draft while playing basketball (as either an amateur or pro) outside the U.S., and who never completed high school or enrolled in a college or university in the U.S. An international player is eligible for the NBA draft that is held in the same calendar year as his 22nd birthday. An international player who is at least 19 but younger than 22 also can become draft eligible by declaring himself an early entry player. An international player who is older than 22 or was not selected in the draft in the same calendar year as his 22nd birthday is considered a rookie free agent.

The NBA has a formal agreement with the Federation Internationale de Basketball (FIBA) recognizing each other’s contracts. A player who is currently playing or last played on a FIBA team must obtain a letter of clearance from the basketball federation of the country in which he played before signing with an NBA team. The letter of clearance ensures that the player does not have an “existing and validly binding” contract with any FIBA team. Likewise, a player who last played in the NBA must secure a FIBA license before signing with a FIBA team, which requires FIBA to contact the NBA to obtain a written statement that the player is not subject to an existing and validly binding NBA contract.

NBA teams signing international players are allowed to pay a buyout to the player’s team or organization in order to release the player to sign in the NBA (see question number 77).

The NBA’s agreement with FIBA also requires NBA teams to allow their players to play for their national teams in major FIBA competitions, including the European Championships, the World Championships and the Olympics, as long as the competition does not conflict with an NBA game and the player is adequately insured. NBA teams can’t take any steps to dissuade their players from participating in such competitions, such as asking their players not to participate or making public statements suggesting they do not want their players to play in these competitions.

77. What about buyouts paid to international teams? Are they allowed? How do they apply to team salary?

NBA teams signing international players1 are allowed to pay a buyout to the player's team or organization in order to release the player to sign in the NBA. The buyout amount is a matter of negotiation between the player and the international team or organization. NBA teams are allowed to pay up to the Excluded International Player Payment Amount, and this amount is not charged to the team salary. Any amount above the Excluded International Player Payment Amount comes out of the player's (after-tax) salary, and therefore is included in the team's team salary. Here are the Excluded International Player Payment Amounts:

Season Excluded amount
2011-12 $525,000
2012-13 $550,000
2013-14 $575,000
2014-15 $600,000
2015-16 $625,000
2016-17 $650,000
2017-18 $675,000
2018-19 $700,000
2019-20 $725,000
2020-21 $750,000

It is a common misconception that a buyout cannot exceed the excluded amount. On the contrary, buyouts can exceed the excluded amount, but any amount above the excluded amount essentially comes out of the player's paycheck. For example, if a team's second round pick in 2011 has a $1 million buyout, the team can use its (Non-Taxpayer or Taxpayer) Mid-Level exception to sign the player, with $1 million going to the player's international team or organization. Since $525,000 is excluded in 2011-12, $475,000 of the player's (after tax) salary will be used to fund the buyout, with the remainder going to the player. The amount above the excluded amount is charged to the team's team salary as a signing bonus (see question number 75).

It is trickier to pay more than the excluded amount for a first round draft pick, which is why international players with large buyouts often drop to the second round of the draft. A first round pick's first contract must be a rookie scale contract3 (see question number 49), with a salary between 80% and 120% of the scale amount. It is possible to write the contract for 120% of the scale amount, with the player paid less than that amount and the remainder used as a buyout to the international team in excess of the excluded amount.

For example, the 30th pick in the 2011 draft has a scale amount of $850,800. The player could be paid $680,640 (80% of the scale amount), with up to $1,020,960 (120% of the scale amount) charged to the team salary in 2011-12. Since the buyout is charged to the cap as a signing bonus, and signing bonuses are allocated to the guaranteed years of a contract, the player's total buyout could be up to $1,205,0004.


1 This applies to any player playing on an international team, and not just to "international players."
2 This amount likely would be charged to the team salary across multiple seasons. See question number 75 for information on the allocation of bonuses.
3 Unless the player waits three years without signing or playing intercollegiately in the interim (see question number 51).
4 Two times the difference between 80% and 120% of the scale amount for the 30th pick in 2011-12, plus the $525,000 excluded amount. Since signing bonuses are allocated to team salary in proportion to the percentage of salary that is guaranteed, and the first two seasons of a rookie scale contract are both 100% guaranteed, the amounts allocated to the first two seasons must be the same. Also note that since $525,000 of the buyout is excluded from cap calculations, the remaining $680,000 that is charged as a signing bonus is less than 15% of the total value of the contract ($5,208,548).

78. Are teams really competing on a level playing field? Since the tax rate is different in the different states and Canada, don't the teams in a more "tax friendly" state have an advantage over the other teams?

Yes they do. For example, an offer from Orlando will provide a higher net income than the same offer from Los Angeles, because the player will play at least half his games in a state with no state income tax. But the advantage is not quite as large as you might expect, because most jurisdictions with NBA teams require visiting athletes to pay state income taxes (often called a "jock tax") for each "duty day" they spend there. There is not a universal definition for a duty day, but it is generally considered to be any day the player spends in a particular jurisdiction, including for preseason, regular season and postseason games. For example, if there are 170 duty days in a season and a player plays five of those duty days in a state with a jock tax, then the player will pay state income taxes in that state based on 5/170 of his income.1

Currently:

The league also has regulations to help neutralize the tax disadvantage of Canadian teams, and there is language in the CBA to help protect players' benefits from any adverse effects caused by changes in Canadian legislation or tax laws.

Incidentally, players are always paid in U.S. dollars, even if their team is located in Canada.


1 Tax laws are nuanced and complicated, and vary considerably from state to state. For this reason it is very difficult to determine a player's net income based on his salary and the state in which his team plays. For example, California does not exempt players from taxes on income earned while playing in other states. Instead it nets jock taxes paid in other states against California taxes, so a player based in California may owe taxes to two states for the same road games.

79. What roster size limits exist? What is the Inactive List? What is Injured Reserve? Do any other such lists exist?

An NBA team can have a maximum of 15 players on its roster during a season (and up to 20 during the offseason). A team normally may have 12 or 13 players on its active roster, who are eligible to play in games, and can have as few as 11 for up to two weeks at a time. Any remaining players must be on the team's Inactive List, and are ineligible to play in games. Teams temporarily can have four players on their Inactive List (bringing their roster size to 16) with league approval in the event of a hardship1. Teams must suit-up at least eight players for every game. The following table summarizes the allowable compositions of team Active and Inactive Lists:

Total Players Active Inactive Notes
16 12 4 With league approval in the event of a hardship
15 13 2
15 12 3
14 13 1
14 12 2
14 11 3 Two week limit
13 13 0
13 12 1
13 11 2 Two week limit
12 12 0 Two week limit
12 11 1 Two week limit
11 11 0 Two week limit

The composition of the Inactive List can change on a game-by-game basis -- no less than 60 minutes prior to tipoff, the team must present to the official scorer a list of the players who will be active for that game. A player can be inactive for as little as one game. While individual teams are only required to carry a minimum of 13 players, (12 active and one inactive), the NBA also guarantees a league-wide average of at least 14 players per team. The league is surcharged if it does not meet this obligation.

In addition to the Active and Inactive Lists, the following lists exist:

Injured Reserve is the former name of the Inactive List. It was originally intended for players who were injured and unable to play, however teams often used it as a convenient place to stash extra players. While a medical reason was required for players to be put on Injured Reserve, the league did not insist on an independent physician confirming the diagnosis. Thus it was common for a seemingly healthy player to suddenly develop "back spasms" right before rosters were cut to 12 players, and spend the entire season on Injured Reserve as a result. With the 1995 CBA they gave up the ghost, dropped the medical requirement, and changed the designation to "Inactive List." (The cynic will note that marginal NBA players seem to have a lot fewer back spasms nowadays.)

Players assigned to the NBA Developmental League (see question number 81) are automatically placed on their team's Inactive List.


1 A hardship can be deemed to occur when a team has four players who are sick or injured and have missed at least three games, and will continue to be unable to play.

80. What is a 10-day contract?

A 10-day contract is just that, a player contract which lasts ten days (or three games, whichever comes later). Teams may sign players to 10-day contracts starting January 51 each season. Teams cannot sign players to 10-day contracts that would extend past their last regular season game. In other words, after their 80th game (64th in 2011-12) or after the 10th day before their last regular season game (whichever comes first) teams can no longer sign 10-day contracts.

A team may sign an individual player to two 10-day contracts in one season (they may or may not be consecutive). After the second 10-day contract, the team can only retain the player by signing him for at least the remainder of the season. A team can't have more 10-day contracts than they have players on their Inactive List, except if a team has 13 players on its Active List, it can have one more 10-day contract than they have players on their Inactive List.

The base salary in a 10-day contract is negotiable, although they are almost always signed for the minimum salary. The salary is then pro-rated for the number of days covered by the contract (10 days or three games, whichever is longer).


1 Or the first business day thereafter. Teams were able to sign players to 10-day contracts starting February 6 during the 2011-12 season, due to that season's late start.

81. What is the NBA Developmental League (NBA D-League)?

The NBA Developmental League (also known as the NBA D-League or NBADL) is a separate league run in affiliation with the NBA. An NBA team may assign its players at any time to its affiliated NBA D-League team as follows:

Season(s) Players Number of assignments
2011-12 Players with 0-1 years' experience can be assigned at any time. Players with two or more years' experience can be assigned if both the player and the union consent. 3
2012-13 and later Players with 0-2 years' experience can be assigned at any time. Players with three or more years' experience can be assigned if both the player and the union consent. No limit

If an active player is assigned to the NBA D-League, he is automatically placed on his NBA team's Inactive List. There is no minimum or maximum length of an NBA D-League assignment, and players have 48 hours to report to the NBA D-League team once they are assigned. Players continue to receive their NBA salary while assigned to the NBA D-League, but their performance in NBA D-League games does not count toward NBA incentives.

NBA D-League rosters are normally 10 players, but can expand to 12 to accommodate assigned NBA players. In some cases where one team might be overstocked with assignees or players at a particular position, players might be reassigned to a different team. NBA teams do not control the playing time their assignees receive -- that is up to the discretion of the NBA D-League coaches.

Further information for the NBA D-League can be found on their website: http://www.nba.com/dleague

82. What are the rules regarding trades?

Teams under the salary cap may make trades as they please, as long as they don't finish more than $100,000 above the salary cap following any trade. But if a team finishes more than $100,000 over the cap, whether they started out above or below the cap, then an exception is required. An exception is the mechanism that allows a team to make trades or sign players and finish over the salary cap. Since most teams are usually over the salary cap, trades are usually completed using exceptions.

Some exceptions are available only for signing free agents, and those exceptions are covered in question number 25. The exceptions available for making trades are as follows:

Sometimes there are multiple ways to configure the same trade. For example, a minimum-salary player might be acquired using either the Traded Player exception or the Minimum Salary exception, or a two-for-two trade might also work as two separate one-for-one trades. Teams are allowed to choose the configuration that works best for them. See question number 88 for an example of this.

Trades require at least two teams, and in theory the maximum limit is the number of teams in the league -- i.e., it is possible (although very unlikely) for there to be a single trade in which every NBA team is involved. Each team in a trade must send something out and take something back, where the following requirements must be met:

When teams wish to complete a trade they must set up a "trade call" with the league office. If the teams wish to complete the trade over a weekend they must notify the league office on Friday, otherwise the trade call cannot be held until the following Monday. The trade is not complete until all terms have been agreed to during the trade call.

During the trade call the teams and the league office review:

Following the trade call each team sends the league office an email with the terms of the transaction, and the league office sends the involved teams instructions for conditions that must be satisfied before the trade becomes official (such as physical exams). When all conditions have been satisfied, the league office sends another email notifying the teams that the trade is complete. Any term or condition that is not specified in the trade call is not enforceable.

Players cannot play, practice or work out with their new teams until the league office notifies the teams that the trade is complete.

If a team misrepresents or fails to disclose any pertinent information during the trade call, the Commissioner can impose penalties including a fine up to $1 million, suspension of the team executives who were involved, rescinding the trade, and/or the forfeit of draft picks.

Traded players must report to their new teams within 48 hours of receiving notice of an in-season trade, or within one week if the trade occurred during the offseason. If a player fails to report to his new team following a trade it can be deemed conduct prejudicial to the NBA, and subject the player to a fine and/or suspension.

83. What is the Traded Player exception?

As described in question number 82, exceptions are the mechanisms that allow teams to sign players or make trades that leave them above the salary cap. Any trade which leaves the team over the salary cap requires an exception -- even if the team is moving downward in salary. For example, if the salary cap is $60 million, a team has a team salary of $65 million, and they want to trade a $5 million player for a $4 million player, they still have to use an exception. Even though their team salary is decreasing by $1 million as a result of the trade, the fact that they would finish over the salary cap ($64 million) means that an exception is required.

The Traded Player exception is the primary means by which teams over the cap complete trades. It allows teams to make trades that leave them over the cap, but it places several restrictions on those trades. Trades using the Traded Player exception fall into two categories: simultaneous and non-simultaneous. As its name suggests, a simultaneous trade takes place all at once. Teams can trade players together and acquire considerably more salary than they trade away in a simultaneous trade. Simultaneous trades are described in question number 84. A non-simultaneous trade may take up to a year to complete, but the team can only trade away one player, and its team salary can increase by no more than $100,000 as a result of the trade. Non-simultaneous trades are described in question number 85.

In short:

It is important to view a trade from each team's perspective separately, rather than as a single, unified transaction. This is because the same trade may be organized differently according to each team's needs. For example, a trade might be classified as a simultaneous trade from one team's perspective, but from the other team's perspective it's actually broken into two separate trades, one simultaneous and the other non-simultaneous (completing a trade they made months earlier).

There are several restrictions on trades (either simultaneous or non-simultaneous) which are described in other questions in this FAQ. These include the following:

In addition, performance incentives can complicate trades, and trades can affect performance incentives (see question number 74).

Also be aware that while the term "Traded Player exception" refers to the entire exception which allows teams to make trades above the salary cap (including both simultaneous and non-simultaneous trades), it is also commonly used to refer to the one-year monetary credit teams receive while a non-simultaneous trade is pending completion. Be aware of this potential ambiguity. In this document "Traded Player exception" is used to refer to the exception, and "trade exception" is used to refer to the one-year credit.

84. How do simultaneous trades work? How much salary can a team take back in a simultaneous trade?

A simultaneous trade takes place all at once. The amount of salary a team can take back in a simultaneous trade depends on the outgoing salary and whether the team is a taxpayer.1 They always use the post-trade team salary when looking at whether a team is a taxpayer, so a team under the tax level would be considered a taxpayer if the trade takes them over the tax level.2

For non-taxpaying teams (again, they must be under the tax level after the trade), the salaries that can be acquired depend on the total salaries the team is trading away:

Non-Taxpaying Teams
Outgoing salary Maximum incoming salary
$0 to $9.8 million 150% of the outgoing salary, plus $100,0003
$9.8 million to $19.6 million The outgoing salary plus $5 million2
$19.6 million and up 125% of the outgoing salary, plus $100,000

Taxpaying teams can take back up to 125% of their outgoing salaries, plus $100,000, no matter how much salary the team is sending away. For example, a taxpaying team trading away $10 million in salaries can acquire one or more replacement players making up to $12.6 million.

Taxpaying Teams
Outgoing salary Maximum incoming salary
Any 125% of the outgoing salary, plus $100,000

If a taxpaying team trades away a $10 million player, they can take back one player making $12.6 million or less, two $6 million players, three $4 million players, etc. However, there must be enough roster spots for the incoming players. A team with a full roster of 15 players cannot trade one player for two players without first waiving a player on its roster (or sending him away in another trade). This team could not acquire two players and simultaneously waive one of the incoming players.

Teams can send out more than one player in the same simultaneous trade. If the outgoing salaries are combined in order to acquire a replacement player with a higher salary than would be available by trading any outgoing player alone, the process is called "aggregation." For example, since the most a taxpaying team can receive for a $10 million player is $12.6 million, it cannot trade its $10 million player for another team's $15 million player. However, it can aggregate the salary of its $10 million player with that of another player making $2 million. With the combined $12 million the team can trade for up to $15.1 million, which lets them trade for the $15 million player. An aggregated trade must be simultaneous -- aggregated non-simultaneous trades are not allowed. Also, if a team is over the cap when it acquires a player, it cannot include that player in an aggregated trade for two months.

Avoiding aggregation (where possible) can be advantageous to a non-taxpaying team. Suppose the team wants to trade two players who make $10 million each. By aggregating the team can take back 125% plus $100,000 of the aggregated $20 million (see the chart above), or $25.1 million. But if the team trades the players individually -- without aggregation -- it can take back $15 million for each player, for a total of $30 million. The other advantage to avoiding aggregation is that trades of individual players can be non-simultaneous, possibly gaining the team a trade exception (see question number 85).

As described in question number 82, a team below the cap may disregard salaries when making trades, as long as the team finishes no more than $100,000 above the cap as the result of a trade. However, a team below the cap can choose to use the trade rules for teams above the cap if it works to the team's advantage. For example, if a team is $1 million below the cap, then by using the trade rules for teams below the cap it can trade an $8 million player for a player making up to $9.1 million. By using the rules in place for teams above the cap, the team could trade the $8 million player for a player making up to $12.1 million.


1 The regular team salary is used to determine whether a team is considered to be a taxpayer for trade purposes, and this amount includes cap holds. However, for a minimum-salary player with more than two years in the league and playing on a one-year contract, the minimum salary for a two-year player is used. For players who were subject to the Gilbert Arenas provision (see question number 45), the cap amount for the trading team is used.
2 An interesting case occurred in the 2013-14 season, when the Washington Wizards traded Jan Vessely, Eric Maynor and a pick for Andre Miller and a pick. Before making the trade the Wizards renounced their Bird rights to four free agents, which removed their cap holds from the team's team salary. This let them trade for Miller and remain under the tax line. In doing so, the Wizards were able to acquire Miller with Vessely's salary alone, because they were able to take back 150% for Vessely rather than 125%. Maynor was therefore effectively traded separately, which gave the Wizards a trade exception for a little over $2 million. Had they not first renounced their free agents, they would not have received a trade exception.
3 Note that the benefit of these margins is limited because a team must end up under the tax level following the trade (or else they would have to use the taxpayer margin of 125%).

85. What is a non-simultaneous trade?

In some cases, teams have up to one year to acquire the replacement player(s) to complete a trade. These trades are considered non-simultaneous. In a non-simultaneous trade, a team can acquire only up to 100% plus $100,000 of the outgoing salary1 (as opposed to a higher amount in a simultaneous trade). A trade in which salaries are aggregated (see question number 84) cannot be non-simultaneous.

Here is an example of a non-simultaneous trade: a team trades away a $2 million player for a $1 million player. Sometime in the next year, they trade a draft pick (with zero trade value itself) for a $1.1 million player to complete the earlier trade. They ended up acquiring $2.1 million in salary for their $2 million player -- they just didn't do it all at once, or even necessarily with the same trading partner.

In the above example, following the initial trade of the $2 million player for the $1 million player, it was like the team had a $1 million "credit" which was good for one year2, with which they could acquire salaries without having to send out salaries to match. As with simultaneous trades, teams are allowed to acquire an extra $100,000 -- so a $1 million credit can be used to acquire $1.1 million in salaries. This credit is often referred to as a Traded Player exception or a trade exception, but be aware that the CBA uses the name "Traded Player exception" to refer to the entire exception which allows teams to make trades above the salary cap (including both simultaneous and non-simultaneous trades). In this document "Traded Player exception" is used to refer to the exception, and "trade exception" is used to refer to the one-year credit.

There are several common misconceptions about trade exceptions and non-simultaneous trades:

Here is a more complicated example of a legal non-simultaneous trade: Team A is a taxpaying team with a $4 million trade exception from a previous trade, and a $10 million player it currently wants to trade. Team B has three players making $4 million, $5 million and $7 million, and the two teams want to complete a three-for-one trade with these players. This trade is legal -- the $5 million and $7 million players together make less than the 125% plus $100,000 allowed for the $10 million player ($12.6 million), and the $4 million player fits within the $4 million trade exception. So the $4 million player actually completes the previous, non-simultaneous trade, so Team A is left trading its $10 million player for Team B's $5 million and $7 million players in a separate, simultaneous trade. From Team B's perspective there is also a simultaneous and a non-simultaneous trade -- it aggregates its $4 million and $5 million players to acquire Team A's $10 million player in a simultaneous trade, and it sends the $7 million player to Team A for "nothing" in a separate, non-simultaneous trade, thereby receiving a $7 million trade exception.

Teams can consume only part of a trade exception, in which case they can still use the remainder in a future trade. For example, if a team trades a $4 million player for a $2 million player, they gain a $2 million trade exception. If they later trade a draft pick for a $1 million player, they still have $1 million left over to acquire more players and complete the earlier trade (until one year from the date of the original trade).

Teams that are under the cap when initiating a trade cannot receive a trade exception, even if they end up over the cap as a result of the trade.

Also see question number 26 for more information on the availability and use of this exception.


1 The salary used for trade is the same as the player's cap amount. For a minimum-salary player with more than two years in the league and playing on a one-year contract, the minimum salary for a two- year player is used. For players who were subject to the Gilbert Arenas provision (see question number 45), the cap amount for the trading team is used.
2 If the one-year anniversary of the trade falls on a weekend or holiday, the trade exception expires on the next business day.

86. How are minimum-salary players handled in trades?

The "Minimum Player Salary exception" allows teams to acquire minimum-salary players without regard to salary matching under the Traded Player exception (see question number 83). For example, a team over the cap can trade a second round draft pick to another team in exchange for a minimum-salary player, even if he is a 10-year veteran earning over $1 million.

When a team acquires multiple players in the same trade, it essentially ignores the incoming salary for all minimum-salary players, since they fall under the Minimum Salary exception. Suppose a taxpaying team is over the cap and trades a $5 million player, receiving in return a $6 million player and two players earning $1 million each on minimum-salary contracts. The team trading the $5 million player can accept only $6.35 million in return (125% plus $100,000 of $5 million), and the three incoming players combine for $8 million in salary. However, the two $1 million players are covered by the Minimum Salary exception, so only the $6 million player is traded with the Traded Player exception. Since $6 million is within the team's $6.35 million limit using the Traded Player exception, the trade is allowed.

Trade bonuses are allowed in minimum salary contracts, but the bonus doesn't vest until a trade actually occurs -- so such a contract is considered to be a minimum salary contract for signing purposes. However, in a trade the bonus takes effect, so the receiving team much use some means other than the Minimum Salary exception to complete the trade.

Teams trading away minimum-salary players do count their salaries (the portion not paid by the league -- see question number 16) as outgoing salary when comparing salaries for trade.

87. How are draft picks handled in trades? What is the Ted Stepien rule?

Draft picks (both first and second round) count $0 for salary matching purposes. This is true both before and after the draft, until the player signs a contract. This can make it very difficult to construct a trade that is equitable in both trade value and basketball value. For example, Vancouver selected Steve Francis with the #2 pick in the 1999 draft, and subsequently traded his draft rights to Houston. When the trade was finally engineered, it included three teams (Orlando was also involved), 11 players (including Francis) and two future draft picks.

Once the draft pick signs a contract, his actual salary becomes his trade value.

Note that even though a draft pick's trade value (for salary matching purposes) is $0, a first round pick is included in team salary at 100% of his scale amount once he is selected in the draft, unless he signs with a non-NBA team (see question number 49) or agrees in writing not to sign an NBA contract that season (see question number 14). If an unsigned first round draft pick is traded, then 100% of his scale amount is included in the acquiring team's team salary as soon as the trade is completed. An unsigned second round pick does not count toward team salary.

The "Seven Year Rule" allows teams to trade draft picks up to seven years into the future (for example, if this is the 2011-12 season, then a 2018 pick can be traded, but a 2019 pick cannot). It is common to "protect" picks depending on their position (for example, "we keep it if it ends up in the lottery, otherwise you get it"), although no more than 55 picks in a single draft can be protected (for example, a top-55 protected pick is legal, but a top-56 protected pick is not). This helps to avoid a repeat of some unfortunate past trades, such as the trade between the Cavs and Lakers where LA received what turned out to be the first overall pick in the 1982 draft, which they used to select James Worthy. It is common for these protections to relax over several years. For example, a team might convey its own pick in the first draft in which it is not a protected pick, where a protected pick is defined as picks 1-14 in 2012; 1-10 in 2013; 1-6 in 2014; and unprotected in 2015. If the team owns one of the protected picks in 2012, 2013 or 2014, then they keep it; otherwise it is conveyed to the other team. If they make it to 2015 without having conveyed a pick, then the other team gets their 2015 pick unconditionally.

Teams are restricted from trading away future first round draft picks in consecutive years. This is known as the "Ted Stepien Rule." Stepien owned the Cavs from 1980-83, and made a series of bad trades (such as the 1982 trade mentioned above) that cost the Cavs several years' first round picks. As a result of Stepien's ineptitude, teams are now prevented from making trades which might leave them without a first round pick in consecutive future years.

The Stepien rule applies only to future first round picks. For example, if this is the 2011-12 season, then a team can trade its 2012 first round pick without regard to whether they had traded their 2011 pick, since their 2011 pick is no longer a future pick. But they can't trade away both their 2012 and 2013 picks, since both are future picks. Teams sometimes work around this rule by trading first round picks in alternate years, or by giving one team the right to swap picks with the other.

When dealing with protected picks, the Stepien rule is interpreted to mean that teams can't trade a pick if there is any chance it will leave the team without a first round pick in consecutive future drafts. Suppose a team makes a trade in 2011-12 that conveys a first round pick sometime from 2012 to 2017. The pick is protected only if it is the first overall pick from 2012 to 2017, and if it is not conveyed by 2017, the other team gets cash instead. In other words, in order to avoid sending a pick from 2012 to 2016, the team would have to win the first overall pick in the draft lottery five seasons in a row. Even though the likelihood of this happening is essentially nil, the team is not allowed to trade its 2018 pick.

If a team trades two future first round picks and the first pick is protected, then the first pick would be conveyed in the first draft in which it is not a protected pick (as described above), and the second pick would be conveyed in the first allowable draft (per the Stepien rule) in which that pick is not protected (i.e., two years after the first pick). But since both picks must be conveyed within seven years, the protection on the first pick cannot last longer than four years (i.e., the first pick must be conveyed by the fifth year). A team can have no more than one trade with such a waiting period in effect at any time.

Other rules that pertain to trading draft picks:

88. Can exceptions be combined when making trades?

Only to a very limited extent -- teams can combine exceptions in the same trade if they are used on different players. Teams cannot combine exceptions in order to acquire one player. For example, a taxpaying team may trade a $5 million player for a $5.5 million player and two veterans earning approximately $1 million each on minimum-salary contracts. The minimum salary exception is used for the two minimum-salary players, and the $5.5 million player is acquired using the Traded Player exception ($5.5 million is within 125% plus $100,000 of $5 million). This is allowed because two exceptions were not combined to acquire any one player.

However, if that team has a $5 million player and a $1 million trade exception from a previous trade, it cannot add the trade exception to the 125% plus $100,000 margin from their $5 million player ($6.35 million), in order to trade for a player making $7 million. This cannot be done, as it would invoke using two exceptions on the same player.

If a team has two trade exceptions from previous non-simultaneous trades, they can't combine them into one larger trade exception. Suppose a team trades a $5 million player for a $4 million player (generating a $1 million trade exception) and separately trades a $3 million player for a $1 million player (generating a $2 million trade exception). They cannot combine the two into a single $3 million trade exception. A rule of thumb is that a trade exception can only be used to acquire a player making up to the amount of the exception plus $100,000.

(See question numbers 83 and 85 for more information on the Traded Player exception and non-simultaneous trades. See question number 86 for more information on the minimum salary exception.)

The legal combining of exceptions sometimes gives the appearance of teams getting away with illegal trades. For example, as detailed in question number 100, when a team is over the cap and acquires a player in trade, they cannot re-trade that player in combination with other players for two months. Technically, however, this applies only to players whose salaries are aggregated to acquire a more expensive player. For example, New Orleans acquired Jerryd Bayless from Portland on October 23, 2010, and traded him with Peja Stojakovic to Toronto on November 20, 2010. This trade did not violate the two-month rule because New Orleans did not aggregate the salaries of Bayless and Stojakovic to acquire any of the Toronto players.

89. What is "Base Year Compensation?" How does it affect trades?

Base Year Compensation (BYC) is mostly an artifact of previous collective bargaining agreements. Its intent was to prevent teams from signing free agents to new contracts with salaries specifically intended to help facilitate trades. BYC was triggered when a team was over the cap and re-signed a player using the Larry Bird or Early Bird exception with a raise over 20%. Once triggered, BYC temporarily lowered the player's salary for salary-matching purposes (only), and therefore reduced or eliminated teams' ability to target salaries for trade purposes.

The 2011 CBA mostly eliminated BYC -- in fact, the term "Base Year Compensation" was removed from the agreement entirely. The rules formerly known as BYC now apply under just one circumstance -- during sign-and-trade transactions (see question number 91). If a team re-signs its Larry Bird or Early Bird free agent in order to trade the player in a sign-and-trade transaction, the player's new salary is greater than the minimum, he receives a raise greater than 20%, and the team is at or above the cap after the signing1, then the player's outgoing salary for trade purposes is either his previous salary or 50% of his new salary, whichever is greater. The team receiving the player always uses his new salary.

For example, a player made $5 million last season, is a Larry Bird free agent, and re-signs with his previous team for $10 million. The team is a taxpayer, and therefore is over the cap following the signing. The signing is part of a sign-and-trade transaction for another team's $10 million player. Since the BYC conditions were satisfied the player's outgoing salary for the trade portion of this sign-and-trade transaction is $5 million. This trade therefore would not be allowed, even though the players' new salaries match, since a taxpaying team cannot trade a $5 million player for a $10 million player. The highest salary this team could acquire in a sign-and-trade arrangement is $6.35 million2.

Once a sign-and-trade is complete, the player's actual salary is included in his new team's team salary.

In lieu of the previous BYC rules for ordinary trades, teams are now prohibited from trading players for three months or until January 15 (whichever is later) when the signing satisfies the BYC critieria3 (see question number 100).


1 The team salary being over the cap following the signing is what triggers this rule. It does not matter whether the team was under the cap prior to the signing, nor whether the team is under the cap subsequent to the trade.
2 The sides also might be able to complete this trade if they both add additional salary to the transaction, or if they include a third team that is able to absorb excess salary.
3 Minimum salary contracts are excluded from this rule.

90. What is the Poison Pill Provision?

"Poison Pill" isn't a defined term in the CBA, but there are a couple situations that are commonly referred to as a poison pill -- meaning a contract clause that creates a potential difficulty because the cap accounting can vary from the norm.

The first is when a team extends a first round draft pick's rookie scale contract (see question number 60) and then trades the player between the date the extension is signed and the date it takes effect. When this happens, the player's trade value for the receiving team is the average of the salaries in the last year of the rookie scale contract and each year of the extension. The sending team uses the player's actual salary when calculating their total outgoing salary, and uses the current-year maximum salary in place of the (unknown) maximum salary for a future season, if necessary.

For example, if a player on the last year of his rookie scale contract earns $2 million in 2011-12, and his contract is extended for four seasons starting at $10 million, with 4.5% raises, then his salary in each season will be:

Season Salary
2011-12 $2,000,000
2012-13 $10,000,000
2013-14 $10,450,000
2014-15 $10,900,000
2015-16 $11,350,000

If this player is traded during the 2011-12 season, then his outgoing salary from the sending team's perspective is his actual salary -- $2 million. But the player's incoming salary from the receiving team's perspective is $8.94 million -- the average of all five seasons. Such a player would be very difficult to trade -- a legal trade can only be accomplished if both teams add additional salary to the transaction, or if they include a third team that is able to absorb excess salary.

The Gilbert Arenas provision (see question number 45) has also been described as containing a poison pill. This is in reference to the third season of contracts signed according to this provision, which can contain a substantially larger salary than the first two seasons. Houston used this provision to its advantage when signing Jeremy Lin and Omer Asik in 2012.

91. Can a free agent be signed and immediately traded?

There is a rule that allows teams to re-sign their own free agents for trading purposes, called the sign-and-trade rule. Under this rule the player is re-signed and immediately traded to another team. This is done by adding a clause to the contract stipulating that the contract is null and void if the trade to the specific team is not completed within 48 hours. To qualify for a sign-and-trade, all of the following must be true:

A sign-and-trade deal can be made with a free agent who has been renounced, as long as all the above criteria are met. Sign-and-trade contracts must be for at least three seasons (not including any option year) and no longer than four seasons. The first year of the contract must be fully guaranteed, but the remaining seasons can be non-guaranteed. The combination of a three-year minimum with a one-year guarantee ensures that the player's new team cannot acquire the player's Bird rights any sooner than if they had signed him directly (if they wanted to re-sign him in less than three years they would first have to waive him, and lose any Bird rights -- see question number 33).

The starting salary in a contract signed for a sign-and-trade may be any amount up to the player's maximum, however if the player meets the 5th Year 30% Max criteria (see question number 17) he cannot receive a salary greater than 25% of the cap. Raises are limited to 4.5%. The player may be considered to have a lower outgoing salary for trade purposes, which can complicate the trade (see question number 89).

If a sign-and-trade contract contains a signing bonus, then either team can pay it. By default the team that signs the player pays the signing bonus (as with any other contract), but since a sign-and-trade is in essence a contract with the receiving team, the teams can agree that the receiving team will pay it. Any portion that is paid by the signing team counts toward the team's annual limit for cash included in a trade (see question number 97), which in effect limits the portion of the signing bonus that can be paid by the signing team.

If a sign-and-trade contract contains a trade bonus, then the bonus is not earned upon the trade that accompanies the signing, but rather on the first subsequent trade. See question number 95 for more information on how long a team must wait before they can trade a player.

Starting in 2013-14 if a team acquires a player in a sign-and-trade, the apron -- the point $4 million above the tax line -- effectively becomes a hard cap for the remainder of that season. See question number 28 for details.


1 These teams are free to send players to other teams in sign-and-trade transactions, or to receive players in sign-and-trade transactions who weren't signed-and-traded themselves. Also, the restriction applies only to the sign-and-trade transaction itself -- teams are free to acquire players who had been signed-and-traded in earlier transactions.
2 A different team salary definition is used for determining whether a team is above or below the apron -- see question number 14 for details.

92. Can a team sign a player using the sign-and-trade rule and then say, "Ha ha, we fooled you. We're not trading you!"?

No. A sign-and-trade is treated like a single, atomic transaction, not two separate transactions between which one party can change its mind. The sign-and-trade clause makes the contract invalid if a trade to the specified team does not take place within 48 hours.

93. Why would teams or players want to do a sign-and-trade?

Teams benefit because they can get something in return for players they would otherwise lose to free agency. For players the benefits are limited. Under previous CBAs a player who qualified could receive a full Bird contract and go to the team of his choice, which encouraged the player to seek a sign-and-trade once he decided to play elsewhere. Under the current CBA a player receives the same contract via sign-and-trade (four years, 4.5% raises) that he could get by signing with his new team directly, and can receive a larger Bird contract only if he stays with his previous team. In addition, it is much simpler for the player to sign directly with his new team, as a sign-and-trade has to be agreed to by three parties rather than two. A player is really only forced to seek a sign-and-trade if he wants to go to a team that is capped-out (or doesn't have enough cap room to give the player his full starting salary) and can't sign him directly.

Another factor encouraging a player not to seek a sign-and-trade is that his new team might be weakened by losing players or draft picks in the trade. So while a sign-and-trade is a useful tool when the team does not have the cap room to sign the player directly, the player and his new team have little reason to seek a sign-and-trade when the player can be signed without involving his previous team.

94. Can a player be given an extension and traded at the same time?

Similar to a sign-and-trade arrangement (see question number 91), a team may sign an eligible player to an extension (see question number 60) and immediately trade him to another team. Such an "extend-and-trade" is limited to three seasons, which include any seasons remaining on the player's current contract1. The salary in the first season of the extension can have a 4.5% raise over the last season of the existing contract, and subsequent raises are limited to 4.5% of the salary in the first season of the extension.

A player cannot be traded in an extend-and-trade after the season (for example, on draft day) in the last season of his contract, or in any season that might be the last season due to an option or ETO.

Since an extend-and-trade has greater limits than a regular extension (three seasons and 4.5% raises vs. four seasons and 7.5% raises), the rules prevent teams from circumventing these limits by extending and trading the player in separate transactions. If a team extends a player beyond the limits of an extend-and-trade (for example, if they sign a player to a four-year extension), they can't trade the player for six months. Conversely, a team cannot extend a player it receives in trade for six months, if the extension exceeds the limits of an extend-and-trade2.

Extend-and-trade transactions are rare. To date they have only been used for Kevin Garnett (traded from Minnesota to Boston in 2007) and Carmelo Anthony (traded from Denver to New York in 2011).

A rookie scale contract (see question number 49) can be extended and traded in an extend-and-trade transaction, although there is no benefit to doing so. A rookie scale extension can be signed immediately after the player is traded (such as with James Harden's trade to the Rockets in 2012), and a rookie scale extension (see question number 60) can be much larger than the extension allowed through an extend-and-trade.


1 The current season counts as one full year, even if the extension is signed as late as June 30. So if a contract is extended on June 30 with one full season remaining, only one new season can be added to the contract with an extend-and-trade.
2 This does not apply to extensions of rookie scale contracts. For example, the Oklahoma City Thunder traded James Harden to the Houston Rockets on October 27, 2012, and the Rockets signed him to an extension four days later.

95. When can a team trade a free agent it signs? Do they have to keep him forever?

Generally a team only has to keep a player for three months after signing a contract or December 151 of that season, whichever is later. This does not apply to draft picks, who can be traded 30 days after signing (even if signed using cap room in a later season -- see question number 51). For sign-and-trade transactions, the initial trade which completes the sign-and-trade obviously is allowed, even though it occurs right after the player is signed. The trade restriction in a sign-and-trade applies to the first subsequent trade.

See question number 100 for more information on trade restrictions.


1 January 15 if the player is a Larry Bird or Early Bird free agent, re-signs with his prior team, his team is over the cap, and he receives a raise greater than 20% in the first season of his contract, and his new salary is greater than the minimum salary.

96. Can a team trade the rights to a free agent, so the other team will inherit his Larry Bird rights?

Once a player becomes a free agent he cannot be traded, except in a sign-and-trade arrangement.

97. Can cash be included as part of a trade package?

Players can be traded for cash, and cash can be included in trade packages. The amount of cash a team can pay or receive per season is limited to the "Maximum Annual Cash Limit," as shown below:

Season Amount
2011-12 $3.0 million
2012-13 $3.1 million
2013-14 $3.2 million
2014-15 $3.3 million
2015-16 $3.4 million
2016-17 $3.5 million
2017-18 $3.6 million
2018-19 $3.7 million
2019-20 $3.8 million
2020-21 $3.9 million

There are two separate limits, one for the cash a team pays as part of trades each season, and the other for the cash a team receives as part of trades each season. For example, in 2011-12 a team may pay up to $3 million as part of one trade, and receive $3 million as part of another trade.

The cash applies to the current season's limit even if it changes hands in a future season. For example, suppose a team trades a draft pick that is top-10 protected this season, top-20 protected next season, and converts to $1 million cash if a pick is not conveyed by next season. $1 million is applied to the teams' Maximum Annual Cash Limit for the current season.

Cash is NOT considered when matching salaries under the Traded Player exception. For example, a taxpaying team cannot add $3 million cash to a trade of their $5 million player in order to acquire a $10 million player.

In a sign-and-trade arrangement, if the contract contains a signing bonus, then any amount of this bonus paid by the signing team counts toward the team's Maximum Annual Cash Limit (see question number 91).

98. Can players be given a bonus when they are traded?

Teams are permitted to write a bonus called a "trade bonus" (sometimes referred to as a "trade kicker") into contracts. This bonus is paid to the player when he is traded, but only upon his first trade and not upon any subsequent trades (in the case of a sign-and-trade, they don't count the initial trade when the contract is signed). The trade bonus can be defined as a specific dollar amount, a specific percentage of the remaining value of the contract, or some combination (e.g., "$1 million or 10% of the remaining value of the contract, whichever is less"). In either case, the actual amount cannot exceed 15% of the remaining value of the contract. For example, suppose a player has a five-year contract that pays $1 million per year. This player also has a $500,000 trade bonus. Since the trade bonus is limited to 15% of the remaining value of the contract, the actual value of the bonus varies from year to year, as follows (the bonus pro-rates during the season, so these amounts are exact only at the start of each season):

Year Remaining value of the contract 15% of the remaining value of the contract Actual value of $500,000 trade bonus
1 $5,000,000 $750,000 $500,000
2 $4,000,000 $600,000 $500,000
3 $3,000,000 $450,000 $450,000
4 $2,000,000 $300,000 $300,000
5 $1,000,000 $150,000 $150,000

Notes on trade bonuses:

99. How do trade bonuses affect team salary and trades?

The value of a trade bonus is applied to the team salary among the remaining years of the contract (excluding non-guaranteed years -- see question number 64, and years following an Option or ETO -- see question number 59), in proportion to the percentage of salary in each of those seasons that is guaranteed. For example, suppose the player from question number 98 is traded at the start of the fourth season of his contract. Per the chart in that question, the actual value of his trade bonus that season is $300,000. If every season of the contract is guaranteed, and there is no Early Termination Option, then $150,000 of the trade bonus is charged to each of the final two seasons of the player's contract, so a total of $1,150,000 is included in the team salary in each of those seasons. (Note that the allocation is not proportionate to the salary itself, but rather to how much of the salary is guaranteed. If the player from question number 98 had a higher salary in the fifth season than in the fourth season, his bonus would still be allocated equally to those seasons. However, if the fifth season was only 50% guaranteed, then two-thirds of the bonus would be allocated to the fourth seasons, and one-third to the fifth season.)

Suppose the same player has an Early Termination Option following the fifth season of his contract. In this event, the entire trade bonus would be allocated to the fourth season of the contract. The player would therefore count $1,300,000 against the team salary during that season.

In the special case of a contract where all additional years are non-guaranteed, the entire trade bonus is applied to the cap in the season in which the trade occurred.

Trade bonuses can be a nuisance. When a team trades for a player with a trade bonus, it must count the portion of the bonus that applies to team salary in that season as incoming salary. Let's say a taxpaying team wants to trade their $800,000 player for the player used in the example above, in the fourth season of that player's contract. Assuming there is no Early Termination Option or non-guaranteed season, $150,000 of the trade bonus counts in the current season, so the trade cannot be made. The team trading the $800,000 player can accept up to $1,100,000 in return (see question number 83), but the player with the trade bonus counts as $1,150,000 in incoming salary.

The CBA allows the player to waive part of his trade bonus, if necessary to make a trade permissible. To make the above trade work, the player would need to waive $100,000 of his $300,000 trade bonus. The bonus would then be worth $200,000, and $100,000 of that would be charged to the current season. The player would therefore count $1,100,000 as incoming salary, which exactly matches the maximum the other team can accept in return for their $800,000 player. The player is not allowed to waive more than the amount necessary to make the trade legal.

A player is also allowed to waive a portion of his trade bonus to make his incoming salary fit within another team's trade exception (see question number 85). In the above example, if the other team has a $1 million trade exception (and is not trading an $800,000 player), the player would have to waive his entire trade bonus in order for his incoming salary to fit within the trade exception.

Another potential difficulty is that a team trading a player with a trade bonus uses the player's pre-trade salary (without the bonus), when comparing salaries for trade. Here is another example, using the same player as before (assume the player's team is a taxpayer, and can accept 125% plus $100,000 of the player's outgoing salary).This time, let's assume our player has an Early Termination Option following the fourth season of his contract, so if he is traded during the fourth season, the entire bonus is allocated to that season. This means that following a trade, $1,300,000 would be included in his new team's team salary. Suppose a taxpaying team wants to trade their $1,400,000 player for this player. That team can accept $1,850,000 for their player, and since our player counts $1,300,000 as incoming salary, there's no problem on their end. But our player counts for $1 million as outgoing salary, so the most we can accept in return is $1,350,000. This means the trade doesn't work from our end. And in this case, waiving a portion of the trade bonus will not help.

A player's salary added to his trade bonus cannot exceed the maximum for that season (based on years of service). For example, in 2011-12 the maximum salary for a player with 7-9 years of service is $15,506,632. If such a player has a $15 million salary and a $1 million trade bonus, then his trade bonus is pared down to $506,632 when he is traded. This happens automatically -- the player has no say in the matter. The same is true for trades of rookie scale contracts that include a trade bonus. If the salary added to the trade bonus exceeds 120% of the player's scale salary amount (see question number 49) the trade bonus is reduced automatically when the player is traded.

If a team is capped at the "apron" ($4 million over the tax line) because it has used the Bi-Annual exception, Non-Taxpayer Mid-Level exception, or (beginning in 2013-14) acquired a player in a sign-and-trade transaction, and wants to acquire a player whose salary added to his trade bonus exceeds the apron, then the trade bonus cannot be reduced (even with the player's consent); the trade is simply illegal.

There is no recomputation of the allocation of a trade bonus based on whether the player does or does not invoke an option or ETO. For example, if a player with a five-year contract and an ETO following the fourth season is traded during the fourth season of his contract, then his entire trade bonus is charged to the team salary that season. If the player does not invoke his ETO that summer (locking in the fifth season), the allocation of the trade bonus does not change -- none of the bonus is charged to the fifth season. In other words, the allocation of a trade bonus always reflects the state of the contract at the time of the trade.

100. When can't a player be traded? Can players be given "no-trade" clauses in their contracts?

A "no-trade" clause prevents the team from trading the player without the player's consent. A no-trade clause can be negotiated into a new contract1 if the player has been in the NBA for at least eight seasons, and has played for the team with which he is signing for at least four seasons2. They don't have to be the four most recent seasons -- for example, Horace Grant received a no-trade clause from Orlando when he signed with them in 2001. He had played for Orlando for the requisite four seasons, but had played for Seattle and Los Angeles in the interim. Few players actually have one of these negotiated no-trade provisions (currently only Carmelo Anthony, Kobe Bryant, Tim Duncan, Kevin Garnett, Dirk Nowitzki and Dwyane Wade have them).

If a player with a negotiated no-trade clause consents to a trade and is traded, his no-trade clause remains in effect with his new team.

There are two additional circumstances in which a trade requires the player's consent:

In addition, teams cannot trade players under the following circumstances:


1 A no-trade clause cannot be negotiated into an extension, unless player's existing contract or extension already contained a no-trade clause.
2 When the player has been with his team a partial season (for example, when traded mid-season), they round his team tenure up. For example, when Carmelo Anthony re-signed with the Knicks in 2014, he received a no-trade clause despite being with the Knicks only 3.5 seasons. The logic is the same as the years of service rule, where a player is credited for a full year of service even if he was on a team's roster for just a single day.
3 When there is an option year involved, they may be able to get around this restriction by invoking the option prior to the trade.
4 Playoff teams can trade players during the playoffs who are not on their playoff roster.
5 This does not apply to rookie scale contracts, which can be extended without such limitations immediately after they are traded.
6 It is possible to work around this restriction by waiving a current player, executing the trade, waiving one of the incoming players, and then re-signing the original player.

101. I keep hearing about teams wanting to acquire "ending contracts" in trades. What are they, and why are they so valuable?

Sometimes teams get locked into long-term financial commitments from which they later want to extricate themselves. Typically this is when they have players with expensive, long-term contracts, but have no real hope of competing for a title before those contracts run out. These teams usually have little hope of having cap room to sign free agents, and may be facing large luxury tax payments as well (see question number 21). But if such a team were to trade a high-salaried player for a player with a similar (or even higher) salary who is in the last year of his contract, then they would be able to rid themselves of that financial obligation the following summer. This could get the team below the tax level, or possibly create enough cap room with which to sign a productive free agent.

This means that some players who aren't necessarily trade-worthy from a basketball standpoint become valuable trade commodities from a financial standpoint. A competing team might be able to parlay mediocre players with ending contracts into a much better basketball player, as long as they are willing to assume a long-term financial obligation. One such trade occurred in 2004-05 when Golden State traded Speedy Claxton, Dale Davis and cash to New Orleans for Baron Davis. With this trade Golden State was able to upgrade its roster, while New Orleans was able to unload Davis' contract, which had four years and $63 million remaining.

Note that players with ending contracts (including players whose contracts might end due to an option or ETO) cannot be traded after the trade deadline (players whose contracts are not ending can be traded after the last day of the team's season and before July 1 -- see question numbers 100 and 103).

102. How are teams able to trade players who are out of the league, like Dallas did with Keith Van Horn?

The short answer is: they can't. Under previous CBAs teams were allowed to sign-and-trade (see question number 91) any player to whom they had Bird rights. Bird rights don't automatically go away once the player is out of the league (see question number 33 for details), so many teams continue to hold Bird rights to players who have long since retired (for example, as of this writing in 2012, the Lakers still hold Bird rights to John Salley, who last played in 1999-2000).

Teams were able to take advantage of the Bird status of retired players when they needed to include extra salary in order to make a trade legal (see question number 83). By signing players out of retirement the teams were able to complete the trades, and since a sign-and-trade requires only the first year of the contract to be guaranteed, it was like they were trading an expiring contract (see question number 101). This kind of trade occurred twice during the 2007-08 season, when Dallas re-signed Keith Van Horn (who had been out of the league since 2006) and sent him to New Jersey as part of a package to acquire Jason Kidd, and the LA Lakers re-signed Aaron McKie and sent him to Memphis as part of a package to acquire Pau Gasol.

The league put a stop to this in the current CBA by restricting sign-and-trades to players who finished the prior season on the team's roster. A player can no longer be included in a sign-and-trade if he has been out of the league.

103. What is the trade deadline?

The trade deadline is the point during the season after which trades are prohibited. It is defined as 3:00 PM Eastern Time on the 17th Thursday of the season (March 15 in 2011-12). The prohibition on trades lasts until the day following the team's final game of the season (see question number 100).

104. What is the July Moratorium?

It is a period during the month of July in which teams may not sign most free agents or make trades. Free agents become free on July 1, but the salary cap is not set until the league's audit is completed later in the month. Teams and players must wait for the salary cap to be set before trades and most free agent signings can commence. Teams may negotiate with free agents beginning July 1, but they have to wait until the moratorium ends before signing a contract. The dates for the July Moratorium are as follows:

Season July Moratorium Players may be signed beginning
2012-131 July 1-10, 2012 July 11, 2012
2013-14 July 1-9, 2013 July 10, 2013
2014-15 July 1-9, 2014 July 10, 2014
2015-16 July 1-8, 2015 July 9, 2015
2016-17 July 1-11, 2016 July 12, 2016
2017-18 July 1-11, 2017 July 12, 2017
2018-19 July 1-10, 2018 July 11, 2018
2019-20 July 1-9, 2019 July 10, 2019
2020-21 July 1-8, 2020 July 9, 2020

There are a few types of signings that are allowed to take place during the July Moratorium. Generally, these are the signings that do not depend in any way on the specific value of the salary cap:

All other signings must wait until the moratorium ends.


1 There was no July Moratorium in 2011-12 due to the 2011 lockout.

105. Can teams find loopholes in the CBA and do things the league never intended to allow? What is circumvention?

As any league executive will tell you, the CBA isn't a list of the things teams can't do, it's a list of the things teams can do. The league operates in a "disallow by default" mode -- actions are not allowed except where the CBA specifically permits them.

In other words, teams aren't allowed to put anything into a player's contract that wasn't negotiated between the league and players association and included in the CBA. For example, a team signing a known drug offender couldn't insist on a "one strike and you're out" agreement or that the player attend mandatory drug counseling -- instead they must follow the negotiated drug program (see question number 108).

The CBA also has a general prohibition on circumvention which states that the rules exist to preserve the benefit derived by the teams and players, and that nobody shall do anything to defeat or circumvent the intent of the agreement. The league can use this prohibition to disallow a trade that they feel circumvents the CBA, even though that trade is not specifically prohibited by the agreement.

Examples of conduct considered to be circumvention include:

Whenever a contract is signed, extended, renegotiated or otherwise amended, the team, player, and player's agent must certify, under penalty of perjury, that there are no side agreements or understandings of any kind relating to:

The intent of these rules is to ensure that the only agreement from which either the player or the team can benefit is the current, signed player contract. The rules extend to sponsors, business partners and other team affiliates, and to player agents, representatives and family members.

106. How does player discipline work? Can teams fine or suspend players for any reason? Do fines and suspensions apply to team salary?

The league or a player's team can levy a fine and/or suspension for breaking league or team rules1, respectively. Generally the league and the team do not both discipline a player for the same violation, with a league penalty superseding any team penalty. However, there are a few exceptions where a player can be disciplined by both the league and his team -- when the egregious nature of the act or conduct is so lacking in justification as to warrant a double penalty. The CBA does not give a complete list of reasons for which a player can be fined or suspended, although some are specified:

The money from fines and suspensions is put to good use -- it's given to charities of the NBA's and players association's choosing. Players are not paid while they are suspended -- for each missed game, the player is docked 1/110 of his salary, whether suspended for a preseason, regular season or postseason game (see question number 14 for information on how suspensions impact team salary).

A suspended player can be traded.


1 Team rules must be in writing, reasonable, and not in violation of the CBA or the standard player contract.
2 Except as the direct result of an injury sustained in any team game or practice.

107. Can fines or suspensions be appealed?

Players are allowed to appeal fines and suspensions. If the penalty from league discipline is less than the following, then the appeal is heard by the Commissioner. If the penalty exceeds these amounts, or if the player and players association are dissatisfied with the Commissioner's decision, the appeal is heard by the league's grievance arbitrator:

Penalties imposed by a team may be appealed to the league's grievance arbitrator if the financial impact (from a fine and/or lost salary due to a suspension) is $5,000 or greater. In the case of any appeal involving penalties imposed by the league or the player's team, the arbitrator's decision is the full and final resolution of the dispute.


1 "On-court" means any area within the arena from the time the player arrives for a game until the time he leaves.

108. What is the league's drug program?

The NBA conducts random testing of its players, and provides both treatment programs and penalties for players who test positive for prohibited substances, which are classified into the following categories:

Testing falls into two categories: reasonable cause and random. Reasonable cause testing occurs when the league or players association provides the program's independent expert with information about a player's use, possession or distribution of prohibited substances, and the expert believes that reasonable cause exists to order testing. If reasonable cause is found to exist, the player can be tested without notice up to four times in a six week period. Players can be subjected to random testing up to four times during a season and up to two times during an offseason (offseason testing is conducted for SPEDs and diuretics only). League-wide, the program will not conduct more than 1,525 tests during a season or more than 600 tests during an offseason. Players who have entered a drug program can also be directed for testing if they miss a game, miss two team flights and/or practices in a seven-day period, or are charged in a court of law with driving under the influence or driving while intoxicated.

Test samples are split into an "A" sample and a "B" sample, with the "A" sample submitted for laboratory testing. If a player's "A" sample results in a positive test, the player can request that his "B" sample also be tested, at a different lab than the one that tested his "A" sample. A test is also considered to be positive if the player fails or refuses to submit for testing, fails to cooperate with the testing process, or tries to cheat. The program's medical director reviews all positive tests before the results are official.

Players can come forward voluntarily for a problem involving the use of a prohibited substance. A player who comes forward voluntarily will enter the appropriate education, treatment and counseling program, and will not be penalized for coming forward (although he may be penalized for failure to comply with his program or for advancing a stage under stage two of the Drugs of Abuse program).

If a player tests positive for a drug of abuse, whether through reasonable cause testing or random testing, he is dismissed from the league. If a player tests positive for marijuana, SPEDs or diuretics, he enters the appropriate program where evaluation, treatment and further testing commence. The player also suffers the penalties associated with his specific program:

Players are also dismissed from the league if they are convicted in a court of law of distributing drugs, of if they are convicted of the use or possession of a prohibited substance other than marijuana. When a player is dismissed from the league his contract is voided (see question number 110), and he is disqualified from playing in the NBA for at least two years. The exception is in the case of a first-year player who was caught through random testing, in which case the dismissal lasts for one year, and the player must enter the Drugs of Abuse program. An application for reinstatement is subject to the approval of the league and players association. Once reinstated, any subsequent dismissal from the league is final.

Teams and players are not allowed to override any portion of the drug program. For example, a team is not allowed to sign a player with a history of marijuana abuse on the stipulation that "one strike and he's out."

The league and players association are convening a panel to determine whether there is a valid test for Human Growth Hormone (HGH), and if so, to recommend testing procedures. If a valid test exists, the league may commence HGH testing 60 days afterward, up to two times during each season, and once during each offseason.

109. What is tampering?

Tampering is when a player or team directly or indirectly entices, induces or persuades anybody (player, general manager, etc.) who is under contract with another team in order to negotiate for their services. The NBA may impose suspensions and/or fines up to $50,000 if tampering is discovered, however the league's practice has been to wait until a team lodges a complaint before investigating (but that's not to say they don't continue to monitor the league and won't take action independently if they discover that tampering has occurred). Here are some examples:

You may have noticed that when general managers and other team personnel talk to the press, they are careful to avoid talking about specific players who play for other teams. They do this in order to avoid tampering. The only allowed response when talking about players under contract with other teams is to decline comment.

110. What does it mean when a contract is voided?

It's when a contract is canceled, i.e., rendered "null and void" because its terms were broken. This is not the same as merely terminating a contract by waiving the player (see question number 65). When a player is waived, some of the terms of the contract remain in effect -- for example, the player is still paid any remaining guaranteed salary. When a contract is voided, none of its terms remain in effect. It's treated the same as if the contract had never existed.

Contracts might be voided under the following circumstances:

Any attempt at voiding a contract likely would be met with a grievance filed by the players association on behalf of the player. Grievance arbitrators have consistently denied attempts to void contracts. For example:

111. How much are players fined for technical fouls and ejections? Where does the money go?

These amounts apply to both players and coaches.

Technical fouls (2011-12 regular season):

Technical fouls (regular season starting 2012-13):

Technical fouls (playoffs):

Ejections:

The money from technical fouls and ejections is split evenly between charities of the league's and players association's choosing.

112. How does it work when the league expands? Can the league also contract?

To supply an expansion team with its initial complement of players, the league holds an expansion draft1 prior to that year's NBA draft. Existing teams are allowed to protect up to eight players (including restricted free agents) from being selected in the expansion draft, but every team must expose at least one player who can't possibly become a free agent as the result of the exercise or non-exercise of an option or ETO. Unrestricted free agents can neither be protected from nor selected in the expansion draft, and are essentially ignored. Restricted free agents (see question number 44) may be selected, but become unrestricted free agents upon selection (with the caveat that they cannot then re-sign with the team from which they came). No team may lose more than one player in an expansion draft.

Some players may become unrestricted free agents due to the invocation or non-invocation of an option or ETO (see question number 59). The league uses their status on the day of the expansion draft -- i.e., if a player has invoked his option or ETO by the day of the expansion draft, then he is treated as a free agent. If a player has not invoked an option or ETO by the day of the expansion draft, then he is treated as being under contract (so it is possible for an expansion team to select a player in the expansion draft who then invokes his option, becomes an unrestricted free agent, and signs elsewhere).

If a team is over the cap and loses a contracted player (not a restricted free agent) to an expansion team, they receive a trade exception (see question number 85) equivalent to the selected player's salary.

Existing teams are allowed to compensate expansion teams (usually with draft picks), in exchange for selecting or not selecting particular players in the expansion draft. For example, in the 1995 expansion draft (when Vancouver & Toronto entered the league), Orlando left Darrell Armstrong, Anthony Avent, Rodney Dent and Geert Hammink unprotected, but did not want to lose either Armstrong or Hammink. They gave Vancouver their 1996 second round pick in exchange for Vancouver selecting Dent with the second pick in the expansion draft. With Dent selected by Vancouver, Armstrong and Hammink became ineligible.

It is also common to see teams leave a desirable player unprotected, hoping that the player's age and/or high salary will dissuade the expansion team from selecting him. This allows those teams to protect an additional player whom they might have been more likely to lose. Or in some cases, they might dangle a high-priced player hoping the expansion team takes him off their hands.

Expansion teams have a lower salary cap for the first two years of their existence. In their first year, their salary cap is 80% of the salary cap for the rest of the league. In their second year, it's 90% of the salary cap for the rest of the league. Beginning with their third season, they have the same salary cap as the other teams. Their minimum team salary (see question number 15) is also lower by a commensurate amount.

Expansion teams often have restrictions placed on their draft position in their first few seasons. For example, Charlotte was assigned the #4 pick in the 2004 NBA draft, and Vancouver & Toronto could not receive the #1 pick in the NBA draft for their first four seasons in the league.

If an expansion team drafts a player in the expansion draft and waives him prior to the first day of the season, then that player's salary does not count toward team salary (although they still have to pay him). This provides some protection against bad decisions made in the expansion draft -- an expansion team could select a player, later decide they don't really want him, and waive him without their team salary being negatively affected.

Most league calculations (average salary, total benefits, total salaries, BRI, salary cap) simply ignore expansion teams (and the players on those teams) for two years. For example, the league calculates the average salary by adding up the team salaries for every team, and dividing by an amount equal to the number of teams times 13.2 (see question number 32). For this calculation the total of the team salaries does not include team salaries from expansion teams in their first two seasons, nor does the number of teams.

Basketball Related Income (BRI) does not include the fee expansion teams pay to join the league.

The league also reserves the right to contract (reduce the number of teams in the league) if necessary. The league needs to provide the players association with written notice of any decision to contract, and the two sides will negotiate to agree on the effects of contraction on the players and the procedures to be followed.


1 There are similar procedures in place to conduct a "restocking draft" in the event of a disaster, which is defined as a team suffering the death, dismemberment or permanent disability of five or more players.

113. Are players paid on a regular schedule? Are there other ways to pay players beside regular paychecks?

The league's standard paydays are on the 1st and 15th of each month, beginning November 151. For contracts signed under the current CBA, the default is 24 paychecks paid over one calendar year. Teams and players whose salaries are over the minimum salary can also agree to a 12-check or 36-check schedule, paid over six months or 18 months, respectively. For contracts signed under the previous CBA the standard is 12 paychecks paid over six months, with teams and players also able to negotiate a schedule of 24 paychecks paid over 12 months.

There are various ways for players to be paid at times other than the standard paydays, including signing bonuses, advances, loans, and deferred compensation. However the basic rule is that players must be paid at least 20% of their base compensation, not including bonuses, on regular league paydays. Players cannot have signing bonuses, advances, loan repayment schedules or deferred compensation that cause this rule to be violated.

When a player is waived he continues to be paid his guaranteed salary. See question numbers 65 and 66 for more information.

Other rules:


1 For 2011-12 the first payday was January 1.
2 The market rate is defined as the prime rate plus 1%, but no less than 7% and no greater than 9%.

114. How do I find out the salary for a specific player?

The NBA does not publish player salaries. However, a number of unofficial sources exist:

115. The league instituted a dress code for players. Do they have the right to do that?

The league has broad powers which enable them to institute a dress code (and the players association has always acknowledged the league's right to do so). For example, every player's contract contains a provision which states that the player agrees to be "neatly and fully attired in public." In addition, the Commissioner has the general power to penalize players for conduct (which would include dress) detrimental to the league's best interests.

116. What does it mean when the players union decertifies? Why would they want to do that? What effect does it have?

Decertification and disclaimer of interest are similar processes to end a union's authority to collectively bargain on behalf of its members. A decertification is issued by the union members, while a disclaimer of interest is issued by the union itself. They are tactics sometimes employed (or at least threatened) by player unions in the event of a difficult labor situation. Antitrust laws are at odds with labor laws -- while antitrust laws prohibit cooperation among competitors and agreements that are anticompetitive, labor laws encourage cooperation among competitors -- such as forming unions and bargaining collectively. This tension is resolved with the "non-statutory labor exemption," which exempts collective bargaining agreements from the antitrust provisions. The NBA draft and restrictions on salaries and free agency are immune from the antitrust laws so long as they are part of the CBA.

Courts have ruled (with the NFL) that the non-statutory labor exemption shield continues even after the CBA expires, so long as a "labor relationship" still exists. But if the players decertify or the union disclaims interest -- ending the union's collective bargaining rights and turning it into a non-union trade association -- it ends this continuing labor relationship and opens the league to an antitrust suit.

The NBA players association threatened to decertify in both 1995 and 1998, but ultimately voted against it both times. The union did disclaim interest during the 2011 labor dispute (see question number 7), filing an antitrust suit shortly afterward. The suit was settled over the following days (ending the labor dispute), and the players voted to re-certify the union in order to conclude their labor negotiations and settle on a new CBA.

117. Are there other must-read web sites for the budding capologist?

In the last few years a number of web sites have sprung up which deal with the business side of the NBA. Here are a few of them:

First and foremost, I maintain a blog where I discuss CBA-related matters. http://www.cbafaq.com/blog
In addition to her salary information, Patricia Bender maintains information on player contracts and lots of other NBA-related data. http://www.eskimo.com/~pbender/index.html
RealGM provides an abundance of news and resources, including a discussion forum dedicated specifically to CBA and business matters. http://www.realgm.com (main site) http://www.realgm.com/boards/viewforum.php?f=4 (discussion forum)
An excellent archive of NBA transactions maintained by Frank Marousek. http://www.prosportstransactions.com/basketball/
The Association for Professional Basketball Research contains a wealth of information on league history. http://www.apbr.org (APBR site), The Compendium of Professional Basketball (book by Robert Bradley).
Mavericks owner Mark Cuban frequently blogs about NBA-related matters. http://blogmaverick.com
Wizards owner Ted Leonsis also blogs about NBA-related matters. http://www.tedstake.com
Grizzlies owner Robert Pera also blogs. http://www.rjpblog.com
The Sports Law Blog frequently discusses NBA labor issues. http://sports-law.blogspot.com/
This FAQ has a Facebook page where I also answer questions. http://www.facebook.com/pages/NBA-Salary-CapCollective-Bargaining-Agreement-FAQ/53461764029

118. What are the important CBA-related dates each season?

The following dates are referenced in the CBA, starting with July 1, which is the first day of the salary cap year. Any deadline which falls on a Saturday, Sunday or federal holiday is extended to the next business day.

July 1 Salary cap year begins
July moratorium begins (see question number 104)
Free agents become free
Unrenounced free agents, scale amounts for first round picks playing outside the NBA, and roster charges are applied to team salary (see question number 14).
Poison Pill provision expires (see question number 90)
Teams may apply for a Disabled Player exception (see question number 25)
Free agents can be renounced (see question number 41)
Players acquired via secondary waiver claims through the Amnesty provision can be traded (see question number 69)
July 8-11 (date varies by year) July moratorium ends (see question number 104)
Salary cap adjusts (see question number 13)
Salaries adjust
Exceptions arise (see question number 25)
Teams can sign free agents and make trades
Starting 2012, amnesty waiver period begins (lasting seven days -- see question number 69)
Contracts can be renegotiated (see question number 61)
Contracts can be extended (see questions number 60)
July 16 First round draft picks become free agents if not given a required tender (see question number 49)
July 23 Last day to withdraw a qualifying offer to a restricted free agent without the player's consent (see question number 44).
August 15 Players remain on waivers for 48 hours (see question number 65)
August 31 Last day to waive a player signed or extended under the current CBA with the Stretch provision applying to the current season (see question number 65)
September 6 Second round draft picks become free agents if not given a required tender
October 1 Last day for a restricted free agent to accept a Qualifying Offer (unless it is extended -- see question number 44)
October 31 Last day to exercise option years on rookie scale contracts (see question number 49)
Last day rookie scale contracts can be extended (see question number 60)
Late October/early November (date varies by year) Last day of offseason
Roster limit decreases to 15 players
Last day to waive summer contracts without applying to team salary (see question number 70)
Last day for sign-and-trade transactions (see question number 91)
Unrenounced free agents, scale amounts for first round picks playing outside the NBA, and roster charges no longer apply to team salary (see question number 14).
November 15 First league payday (see question number 113)
December 15 Players who signed a contract on or before September 15 can be traded2 (see question number 95)
January 5 10-day contracts can be signed (see question number 80)
January 10 Contracts guaranteed for rest of season (see question number 64). Players who do not clear waivers prior to this date are guaranteed.
Scale salary amounts and unused exceptions begin to reduce in value (see question numbers 49 and 26)
January 15 Last day to apply for a disabled player exception (see question number 25).
Players who signed a contract on or before October 15 can be traded (applies only to Larry Bird or Early Bird free agents who re-sign with their prior team, the team is over the cap, and the player receives a raise greater than 20% -- see question number 89).
February 1 First round draft picks who were playing pro ball outside the NBA may sign a rookie scale contract that takes effect the following season.
February 28/29 Last day contracts can be renegotiated (see question number 61)
March 1 Players waived after this date are ineligible for the playoffs (March 23 in 2011-12)
Last day for a restricted free agent to accept a qualifying offer (if extended) or sign an offer sheet (see question number 43)
March 10 Disabled Player exceptions expire (see question number 25)
Mid-April (date varies by team and season) Date of last regular season game
Last day players can sign contracts.
Snapshot date for luxury tax (see question number 21).
June 25 Last day to exercise player option if player will be a restricted free agent (see question number 44).
June 29 Option years (except in rookie scale contracts and player options for players who will be restricted free agents) and ETOs must be exercised1 (see question number 59)
June 30 Deadline to extend a qualifying offer (see question number 44)
Last day to sign an extension (see question number 60)
Players are credited with one year of service
Salary cap year ends

1 Individual contracts may specify an earlier date.
2 Also see entry for January 15.

119. Can I get a copy of the actual Collective Bargaining Agreement?

The Collective Bargaining Agreement is a very long legal contract between the league and the Players Association, and is written in dense legalese. It is my hope that this FAQ answers all your questions. However, if you really want the CBA, it is available from the players association's web site at http://www.nbpa.org/cba/2011. It is also available through the University of New Hampshire School of Law's Sports and Entertainment Law Institute web site, at http://www.ipmall.info/hosted_resources/SportsEntLaw_Institute/UNHSportsEntLaw_Institute.asp. In addition, members of the media with an account on the NBA's "Media Central" website can download it there. Bound copies of the CBA are no longer available from the league office.

The CBA doesn't answer every possible question. Many of the league's rules, policies and procedures are contained in these documents:

These documents are separate and apart from whatever contracts the league may make with other entities such as the players association. It has always been possible for the public to obtain the CBA. The league kept the Constitution and By-Laws confidential until the Donald Sterling situation occurred in 2014, after which it was made publicly available at http://mediacentral.nba.com/media/mediacentral/NBA-Constitution-and-By-Laws.pdf. The league continues to keep the Operations Manual confidential.

120. I see reports in the newspaper or on the Internet that would be impossible if everything you say here is true. Is this FAQ wrong?

The media sometimes gets it wrong. Some members of the media simply don't pay enough attention to the rules (they -are- pretty complicated, after all). However, this has improved tremendously since this FAQ was originally released in 1999 (draw your own conclusions about whether I had anything to do with it). It used to be easy to separate the legitimate rumors from the made-up ones -- the made-up ones were often impossible under the CBA. Today it's much harder to separate the good rumors from the bad.

121. What if this FAQ really is wrong? How authoritative is this FAQ?

This FAQ has been fact-checked against the actual CBA, and I'm pretty confident about its accuracy. Still, this FAQ isn't necessarily 100% accurate. If you find any errors, please contact me at lmcoon@cox.net (please include the source of your information, if possible). You may also contact me if there are additional questions you would like to see added to this FAQ, or if you find any of the answers confusing and in need of clarification.

The author of this FAQ is not connected to the NBA, any of its teams or the NBA players association.

122. Can I e-mail you with other CBA-related questions?

Absolutely! Just don't rely on a prompt answer -- this isn't my job, it's a hobby, and I'm only able to answer questions as time permits (after career, family and other personal obligations have been met). I get a *lot* of e-mail, which frequently gets backed up. In addition some responses are delayed until I can verify facts with others, or batched together so I can answer a set of related messages all at once. Unfortunately, questions that are longer and involve a lot of thought, research and/or detail on my part tend to be delayed more than simple ones that I can answer off the top of my head. I do ask that you make a reasonable effort to make sure the information you're looking for isn't already covered in the FAQ before e-mailing me.

You will probably find that your question will be answered more quickly if it is posted in the CBA/Business discussion forum at RealGM.com: http://www.realgm.com/boards/viewforum.php?f=4, simply because more people will see it. A number of CBA-knowledgeable people, including me, frequent that discussion forum.

Another excellent venue for questions is Twitter. Follow me at http://www.twitter.com/LarryCoon. Questions posted to Twitter are usually answered quickly, although the Twitter format precludes lengthy, detailed answers.

There is also a Facebook page for this FAQ, where I also answer questions.

Finally, I occasionally host online chats at ESPN.com and BasketballInsiders.com where I field questions from readers.

I also recognize that some of you (members of the media, etc.) need this information as part of your job, and not simply because you're curious. I try to give these questions the highest priority. Apologies in advance to anybody who gets put on the back burner as a result.

The bottom line is that emails sometimes quickly make their way to the end of an inbox queue that is several hundred messages deep. Apologies to anyone who has sent me an e-mail and didn't receive a reply.

123. Can this FAQ be reproduced or distributed? Can I link my web page to it?

This FAQ is copyrighted, and the copyright notice appears herein. The intent of the copyright is only to restrict the following:

Any use of this FAQ not specifically allowed in the copyright notice requires written consent. Such consent is generally granted to any request that does not violate the provisions listed above.

124. Can you translate this FAQ into (name of language)? I'll even translate it for you!

I appreciate the fact that the NBA receives worldwide attention, that there are fans around the world interested in CBA-related matters, and that this has created a demand for this FAQ in languages other than English. I have received requests for translations in over a dozen different languages, usually accompanied by kind offers to provide the translation (which would be necessary, since I speak none of those languages).

I had previously turned down all such requests because I had no way to ensure that a translation would be faithful and accurate, and because I had no way to ensure that translations would be kept up to date. However, these issues are not unique to this FAQ, and many others have successfully found ways to balance the needs of their audience with the need for accuracy. As a result, I have revised my translation policy, as follows:

125. How should this FAQ be cited?

If you are citing this FAQ in an academic or scholarly context, the following is a suggested citation. Note that you should replace the "last visited" date with the date you actually retrieved this FAQ.

Coon, Larry (2012); "NBA Salary Cap/Collective Bargaining Agreement FAQ"

http://www.cbafaq.com, last visited May 6, 2012

126. Where can this FAQ be downloaded?

This is the third edition and latest version of this FAQ. It can be found at http://www.cbafaq.com.

The second edition of this FAQ covering the 2005 CBA can be found here.

The first edition of this FAQ covering the 1999 CBA can be found here.

History of this FAQ, acknowledgements, and about the author:

An original NBA Salary Cap FAQ was written by Tony Minkoff and covered the 1995 CBA. This FAQ originally was based on Tony's original, and on several articles written by Garret Okamoto for totk.com (Top of the Key). An archive copy of Tony's original FAQ can be found here.

The first edition of this FAQ was written in 1999, covering the 1999 CBA. An archive copy can be found here. Tony and Garrett participated with me on the research and draft review process, along with Patricia Bender, Josh Frankel, Jon Hamm, Jonathan Richards and Gary S. Simon. The suggestions and contributions of a number of people are also acknowledged in the revision history.

The second edition of this FAQ was written in 2005, covering the 2005 CBA. An archive copy can be found here. Ryan Hoak, Dan Hoelzl, Zev Iosupovici, Eric Pincus, Dan Rosenbaum and Andy Stein participated with me on the research and draft review process. The suggestions and contributions of a number of people are also acknowledged in the revision history.

This is the third edition of the FAQ, completed in 2012 and covering the 2011 CBA. A number of people were kind enough to contact me to volunteer their services as I prepared this edition, and I was able to put some of them to good use. I'd especially like to thank Josh Berman for entering the rookie scale salary and index information, Zach Schreiber for checking the scale salaries, index, and links from one question to another, and Clint Peterson for updating Zev Iosupovici's original masthead graphic.

After I had reviewed everything for the thousandth time I unleashed the trusted eyes of Andy Stein, who quickly pointed out a hundred-or-so things I had missed. From there I opened it up to a small team of reviewers. My thanks to Edward Gleason, Brett Greenberg, Ryan Hoak, Bernie Lee, David Lord, Albert Nahmad and Eric Pincus for providing feedback and suggestions which helped improve the final product.

In summary, I'd like to collectively thank everybody whose contributions found their way into this FAQ over the years. Thanks also to my friends & colleagues in the media who have been so kind as to inform the public of this FAQ's existence, and for the kind words they have written about the work I have done here.

Please note that I will not accept advertisements, and I will not carry a link to your site unless it is directly related to the material in this FAQ. If you have a site you feel should be mentioned here then you can try asking, but if it belongs here then chances are I already know about it.


About the author:

Larry Coon is a computer scientist by both education and trade. He works as an IT Director at University of California, Irvine, and has also taught university Computer Science courses, specializing in database theory. A lifelong NBA fan, he assimilated a working knowledge of the league's salary cap and trade rules, eventually organizing this knowledge into the Salary Cap FAQ to provide "the kind of reference I was looking for when I was trying to figure it all out."

Larry has been featured in the New York Times, Los Angeles Times and Sports Illustrated. He makes regular media appearances including television (such as ESPN's "Outside the Lines") radio and podcasts. He is a regular contributor to ESPN.com and to BasketballInsiders.com. He is often quoted and cited, both online and in print, by local and national media venues. He has also contributed to the New York Times Off the Dribble blog, and to RealGM.com.

Larry lives in Orange County, California with his wife and 15 year old daughter, about whom he brags at every possible opportunity.

Appendix: Differences between 2011 and 2005 CBAs

2011 2005 See
CBA is in effect for ten years, with mutual option to terminate after the sixth year. CBA is in effect for seven years, with league option to terminate after the sixth year. 9
50% of the proceeds from arena naming rights applies to BRI. 45% of the proceeds from arena naming rights applies to BRI. 12
50% of the proceeds from practice facility naming rights applies to BRI. N/A 12
The salary cap is based on 44.74% of BRI ($58.044 million in 2011-12) The salary cap is based on 51% of BRI ($49.5 million in 2005-06) 13
A first round draft pick's cap hold comes off the team salary if the team and player agree in writing not to sign a contract that season. N/A 14
A modified formula is used for determining the team salary when a team is using the Bi-Annual, Non-Taxpayer Mid-Level or Taxpayer Mid-Level exception, or receiving a player in a Sign-And-Trade transaction. N/A 14
The minimum team payroll is 80% of the cap in 2011-12 85% in 2012-13, and 90% thereafter. The minimum team payroll is 75% of the cap. 15
Maximum salaries are based on 42.14% of Basketball Related Income (BRI) Maximum salaries are based on 48.04% of Basketball Related Income (BRI) 16
Qualified Players coming off rookie scale contracts can receive the maximum salary applicable to players with 7-9 years in the league. Maximum salary for all players coming off rookie scale contracts is the maximum salary applicable to players with 0-6 years in the league. 17
Players are paid over 12 months by default. Alternatively, can have 6 or 18 month pay schedules. Players are paid over six months by default. Alternatively, can have 12 month pay schedule. 17
The lesser of 80% of guaranteed salary or 50% of base salary can be advanced. No more than 25% can be advanced prior to October 1. 80% of a player's salary can be advanced. 17
Up to 25% of a player's compensation can be deferred. Up to 30% of a player's compensation can be deferred. 17
A new supplemental benefits program is funded with 1% of BRI. N/A 18
Players are guaranteed 50% of BRI, plus/minus 60.5% of the amount by which revenues exceed/fall short of projections, with limits of 49% and 51% of BRI. Players are guaranteed 57% of BRI each season. 18
Escrow is based on 10% of player salaries. Escrow is based on 10% of salaries in 2005-06, 9% through 2009-10, and 8% thereafter. 19
The luxury tax level is based on 53.51% of BRI. The luxury tax level is based on 61% of BRI. 21
The luxury tax is progressive, with the rate increasing for every $5 million the team is above the tax line. Repeater penalty when the team is a taxpayer in three out of four years. The luxury tax is $1 for every $1 the team is above the tax line. 21
Revenue sharing redistributes approximately $180 million annually. Revenue sharing redistributes approximately $40 million annually. 24
The Disabled Player exception can be used to sign/acquire players for one year only. Disabled Player exception can be used to sign/acquire player for up to 5 years. 25
Teams cannot apply for a Disabled Player exception after January 15. N/A 25
The Disabled Player exception expires on June 30. The Disabled Player exception expires in either 45 days or on October 1. 25
The Bi-Annual exception is not available to teams above the apron ($4 million above the tax line). N/A 25
Teams over the apron have a smaller Mid-Level exception (3 years, with a lower starting salary). N/A 25
Once a team has used an exception unavailable to teams over the apron, the apron becomes a hard cap. N/A 28
The Room Mid-Level exception is available to teams that sign players with cap room. N/A 25
Penalties for circumvention are $3 million for the first occurrence, and $4.5 million for the second occurrence. Penalties for circumvention are $2.5 million for the first occurrence, and $3 million for the second occurrence. 29
The penalty for an undisclosed agreement can be up to $6 million for any team and up to $250,000 for any player. The penalty for an undisclosed agreement can be up to $5 million for any team and up to $100,000 for any player. 31
Free agent cap holds for Larry Bird free agents not coming off rookie scale contracts are 150% or 190% of the player's previous salary. Free agent cap holds for Larry Bird free agents not coming off rookie scale contracts are 150% or 200% of the player's previous salary. 38
Free agent cap holds for Larry Bird free agents coming off rookie scale contracts are 200% or 250% of the player's previous salary. Free agent cap holds for Larry Bird free agents coming off rookie scale contracts are 250% or 300% of the player's previous salary. 38
A qualifying offer to a restricted free agent must be 100% guaranteed. The guarantee in a qualifying offer to a restricted free agent is the same as the guarantee in the last season of the player's previous contract. 44
Teams have three days to match offer sheets to restricted free agents. Teams have seven days to match offer sheets to restricted free agents. 44
Qualifying offers for certain players may be higher or lower if player meets or fails to meet starter criteria. N/A 49
Players can receive 7.5% raises in Bird or Early Bird contracts or extensions. Players can receive 10.5% raises in Bird or Early Bird contracts or extensions. 55
Players can receive 4.5% raises in other contracts. Players can receive 8% raises in other contracts. 55
Contracts for Bird free agents can be up to five years. Contracts for Bird free agents can be up to six years. 55
All other free agent contracts can be up to four years. All other free agent contracts can be up to five years. 55
Veteran extensions can total four seasons (including existing). Veteran extensions can total five seasons (including existing). 60
Only Designated Players can receive rookie scale extensions adding five new seasons. Rookie scale extensions can add five new seasons. 60
Raises in veteran extensions are based on the salary in the first year of the extension. Raises in veteran extensions are based on the salary in the last year of the extended contract. 60
If a contract is extended and renegotiated at the same time, the salary in the first season of the extension cannot decrease by more than 40%. N/A 61
A player with a career-ending injury or illness who resumes his career is reinstated on team salary after 25 regular season or playoff games. A player with a career-ending injury or illness who resumes his career is reinstated on team salary after 10 preseason, regular season or playoff games. 63
Teams cannot re-sign or re-acquire players with career-ending injuries or illnesses who resume their career. N/A 63
Players who are traded and subsequently waived can't re-sign with the team that traded them for one year or until the end date of their contract. Players who are traded and subsequently waived can't re-sign with the team that traded them for 30 days. 65
The waiver period includes weekend days. The waiver period does not include weekend days. 65
Guaranteed salary payments for waived players are "stretched" across twice the number of years remaining on the contract, plus one. By default, guaranteed salary in terminated contracts is paid according to schedule. Teams and players can negotiate shorter or longer pay schedules. 65
Teams may elect to stretch the cap hit for waived players whose salary payments are stretched. The cap hit for waived players applies to all guaranteed seasons of the waived contract. 66
Teams can amnesty one player (total) prior to any season until 2015-16. Amnestied players are excluded from team salary and luxury tax computations. Teams can amnesty one player prior to the 2005-06 season. Amnestied players are excluded from luxury tax computations. 69
Teams can claim amnestied players via a secondary waiver process. N/A 69
Unlikely bonuses may not exceed 15% of regular salary. Unlikely bonuses may not exceed 25% of regular salary. 74
The maximum signing bonus is 15% (10% in offer sheets to restricted free agents). The maximum signing bonus is 20% (17.5% in offer sheets to restricted free agents). 75
The overseas contract buyout amount starts at $525,000, and increases yearly. Up to $500,000 can be paid to buy out overseas contracts without counting against the cap. 77
Players with two or more years of service can be assigned to the D-League with the consent of the player and the players association. Players with two or more years of service cannot be assigned to the D-League. 81
Non-taxpaying teams can receive in trade 150% plus $100,000 (when trading $0 to $9.8 million), 100% plus $5 million (when trading $9.8 million to $19.6 million), and 125% plus $100,000 (when trading more than $19.6 million). Teams can receive 125% plus $100,000 in trade. 84
Base Year Compensation is eliminated in all but certain Sign-And-Trade transactions. Base Year Compensation applies when a player re-signs with Larry Bird or Early Bird rights, receives a raise over 20%, and his team is over the cap. 89
Starting in 2013-14, teams above the apron cannot receive a player in a sign-and-trade transaction. N/A 91
Teams cannot complete Sign-and-Trade transactions after the season starts. N/A 91
A player must finish the previous season on the team's roster to be eligible for a Sign-and-Trade. A player must have finished his last season in the NBA on the team's roster to be eligible for a Sign-and-Trade. 91
Sign-and-trade contracts are limited to four total years. Sign-and-trade contracts are limited to six total years. 91
Extend-and-trade contracts are limited to three total years and 4.5% raises. Extend-and-trade contracts are limited to six total years and 10.5% raises. 94
Players who are extended above the limits for an extend-and-trade can't be traded for six months. N/A 94
Players who are traded can't be extended above the extend-and-trade limit for six months. N/A 94
Teams can both send and receive up to $3 million cash in trade annually. Teams can receive up to $3 million in cash per trade. 97
Trade kickers are paid by the team trading the player. Trade kickers are paid by the team receiving the player. 98
Deferred compensation is any compensation paid after May 1 of the following season. Deferred compensation is any compensation paid after the contract ends. 113
Option buyouts are eliminated. Contracts can have buyout amounts associated with options and ETOs. N/A

Index:

Numbers in bold indicate the item in which the term is principally defined or explained.

5th Year 30% Max criteria 16, 17, 60, 91
10-day contract 11, 16, 29, 33, 65, 80, 118
Active List 79, 80
Active roster See "Active List"
Advance (salary) 113
Age (eligibility) 57
Aggregation 84, 85, 88, 90
Amnesty 11, 14, 15, 21, 25, 33 42, 65, 66, 69, 100, 118
Antitrust laws 4, 6, 7, 116
Apron 14, 23, 25, 28, 91, 99
Arenas provision See "Gilbert Arenas provision"
Average salary 25, 32
Base Year Compensation (BYC) 89
Basketball Related Income (BRI) 7, 12, 13, 18, 19, 22, 24, 112
Benefits 13, 18, 19, 20, 78, 112
Bi-annual exception 14, 23, 25, 26, 28, 55, 99
Bird rights See "Larry Bird exception"
Bonus (performance) See "Incentive"
Bonus (signing) See "Signing Bonus"
Bonus (trade) See "Trade Bonus"
Buyout (international) 15, 49, 75, 77
Buyout (player contract) 62, 65, 66, 67, 68, 79
Cap hold (draft pick) 14, 52
Cap hold (free agent) 14, 37, 38, 39, 40, 41
Cap room 14, 25, 26, 27, 36, 37, 39, 41, 42, 44, 45, 49, 51, 52, 60, 61, 69, 74, 75, 93, 101
Career ending injury 14, 63, 72
Cash in trade 52, 91, 97
CBA See "Collective Bargaining Agreement (CBA)"
Circumvention 30, 31, 34, 105
Collective Bargaining Agreement (CBA) 4, 6, 7, 8, 9, 10, 20, 116, 119, 121
Combining exceptions 27, 85, 88
Contract length 25, 55, 60, 70, 91
Contraction 112
D-League See "NBA Developmental League (D-League)"
Death (player) 25, 63, 64, 72, 112
Decertification 6, 116
Deferred Compensation 58, 113
Designated Player 55,60
Disabled Player exception 14, 25, 26, 55, 63, 65, 82, 118
Disclaimer of interest See "Decertification"
Dismissal (from the NBA) 108
Disqualification See "Dismissal (from the NBA)"
Draft pick 14, 43, 49, 51, 52, 53, 54, 55, 82, 87, 95
Draft rights 51
Dress code 115
Drugs of abuse 108
Drug testing 108
Duty days 78
Early Bird exception 25, 32, 33, 38, 41, 45, 55, 65, 69, 89, 95, 100
Early entry player 57
Early Qualifying Veteran Free Agent See "Early Bird exception"
Early Termination Option (ETO) 59, 60, 62, 65, 66, 98, 99, 118
Ejection (game) 111
Ending contract 101
Escrow 14, 18, 19, 20, 22, 23
ETO See "Early Termination Option"
Exception 2, 3, 11, 14, 21, 23, 25, 26, 27, 28, 41, 82, 83, 88, 118
Excluded International Player Payment amount 77
Exhibit 9 64, 70
Expansion 112
Expansion draft 14, 33, 112
Extend-and-trade 55, 60, 94
Extension 31, 55, 56, 58, 59, 60, 61, 74, 75, 90, 94, 100, 118
FIBA 7, 76
Fines 30, 31, 82, 106, 107, 108, 109, 111
First Refusal Exercise Notice 44
First round draft pick 14, 16, 25, 44, 49, 51, 52, 53, 54, 55, 59, 75, 77, 80, 87, 104, 113, 118
Forecasted BRI 18
Free agent 11, 14, 16, 25, 26, 31, 33, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 51, 53, 57, 58, 65, 70, 91, 95, 96, 101, 112, 118
Free agent amount See "Cap hold (free agent)"
Free agent cap hold See "Cap hold (free agent)"
Gilbert Arenas provision 23, 44, 45, 55, 84, 85, 90
Grievance 14, 21, 107
Guarantee (player salary) 11, 28, 45, 49, 53, 62, 63, 65, 66, 67, 68, 69, 70, 73, 77, 91, 99, 102, 113, 118
Guarantee (league wide salary) 7, 13, 18, 19, 20, 21, 69
Guarantee (league wide roster size) 79
Hard cap 2, 7, 14, 25, 28, 91
Human Growth Hormone (HGH) 8, 108
Inactive List 11, 79, 80, 81
Incentive 11, 14, 69, 74 81, 98
Income tax 78
Incomplete roster charge 14, 43, 118
Injured Reserve 79
Injury (career ending) See "Career ending injury"
Insurance 70, 73, 76, 82
International Buyout See "Buyout (international)"
International player 57, 75, 76, 77
Jock tax 78
July moratorium 14, 65, 104, 118
Labor negotiations 6, 7, 8, 116
Larry Bird exception 25, 26, 31, 33, 34, 35, 36, 37, 38, 39, 41, 42, 44, 55, 65, 69, 89, 91, 100, 102
Length (contract) See "Contract length"
Letter of clearance 7, 76
Likely bonus See "Bonus (performance)"
Loans 11, 49, 113
Lockout 6, 7, 57
Luxury tax 1, 11, 1, 21, 22, 23, 24, 63, 69, 118
Maximum annual cash limit See "Cash in trade"
Maximum qualifying offer 44, 104
Maximum salary (player) 16, 17, 38, 44, 60, 61, 104
Mid-Level exception See "Non-Taxpayer Mid-Level exception" and "Taxpayer Mid-level exception"
Minimum age See "Age (eligibility)"
Minimum Player Salary exception 25, 55, 82, 86, 88
Minimum salary (player) 16, 21, 25, 26, 29, 74, 80, 86, 104
Minimum team salary See "Team salary (minimum)"
NBA Developmental League (D-League) 79, 81
NBA Draft List 79
No-trade clause 100
Non-Bird exception 25, 26, 38, 41, 45, 55, 100
Non-NBA team 7, 14, 51, 52, 77, 87, 118
Non-Qualifying Veteran Free Agent See "Non-Bird exception"
Non-simultaneous trade See "Trade (non-simultaneous)"
Non-Taxpayer Mid-Level exception 14, 23, 25, 26, 45, 55, 99
Offer Sheet 14, 25, 38, 42, 43, 44, 45, 46, 64, 75, 91, 100, 118
Option year 11, 25, 44, 49, 55, 59, 60, 62, 64, 65, 66, 69, 75, 94, 98, 99, 100, 101, 112, 118
Over-36 rule 58
Overage (escrow) 13, 18, 19, 20, 21, 22
Pay days See "Pay schedule"
Pay schedule 44, 59, 62, 65, 66, 67, 113
Payroll (team) See "Team payroll"
Performance bonus See "Incentive"
Player discipline 106, 107
Players Association 4, 6, 7, 9, 13, 18, 21, 57, 63, 65, 74, 105, 106, 107, 108, 112, 115, 116, 119
Poison Pill provision 90, 118
Pro-ration (bonuses) 58, 60, 75, 77, 98, 99
Pro-ration (exceptions) 11, 25, 26, 29, 49, 118
Pro-ration (salaries) 11, 29, 58, 80
Projected BRI 13, 16, 18, 20, 21
Protected draft pick 87
Qualifying offer 11, 14, 25, 38, 44, 47, 49, 64, 100, 104, 118
Qualifying Veteran Free Agent See "Larry Bird exception"
Raises 25, 29, 44, 45, 51, 55, 56, 60, 61, 74, 75, 91, 93, 94
Reinstatement 25, 108
Renegotiation 58, 60, 61, 75, 113, 118
Renouncing (draft rights) 52, 53, 54
Renouncing (exceptions) 14, 25, 26
Renouncing (free agents) 33, 40, 41, 42, 43, 44, 91, 118
Required tender 14, 104, 118
Rest-of-season contract 16, 25, 28, 29
Restricted free agency 6, 11, 42, 44, 4959, 64, 75
Restricted free agent 14, 23, 25, 38, 44, 45, 46, 47, 49, 55, 100, 104, 112, 118
Retired player 14, 63, 67, 71, 79, 102
Revenue sharing 7, 12, 22, 24
Right of first refusal See "Restricted free agency"
Rookie exception 25, 49
Rookie free agent 51. 76
Rookie scale contract 11, 14, 16, 25, 38, 41, 44, 49, 51, 52, 53, 54, 55, 59, 60, 61, 64, 75, 77, 87, 90, 94, 99, 100, 104, 113, 118
Room Mid-Level exception 25, 26, 55
Room (under the cap) See "Cap room"
Roster charge See "Incomplete roster charge"
Roster size 79, 118
Salary cap 1, 5, 6, 13, 20, 104, 112, 118
Salary decrease 55, 61, 74
Salary increase See "Raises"
Salary (maximum player) See "Maximum salary (player)"
Salary (minimum player) See "Minimum salary (player)"
Salary (player) 11, 60, 114
Salary (team) See "Team Salary"
Scale salary See "Rookie scale"
Second round draft pick 16, 44, 45, 52, 87, 104, 118
Set-off 14, 62, 66, 67
Seven Year Rule 87
Sign-and-trade 14, 23, 25, 28, 33, 41, 44, 55, 64, 85, 87, 89, 91, 92, 93, 95, 97, 98, 99, 100, 102, 118
Signing bonus 11, 44, 49, 60, 61, 75, 77, 91, 97, 113
Simultaneous trade See "Trade (simultaneous)"
Soft cap 2, 3, 25
Starter criteria 44, 49
Stepien rule See "Ted Stepien rule"
Steroids and Performance Enhancing Drugs See "Drugs of abuse"
Stretch provision 14, 28, 62, 65, 66, 118
Summer contract 14, 66, 70, 113, 118
Suspended List 79
Suspension 14, 31, 62, 79, 82, 106, 107, 108, 109, 111
Tampering 106, 109
Taxpayer Mid-Level exception 14, 23, 25, 26, 28, 45, 55, 91
Team option 49, 59, 64, 66
Team payroll 1, 15, 91
Team salary 11, 14, 15, 16, 21, 23, 25, 26, 28, 35, 37, 38, 40, 41, 43, 45, 51, 52, 58, 60, 63, 65, 66, 68, 69, 70, 71, 72, 74, 75, 77, 83, 84, 87, 89, 91, 99, 106, 112, 113, 118
Team Salary (minimum) 15, 69, 112
Technical foul 111
Ted Stepien rule 87
Trade bonus 21, 44, 59, 60, 61, 62, 75, 82, 91, 98, 99
Trade call 82
Trade deadline 11, 100, 101, 103
Trade exception 11, 14, 26, 65, 83, 84, 85, 88, 99, 112
Trade kicker See "Trade bonus"
Trade (non-simultaneous) 83, 84, 85, 88
Trade restriction 44, 65, 95, 100
Trade rules 11, 23, 25, 41, 44, 65, 79, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 106, 118
Trade (simultaneous) 23, 83, 84
Traded Player exception 14, 25, 26, 82, 83, 85, 86, 88, 97
Undisclosed agreement 31
Uniform Player Contract (UPC) 64, 70
Union See "Players Association"
Unlikely bonus See "Incentive"
Unrestricted free agent 31, 44, 47, 49, 112
UPC See "Uniform Player Contract (UPC)"
Verbal agreement 14, 52
Voluntarily Retired List 63, 67, 79
Waivers 11, 16, 28, 33, 42, 59, 63, 64, 65, 66, 67, 68, 69, 70, 84, 100, 104, 112, 113, 118
Years of service 16, 118

Miscellaneous links:

1999 CBA FAQ http://www.cbafaq.com/salarycap99.htm
2005 CBA FAQ http://www.cbafaq.com/salarycap05.htm
CBA FAQ Blog http://www.cbafaq.com/blog
Contract calculator http://www.cbafaq.com/Contracts.xls
Rookie salary scale http://www.cbafaq.com/scale2011.htm

Revision History:

There were 41 revisions to the first version of this FAQ (covering the 1999 CBA), which have been consolidated into the 11/16/2005 item here. There were 23 revisions to the second version of this FAQ (covering the 2005 CBA), which have been consolidated into the 10/23/2011 item here.

8/30/1999 Initial release.
11/16/2005 Final revision covering the 1999 CBA. Thanks Patricia Bender, Robert Bradley, Steve Durrett, Tony Farr, Jon Hamm, Ron Haneberg, Ryan Hoak, Frank Hughes, Leon Jackson, Don Jones, Leaf, David Lord, Wes McDaniel, Dan Rosenbaum, Andy Stein, Ralph Wallace and Kevin Wilcutts for your contributions.
10/23/2011 Final revision covering the 2005 CBA. Thanks Patricia Bender, Robert Bradley, Gabe Feldman, Ryan Hoak, Dan Hoelzl, Zev Iosupovici, David Lord, Albert Nahmad, Eric Pincus, Dan Rosenbaum, Nick Silva, Andy Stein & Marc Stein for your contributions.
5/6/2012 Extensive revision for the 2011 CBA. Thanks Josh Berman, Edward Gleason, Brett Greenberg, Ryan Hoak, Zev Iosupovici, Bernie Lee, David Lord, Albert Nahmad, Clint Peterson, Eric Pincus, Zach Schreiber, Andy Stein.
7/10/2012 Revised questions 13, 15, 16,19, 21, 32 with new numbers for the 2011-12 season. Also revised questions 25, 33, 64, 69.
7/14/2012 Revised questions 65 and 69. Thanks Nick Silva.
1/17/2013 New question 76. Revised 12, 14, 16, 17, 24, 25, 30, 31, 38, 44, 45, 49, 52, 53, 55, 57, 60, 64, 65, 66, 69, 70, 73, 75, 79, 80, 82, 84, 85, 87, 91, 94, 100, 103, 106, 109, 112, 113, 117, 119, Index
2/3/2013 Revised questions 17, 30, 32, 58, 59, 60, 64, 65, 70, 74, 77, 80, 104, 105, 118
2/18/2013 Revised questions 14, 21, 25, 106, 117. Thanks Albert Nahmad.
7/9/2013 Revised questions 13, 15, 16, 18, 19, 21, 22, 32 with new numbers for the 2013-14 season.
8/10/2013 New question 28. Revised questions 2, 14, 19, 22, 25, 44, 55, 56, 58, 59, 60, 64, 65, 66, 67, 69, 75, 77, 79, 87, 91, 100, 104, 114, Acknowledgements, Index. Thanks Ryan Hoak, David Lord, Albert Nahmad, Andy Stein.
9/7/2013 Revised questions 33, 55, 63, 65, 85, 89.
1/15/2014 Revised questions 21, 60, 90, 108.
7/9/2014 Revised questions 13, 15, 16, 18, 19, 21, 22, 32 with new numbers for the 2014-15 season. New questions 50, 110. Revised questions 24, 25, 29, 33, 44, 59, 65, 74, 79, 81, 82, 84, 86, 87, 95, 97, 98, 100, 119. Thanks Albert Nahmad, Nick Silva.

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