NBA Salary Cap/Collective Bargaining Agreement FAQ
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Copyright © 1999-2017, Larry Coon

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6/30/2017: New version for the 2017 CBA. I'm still not 100% finished, but it's enough to publish. In particular, the index isn't done and I have about 30 open issues I need to resolve. I'll try to get them updated quickly.

This FAQ is for anyone who wants to know more about the salary cap, trade rules, and other aspects of the NBA's 2017 Collective Bargaining Agreement. There is a lot of information here, so there are several ways to navigate this document. A simple text search within your browser is the easiest way to find something if you know what you're looking for -- that's why I kept the entire FAQ on one page. 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 2017 and 2011 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. What happened to the negotiations in 2011, and why did they go so smoothly in 2016?
  8. Do any unresolved issues remain from the 2017 labor agreement?
  9. When will the current CBA expire?
  10. What changes did they make in the 2017 CBA?
  11. What is included in Basketball Related Income (BRI)?
  12. How is the salary cap set each year?
  13. Exactly what is included when computing total team salaries? What is cap room? What is a cap hold?
  14. Is there a minimum amount each team must spend on its payroll?
  15. What percentage of revenues do the players receive?
  16. How does the escrow system work? What is it for?
  17. What happens when there's not enough money in the escrow account?
  18. What is the "luxury tax?" Why does it exist? How is it determined? Who pays it?
  19. Where does the escrow and luxury tax money go?
  20. Other than financial penalties, are there restrictions on taxpaying teams? What is the "Apron?" What is the hard cap?
  21. How does revenue sharing work? How is it different from the luxury tax?
  22. What is the minimum salary a player can receive?
  23. What is the maximum salary a player can receive? Are there exceptions to the maximum salary?
  24. What is the Designated Player rule? What are the performance criteria for earning a higher maximum salary?
  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. When a player signs mid-year for the rest of the season, is his salary pro-rated? What is a "Rest-of-Season" contract?
  29. Can a team pay a player less but arrange for an affiliated company to also pay him, perhaps by way of an endorsement contract?
  30. 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?
  31. How is "average salary" defined?
  32. How long must a player be with one team before the Larry Bird exception can be used?
  33. Why a three-year wait before gaining Bird rights?
  34. Does having Bird rights mean that free agents can be signed and not count against the cap?
  35. 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?
  36. 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?
  37. How much do free agents count toward team salary?
  38. When do free agents stop counting against team salary?
  39. What does renouncing a player mean?
  40. Can the renouncement be renounced? In other words, can a team un-renounce a player and then sign him using a Bird exception?
  41. 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?
  42. What is restricted free agency?
  43. What is the "Gilbert Arenas" provision?
  44. Haven't some restricted free agents gotten away anyway? How did this happen?
  45. What if a restricted free agent has no interest in staying with his original team? Is there any way he can force the issue?
  46. Does a team receive compensation when another team signs their free agent, like in some other sports?
  47. First round draft picks operate under a different set of rules?
  48. What about second round draft picks? What rules do they operate under?
  49. 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?
  50. Are draft picks included in team salary? If so, for how much?
  51. 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?
  52. If a first round draft pick is renounced, is he still bound to the salary scale for a first round pick?
  53. 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?
  54. Are raises compounded? In other words, is each raise a percentage of the previous season's salary?
  55. Are there restrictions based on a player's age?
  56. What is the Over-38 Rule?
  57. What are option clauses? What kind of option clauses are there?
  58. Can existing contracts be extended?
  59. Can existing contracts be renegotiated?
  60. In what other ways can an existing contract be modified?
  61. What are the rules for retired players? What if the player suffers a career-ending injury?
  62. What is a Fitness to Play panel?
  63. Are contracts always guaranteed?
  64. What happens when a player is released? What are waivers? What is the Stretch provision?
  65. How do released or stretched players apply to team salary? What is set-off?
  66. What is a contract buyout?
  67. How do buyouts affect team salary?
  68. What are partial waivers?
  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 is a Two-Way player?
  83. Can a Two-Way player be converted to a regular NBA player? Can a regular NBA player be converted to a Two-Way player? What is Exhibit 10?
  84. What are the rules regarding trades?
  85. What is the Traded Player exception?
  86. How do simultaneous trades work? How much salary can a team take back in a simultaneous trade?
  87. What is a non-simultaneous trade?
  88. How are minimum-salary players handled in trades?
  89. How are draft picks handled in trades? What is the Ted Stepien rule?
  90. Can exceptions be combined when making trades?
  91. What is the Poison Pill Provision?
  92. Can a free agent be signed and immediately traded?
  93. What is "Base Year Compensation?" How does it affect trades?
  94. Why would teams or players want to do a sign-and-trade?
  95. Can a player be given an extension and traded at the same time?
  96. When can a team trade a free agent it signs? Do they have to keep him forever?
  97. Can a team trade the rights to a free agent, so the other team will inherit his Larry Bird rights?
  98. Can cash be included as part of a trade package?
  99. Can players be given a bonus when they are traded?
  100. How do trade bonuses affect team salary and trades?
  101. When can't a player be traded? Can players be given "no-trade" clauses in their contracts?
  102. I keep hearing about teams wanting to acquire "ending contracts" in trades. What are they, and why are they so valuable?
  103. How are teams able to trade players who are out of the league, like Dallas did with Keith Van Horn?
  104. What is the trade deadline?
  105. What is the July Moratorium?
  106. Can teams find loopholes in the CBA and do things the league never intended to allow? What is circumvention?
  107. How does player discipline work? Can teams fine or suspend players for any reason? Do fines and suspensions apply to team salary?
  108. Can fines or suspensions be appealed?
  109. What is the league's drug program?
  110. What is the league's domestic violence program?
  111. What is tampering?
  112. What does it mean when a contract is voided?
  113. How much are players fined for technical fouls and ejections? Where does the money go?
  114. How does it work when the league expands? Can the league also contract?
  115. Are players paid on a regular schedule? Are there other ways to pay players beside regular paychecks?
  116. How do I find out the salary for a specific player?
  117. The league instituted a dress code for players. Do they have the right to do that?
  118. What does it mean when the players union decertifies? Why would they want to do that? What effect does it have?
  119. Are there other must-read web sites for the budding capologist?
  120. What are the important CBA-related dates each season?
  121. Can I get a copy of the actual Collective Bargaining Agreement?
  122. What if this FAQ is wrong? How authoritative is this FAQ?
  123. Can I e-mail you with other CBA-related questions?
  124. Can this FAQ be reproduced or distributed? Can I link my web page to it?
  125. Can you translate this FAQ into (name of language)? I'll even translate it for you!
  126. How should this FAQ be cited?
  127. 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 2016-17 season (the final season under the previous CBA) the lowest team payroll was approximately $80.5 million1 and the highest was over $127.5 million (plus an additional $27.3 million in luxury tax).

As a result, there is now a weak to moderate correlation between team payroll and regular season wins. For the 2016-17 NBA season the correlation coefficient2 was about 0.35. It was much stronger in the past -- for example, in 2010-11 (the last season under the 2005 CBA) the correlation coefficient was 0.53, indicating that deep-pocket teams were 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 for this variation is the changes in the league's luxury tax and revenue sharing systems over time.


1 Although this was below the league minimum payroll of $84.7287 million, so the team was surcharged.
2 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, few NBA teams are under the cap during a season.

Certain components of the NBA's system function as a hard cap under specific circumstances. See question number 20 for more information.

3. Why have a soft cap?

A soft cap 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. In addition, they allow teams to make a limited number of changes (replacing department players, improvements, etc.) every year.

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 118).

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. Under the 2011 CBA the salary cap started at $58.044 million and finished at $94.143, a 62.19% increase. This was driven largely by the new national TV deals that took effect in 2016.

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 agreement 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. The 2011 CBA had a 10-year term, but a mutual opt-out after the 2016-17 season. The sides agreed to terms for a new CBA before the opt-out date, which took effect on July 1, 2017.

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. Technically not a new CBA, rather a Memorandum of Understanding modifying the terms of the 1980 agreement.
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 2017 Players' guaranteed share of revenue reduced. Further reductions in contract lengths & raises. Greater penalties for taxpaying teams. Originally effective through 2020-21; with a mutual opt-out for 2017.
2017 2024 Designated veteran provision. Two-way contracts. Mutual opt-out for 2023.

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

7. What happened to the negotiations in 2011, and why did they go so smoothly in 2016?

The 2005 CBA guaranteed the players 57% of BRI (see question number 12). 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 disagreed over the extent of the losses, and maintained that the league's problems could be addressed through better management and revenue sharing.

As a result, the sides were nowhere near an agreement when the 2005 CBA expired in July 2011. The league imposed a lockout, which led to the players filing multiple unfair labor practices charges with the National Labor Relations Board (NLRB), a union disclaimer of interest (see question number 118) and subsequent class action lawsuits, several players signing to play overseas (eligible to receive a Letter of Clearance allowing them to do so as long as their overseas contracts let them return to the NBA when the lockout ended), and the cancellation of the entire preseason and the first 16 games of the regular season. The sides ultimately ratified a new CBA in early December 2011, and a 66-game 2011-12 season opened on Christmas Day, 2011.

The 2011 CBA was effective through the 2020-21 season, but there was a mutual opt-out allowing the agreement to be terminated at the conclusion of the 2016-17 season. The sides agreed to terms on a new agreement in December 2016, which superseded the 2011 CBA and took effect on July 1, 2017.

Many factors were involved in the comparative ease of the 2016 negotiation process, including the improved financial state that resulted from changes made in the 2011 CBA, the influx of new revenue starting in 2016 that came as a result of new national TV contracts, an improving economy, skyrocketing franchise values, and new leadership at both the league and union, with Adam Silver replacing David Stern as NBA Commissioner, and Michelle Roberts replacing Billy Hunter as NBPA Executive Director.

8. Do any unresolved issues remain from the 2017 labor agreement?

In 2011 the sides were rushed to complete and ratify the agreement in time to open the season on Christmas Day, so they put off discussing several issues. In 2017 they had more time to work through the issues, so very few items were identified to be discussed at a later date:

The review and approval of wearable biometric devices will be conducted by a joint advisory committee to be established after the agreement takes effect. Wearable devices are devices that are worn by the player, and measure movement information, biometric information, and/or other health, fitness and performance information.

Teams will request that the committee review specific devices. Their standard will be whether the device is potentially harmful, has been vetted for effectiveness, and provides adequate security.

Approved devices can be worn in practice, but not games, and the player may decline to wear a device. The device can only be used to measure health and performance information, or data for team on-court strategic and tactical use. The data cannot be used for player contract purposes. The player must be given access to his own data.

9. When will the current CBA expire?

The CBA runs through the 2023-24 season, although either side may opt out after the 2022-23 season. To do so, notice must be given by December 15, 2022.

The CBA also may be terminated early under certain conditions:

10. What changes did they make in the 2017 CBA?

Please see the appendix for a summary of the differences between the 2017 and 2011 CBAs. The appendix includes links to sections in this document with additional information.

In addition, the final editions of this FAQ for previous CBAs may be found at the following locations:

CBA Previous edition of FAQ
2011 www.cbafaq.com/salarycap11.htm
2005 www.cbafaq.com/salarycap05.htm
1999 www.cbafaq.com/salarycap99.htm

11. 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.
2 Less 50% of taxes and reasonable expenses.

12. How is the salary cap set each year?

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 by the end of the previous season (June 30), they instead use:

The salary cap calculation takes 44.74% of projected BRI, subtracts projected benefits, and divides by the number of teams in the league1. The following adjustments are then made to the result:

Here are the salary cap amounts for each season under the 2017 CBA:

Season Salary cap
2017-18 $99.093 million

The salary cap adjusts each year on July 1, at the start of the July Moratorium (see question number 105).


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.

13. 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 therefore has $6 million in room. A team $5 million under the cap with $6 million in cap holds is not considered to be 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 (see question number 20). 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 92). For these purposes they use the team salary as defined above, with the following modifications:

They do this because those exceptions and sign-and-trade transactions affect whether the team is subject to a hard cap (see question number 20), 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 For players who have been in the NBA for three or more seasons and are playing under a one-year, 10-day or Rest-of-Season contract at the minimum salary, the minimum salary for a two-year veteran is used in place of the player's actual salary (see question number 22).
2 Set-off amounts are not deducted from team salary until after the end of the regular season; however they apply set-off retroactively to the final game of the regular season.
3 During the July Moratorium (see question number 105), teams may not enter into verbal or written agreements with most free agents. Therefore any such agreements that are struck during the Moratorium are still characterized as negotiations, and do not count toward team salary.
4 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 2018 draft, the scale amount is applied to the team's 2018-19 team salary. Nothing is applied to the team's 2017-18 team salary.
5 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.
6 Roster charges for empty roster spots are included for Apron purposes; however additional roster charges 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.

14. Is there a minimum amount each team must spend on its payroll?

There is a minimum team salary (see question number 13), which for this purpose includes the salaries of players who suffered career-ending injuries or illnesses (see question number 61), and excludes all cap holds. The team salary must be at or above 90% of the salary cap on the date of the team's last regular season game:

Season Minimum Violators
2017-18 $89,183,700

For minimum team salary purposes the salary of a player who changes teams through trade or waivers is divided among the teams for which he played. For example, if a $10 million player is traded exactly 60% of the way through the season, then the player's original team counts $6 million of the player's salary for minimum team salary purposes, and the player's new team counts $4 million of the player's salary for minimum team salary purposes.

Any salary included in team salary as a result of international buyouts (see question number 77) is excluded from team salary for minimum team salary purposes.

Teams with a team salary below the minimum are surcharged for their shortfall, with the money distributed among the players on that team. The determination of how the money is distributed is up to the players union. Most recently they have distributed a full share to players who had spent at least 41 games on the team's roster, and a half share to players who had spent 20 to 40 games on the team's roster. However, a player cannot receive more than the maximum salary as a result of a shortfall payment.

15. What percentage of revenues do the players receive?

Player 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 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 2017-18 through 2023-24, with 50% of the forecast value (upon which the guarantee is based):

Season BRI Forecast 50% of Forecast
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
2021-22 $6.342 billion $3.171 billion
2022-23 $6.627 billion $3.3135 billion
2023-24 $6.926 billion $3.468 billion

For example, if BRI for 2017-18 is $5.418 billion (i.e., revenues exceed forecasts by $100 million), then the players collectively are guaranteed $2.7195 billion, which comes from:

If instead BRI for 2017-18 was $4.8 billion, then the players' guarantee would be $2.352 billion, which comes from:

THIS BLOCK SHOULD BE ENABLED WHEN THE 2017-18 NUMBERS ARE IN

Here is what actually happened in each season:

2017-18
Forecasted BRI: $5.318 billion
Actual BRI: $X.XXX billion
Excess or shortfall: $XXX million shortfall
60.5% of excess or shortfall: $XX.X million
50% of forecasted BRI: $2.659 billion
Players' guarantee (50% of forecast plus/minus
60.5% of excess/shortfall):
$X.XXX billion
Actual guarantee percentage: XX.XX%

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 2014-15, 2015-16, and 2016-17, under the 2011 CBA).

The escrow system adjusts the players' salaries when they earn more than their guaranteed share (see question number 16).

An additional benefits pool is funded with 1% of BRI, which comes out of the players' share. This pool is used to fund various benefits and annuities for players who have vested. If there is an escrow overage (see question number 16) and the escrow fund is not large enough to bring salaries and benefits down to the players' designated share, they take the remainder out of this pool.


1 BRI forecasts for all seasons covered by the CBA were determined when the CBA was negotiated. Forecasted BRI is different from projected BRI, which is calculated each June on the basis of the league's financial performance in the preceding season (see question number 12).

16. 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 15) 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' salaries1 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: $5.318 billion $5.318 billion $5.318 billion
Designated share: $2.659 billion $2.659 billion $2.659 billion
Salaries: $2.4 billion $2.6 billion $2.8 billion
Benefits: $225 million $225 million $225 million
Amount held in escrow: $240 million $260 million $280 million
Overage (amount salaries & benefits
exceeded designated share):
$0 $166 million $366 million
Returned to owners: $0 $166 million $280 million
Given to players: $240 million2 $94 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" $366 million, but the escrow account contains only $280 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 17 for more information on this situation).

THIS BLOCK SHOULD BE ENABLED WHEN THE 2017-18 NUMBERS ARE IN

Here is what actually happened in each season:

2011-12
BRI: $3.375 billion
Designated share: $1.727 billion
Salaries: $1.610 billion
Benefits: $173.8 million
Amount held in escrow: $162 million
Overage/underage (amount salaries & benefits
exceeded designated percentage):
$57.0 million
Overage amount retained by NBA: $57.0 million
Remainder of escrow given to players: $105.0 million
Supplemental check to players
(in event of an underage):
N/A

Question number 19 describes how the escrow money is distributed to the teams.


1 For Two-Way players (see question number 82), only the player's NBA salary, and not his D-League salary, is subject to escrow withholding.
2 Includes the entire escrow balance, plus a supplemental payment to meet the players' revenue guarantee (see question number 15)

17. 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 supplemental benefits pool that is funded with 1% of BRI (see question number 15). If they exhaust the entire supplemental 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 earn 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 2019-20 are $4.686 billion and this results in an overage of $351 million (7.5% of total salaries and benefits), and if the projected BRI for 2020-21 exceeds the BRI for 2019-20 by 9%, then the 2020-21 salary cap is adjusted downward by $0.8 million, and the tax level is reduced by $1.07 million.

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.

18. 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 by taking 53.51% of projected BRI (see question number 12), subtracting projected benefits, and dividing by the number of teams in the league1. The tax level may be adjusted from there, based on what happened during the previous season:

Teams pay an incremental tax rate based on their team salary as of the team's last regular season game, and whether the team is a "repeat offender," i.e., whether they were also taxpayers in at least three of the four previous seasons:

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 13) 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)
2017-18 $119,266,000

In addition to the financial penalties, a number of restrictions are placed on taxpaying teams, which are described in question number 20.

Where does the tax money go? This is described in question number 19.


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 3/177 of the two-year veteran minimum salary.

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

The money collected from the escrow (see question number 16) and luxury tax (see question number 18) 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. Currently 50% of the tax revenue is used as a funding source for the revenue sharing program, and the remaining 50% is 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.

THIS BLOCK SHOULD BE ENABLED WHEN THE 2017-18 NUMBERS ARE IN

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

2011-12
BRI: $3.375 billion
Designated share: $1.727 billion
Designated share percentage: 51.15% of BRI
Total salaries and benefits: $1.784 billion
Escrow collected: $162 million
Overage1: $57 million
Escrow share per team: $1,899,756
Tax level: $70.307 million
Total tax collected: $31.972 million
Tax share per team:
Used to fund revenue sharing: $31.972 million

1 Salaries & benefits minus designated percentage.

20. Other than financial penalties, are there restrictions on taxpaying teams? What is the "Apron?" What is the hard cap?

In addition to the tax payments described in question number 18, taxpaying teams have the following restrictions:

Further restrictions kick-in once a team crosses a point known as the Apron. In 2017-18 the Apron is the point $6 million above the tax threshold. In subsequent seasons the Apron rises or falls by one-half the percentage that the salary cap rises or falls.

Here are the tax and Apron amounts in each season:

Season Tax Level Apron
2017-18 $119,266,000 $125,266,000

Teams with a team salary above the Apron have the following additional restrictions. Note that they use the team salary at the conclusion of any transaction to determine whether a team is over the Apron (for example in a sign-and-trade transaction, they look at what the team salary would be after the trade is completed).

The transactions listed above 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 allowed by the Taxpayer Mid-Level exception, 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 the reverse -- 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 13 for details.

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

The high revenues generated by big-market teams increase 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 -- which leads 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), leading to sustainability and profitability for all 30 teams.

The NBA has had some form of revenue sharing in place since the 2005 CBA. Under the 2005 agreement it was funded entirely through luxury tax revenues, and redistributed an average of $40 million per season. However in many cases teams merely got back money they had put into the pool themselves, so the net redistribution of money was much lower than the gross distribution. Under the current plan, for example, $153 million was redistributed to small-market teams in 2013-14.

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 pool1. 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 pool: $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 sources -- 50% of tax revenues goes to fund revenue sharing, with the remaining 50% distributed back to non-taxpaying teams.


1 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.

22. What is the minimum salary a player can receive?

Minimum salaries for all seasons of a contract are based on the minimum salary scale in effect when the contract is signed. To determine the salary for each season of a multi-year, minimum salary contract, read diagonally across the chart below. For example, if a five-year veteran signs a three-year contract, his first-year salary will be the Year 1 salary for a five-year veteran; his second-year salary will be the Year 2 salary for a six-year veteran; and his third-year salary will be the Year 3 salary for a seven-year veteran.

Minimum salary scale for contracts signed in 2017-18:

Years in NBA1 Year 1 Year 2 Year 3 Year 4 Year 5
0 $815,615
1 $1,312,611 $1,378,242
2 $1,471,382 $1,544,951 $1,618,520
3 $1,524,305 $1,600,520 $1,676,735 $1,752,950
4 $1,577,230 $1,656,092 $1,734,954 $1,813,816 $1,892,678
5 $1,709,538 $1,795,015 $1,880,492 $1,965,969 $2,051,446
6 $1,841,849 $1,933,941 $2,026,033 $2,118,125 $2,210,217
7 $1,974,159 $2,072,867 $2,171,575 $2,270,283 $2,368,991
8 $2,106,470 $2,211,794 $2,317,118 $2,422,442 $2,527,766
9 $2,116,955 $2,222,803 $2,328,651 $2,434,499 $2,540,347
10+ $2,328,652 $2,445,085 $2,561,518 $2,677,951 $2,794,384

The minimum salary scale amounts for the 2017-18 season were negotiated into the agreement. For each subsequent season the minimum salary scale amounts are determined by applying the percentage change in the salary cap to the previous minimum salary scale amounts. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then all minimum salary scale amounts also will increase by 4% from 2017-18 to 2018-19. The minimum salary scales for previous seasons can be found HERE.

Players on minimum-salary contracts may receive salary advances and deferred compensation (see question number 115), as well as trade bonuses (see question number 97) and Exhibit 10 bonuses (see question number 83). They cannot receive loans or other types of bonuses.

Two-Way players (see question number 82) receive the NBA rookie minimum salary (no matter how many years of NBA service they have) on a per-day basis, for each day they are with their parent club. For each day they are on the team's D-League affiliate, they receive a pro-rated portion of the D-League scale salary for that season.

Minimum salaries begin to pro-rate starting on the first day of the regular season -- see question number 28).

Any salaries below the applicable minimum salary in contracts that pre-date the current CBA are automatically revised upward to the applicable minimum salary.

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 for a two-year veteran. For example, the minimum salary for a two-year veteran in 2017-18 is $1,471,382, so for a ten-year veteran, with a minimum salary of $2,328,652, the league would reimburse the team $857,270. 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.

Other notes on league reimbursement of minimum-salary contracts:

First round draft picks have a more restrictive salary scale, based on their draft position (see question number 47 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.

23. What is the maximum salary a player can receive? Are there exceptions to the maximum salary?

Here are the league-wide maximum salaries for the first season of a new contract:

Years in NBA1 Defined maximum salary 2017-18
0 - 6 25% of cap $24,773,250
7 - 9 30% of cap $29,727,900
10+ 35% of cap $34,682,550

The above maximum salaries are for the general case, but there are exceptions. The first exception is that in a multi-year contract only the first season's salary is subject to the maximum. The latter seasons of a contract can have salaries above the maximum, although there are restrictions about how big raises can be from year to year (see question number 53).

The second exception is that the maximum salary in the first season of a contract is never less than 105% of the salary in the last year of the player's previous contract. For example, a seven-year veteran free agent who most recently earned $30 million has a maximum salary of at least $31.5 million, even if that is above the league-wide maximum. A free agent does not have to re-sign 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.

The third exception is that certain players qualify for the next-higher maximum salary band (for example, a player with four years of experience can sign for 30% of the cap, which is normally reserved for players with seven-to-nine years of experience) at specific points in their careers. This is covered in question number 24.

When a team distributes money to its players because it did not spend at least the minimum team salary (see question number 14), no player can receive a distribution that takes his salary above the maximum salary. For example, if a player's salary is $500,000 below the maximum salary, his distribution is limited to $500,000. Players whose salary is at or above the maximum salary cannot receive a distribution. Any money a player forfeits in this manner is redistributed to the other players on his team.


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.

24. What is the Designated Player rule? What are the performance criteria for earning a higher maximum salary?

Certain players can receive contracts or extensions that are more favorable (in years and/or salary) than they ordinarily could receive. This applies to players who are finishing their rookie scale contracts (and other players with four years of experience), who can receive a starting salary up to 30% of the cap (which is normally reserved for players with 7-9 years of service). It also applies to players who are finishing their rookie scale extensions (and other players with eight or nine years of experience), who can receive a starting salary up to 35% of the cap (which is normally reserved for players with at least 10 years of service).

In addition, players signing a rookie scale extension can be designated by their team to receive a longer extension, totaling six seasons (including the season remaining on their rookie scale contracts).

In order to qualify for the higher maximum salary, players must meet certain performance criteria1. At least one of the following must be true:

For example, if this is the 2018 offseason, then a player meets the performance criteria if he accomplishes any of the following:

The naming of these rules and criteria are somewhat inconsistent and confusing. The Designated Veteran rule allows teams to sign or extend players with eight or nine years of service to a higher salary (up to 35% of the cap). The Designated Rookie rule allows teams to sign players finishing their rookie scale contracts to longer extensions, but does not provide for the higher maximum salary (up to 30% of the cap). In fact, there are no performance criteria the player must meet to qualify for the Designated Rookie rule -- he just needs to be designated by his team to receive a longer extension. The higher maximum salary for these players is provided by the 5th Year, 30% Max criteria. And while the criteria are the same for players with eight or nine years of experience to qualify for the higher maximum salary (up to 35% of the cap), the CBA calls it the "Designated Veteran Player 35% Max Criteria" for these players.

A player's eligibility for a higher maximum salary doesn't imply he will actually receive that amount -- as with all contracts, the actual salary is a matter of negotiation between the player (or his agent) and his team. However, a Designated Rookie must receive at least 25% of the cap. In addition, for players entering their fifth season the exact percentage of the cap can be based on how the player meets the 5th Year, 30% Max criteria. For example, a rookie scale extension can specify that the player will receive 27% of the cap if he meets the criteria by being named to the All NBA Second Team, 28% if he meets the criteria by being named to the All NBA First Team, or 30% if he meets the criteria by being named Most Valuable Player.

There is a limit to the number of designated players a team can have on its roster at a time. A team can have up to two designated rookies (who received a longer rookie scale extension) and up to two designated veterans (who received higher than the 30% maximum salary) at any time.2 However, only one designated rookie and one designated veteran may have been acquired from another team in a trade.

A designated veteran extension can only be signed from the end of the July Moratorium through the last day before the start of the regular season. A player who signs a designated veteran contract or extension can't be traded for one year after he is signed.

In summary, the kinds of contracts and extensions that can be signed using the Designated Player rule and the 5th Year, 30% Max Criteria are as follows:

Type Qualifications Maximum Salary Maximum Years
Designated Rookie Extension Entering 4th season of Rookie Scale Contract; designated by team 25% of cap (30% if meets 5th Year 30% Max Criteria) 6 (including remaining year on current contract)
Free Agent Contract after Rookie Scale Contract Finished Rookie Scale Contract, or 2nd round pick or undrafted player with 4 years of service; designated by team 25% of cap (30% if meets 5th Year 30% Max Criteria) 5
Designated Veteran Extension 7 or 8 years of service when extension signed; 1 or 2 years remaining on contract; with same team continuously (unless traded during first four years in the league); meets Designated Veteran Player 35% Max Criteria3 35% of cap 6 (including remaining years on current contract)
Designated Veteran Contract 8 or 9 years of service; with same team continuously (unless traded during first four years in the league); meets Designated Veteran Player 35% Max Criteria 35% of cap 5

The mechanisms for extensions are covered in question number 58.


1 In 2017 only, the previous criteria applied for players finishing their fourth season to earn the 30% maximum: A) The player was named to the All-NBA First, Second or Third team at least twice; B) The player was voted as a starter in the All-Star game at least twice; OR C) The player was named the NBA Most Valuable Player at least once.
2 Players who were waived continue to count toward the team's limit of two designated players for the remainder of the original term of the waived contract. However, if the player's cap hit was stretched (see question number 64), the player does not count toward the limit during any stretched-over season. For example, if a designated veteran is waived in 2020 with only the 2020-21 season remaining on his contract, and his cap hit is stretched across the 2021-22 and 2022-23 seasons, the player will count toward the limit of two designated veteran players in the 2020-21 season only.
3 Russell Westbrook and James Harden were grandfathered into this rule. Even though each had signed an extension in 2016, they are allowed to sign new extensions per the Designated Veteran rule in 2017 (both players) or 2018 (Harden only) if they remain with the same teams (Oklahoma City and Houston, respectively) and meet the performance criteria.

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 84. 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 32. 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 8% 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 32 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 season (not over the maximum salary, of course) or 105% of the average salary in the previous season3, whichever is greater (see question number 31 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 8% 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 under the Gilbert Arenas provision (see question number 43. This is true even if the starting salary for the Early Bird exception is lower than the starting salary in the 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 season (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 42), whichever is greater. Raises are limited to 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" (see question number 20). 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:

Season First-year salary
2017-18 $8.406 million

The Non-Taxpayer Mid-Level exception amount for the 2017-18 season was negotiated into the agreement. For each subsequent season the exception amount is determined by applying the percentage change in the salary cap to the previous exception amount. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then the exception amount also will increase by 4% from 2017-18 to 2018-19.

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 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 under the Gilbert Arenas provision, the player's prior team may use the Non-Taxpayer Mid-Level exception to match the offer sheet (see question numbers 42 and 43).

Again, this exception is only available to teams that are below the "Apron." 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 20 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 2017-18 they use the Non-Taxpayer Mid-Level exception to sign a player for $5.192 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 13 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 28), 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" (see question number 20). 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 it above the Apron. It cannot be used by a team that has already used the Bi-Annual, Non-Taxpayer Mid-Level or the Room Mid-Level exception. It also cannot be used if the team has received a player that season in a sign-and-trade transaction (see question number 92). It allows a team to sign any free agent to a contract with a starting salary up to the following:

Season First-year salary
2017-18 $5.192 million

The Taxpayer Mid-Level exception amount for the 2017-18 season was negotiated into the agreement. For each subsequent season the exception amount is determined by applying the percentage change in the salary cap to the previous exception amount. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then the exception amount also will increase by 4% from 2017-18 to 2018-19.

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 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 under the Gilbert Arenas provision, 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 42 and 43).

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 2017-18 they use the Non-Taxpayer Mid-Level exception to sign a player for $5.192 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 13 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 28), 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 therefore 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 already has used the Bi-Annual, Non-Taxpayer Mid-Level or Taxpayer Mid-Level exception. 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. It allows a team to sign any free agent to a contract with a starting salary up to the following:

Season First-year salary
2017-18 $4.328 million

The Room Mid-Level exception amount for the 2017-18 season was negotiated into the agreement. For each subsequent season the exception amount is determined by applying the percentage change in the salary cap to the previous exception amount. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then the exception amount also will increase by 4% from 2017-18 to 2018-19.

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 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 when a team is below the "Apron" (see question number 20). 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 its Taxpayer Mid-Level or Room Mid-Level exception. It allows a team to sign any free agent to a contract with a starting salary up to the following:

Season First-year salary
2017-18 $3.290 million

The Bi-Annual exception amount for the 2017-18 season was negotiated into the agreement. For each subsequent season the exception amount is determined by applying the percentage change in the salary cap to the previous exception amount. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then the exception amount also will increase by 4% from 2017-18 to 2018-19.

This exception may not be used two years in a row (and if this exception was used under the previous CBA in 2016-17, it may not be used in 2017-18). 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 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 20 for more information).

A different team salary definition is used for determining whether a team is above or below the Apron. See question number 13 for details. In addition, this exception begins to pro-rate downward daily starting on January 10 each season (see question numbers 26 and 28), 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 47).

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. In a two-year contract, the salary in the second year is specified in the minimum salary scale in effect when the contract was signed (see question number 22). 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 177 days in the season, then this exception reduces in value by 1/177 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 87/177 of the minimum salary.

See question number 88 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 or Fitness to Play panel (see question number 62) 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 waiver 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 only can 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 61). 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 estimated average salary for the season in which he is reinstated, whichever is less.

See question number 109 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 estimated average salary3 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 estimated average salary Player's prior salary
Maximum Raises 8% 8% 5% 5% 5% 5% 5% Defined in rookie salary scale Defined in minimum salary scale N/A 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 This means the Disabled Player exception cannot be used to acquire a player in a sign-and-trade transaction. A sign-and-trade requires signing the player for at least three years (see question number 92).
3 The Estimated Average salary is defined as 104.5% of the average salary for the previous season, but the definition of the Early Bird exception says 105%. As of this writing it is not clear if this is a typo.

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 37). A team can't act like it's under the cap and sign free agents using cap room, and then use its Disabled Player, Bi-Annual, Mid-Level and/or trade exceptions. Consequently, the exceptions are added to the 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 $100 million, and a team has $90 million committed to salaries. It also has a Non-Taxpayer Mid-Level exception for $9 million and a trade exception for $6 million. Even though its salaries put it $10 million under the cap, its exceptions also count toward team salary, increasing the total to $105 million, or $5 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.

A team has the option to renounce its exceptions in order to reclaim its cap room. So in the example above, if the team renounced its Traded Player and Mid-Level exceptions, then the $15 million is taken off its team salary, which then totals $90 million, leaving the team with $10 million of cap room which then can be used to sign free agent(s).

Starting January 10 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 177 days in the season, then these exceptions reduce in value each day by 1/177 of the amount remaining on January 10. So if a team had a $9 million Non-Taxpayer Mid-Level exception and spent $2 million before the start of the season, then on January 10, and each day thereafter, the exception would reduce in value by 1/177 of $7 million, or $39,548. Even if the team signs another player after January 10, the daily pro-ration would continue to be 1/177 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 on July 1, then the team doesn't get their exceptions at all. If the team salary ever drops below this level during the year, then the unused portions of any remaining exceptions are lost (and do not return if the team salary later increases).

For example, assume there is a $100 million salary cap, and during the offseason a team has $80 million committed to salaries, along with a Non-Taxpayer Mid-Level exception for $9 million, a trade exception for $5 million, and an unrenounced free agent whose free agent amount is $10 million. The team's salaries and exceptions total $104 million, or $4 million over the cap. What if the free agent signs with another team? The $10 million free agent amount comes off the team's cap, leaving its team salary (including their remaining exceptions) at $94 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 in this manner. The Minimum Player 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 $5 million under the salary cap that has not used its $9 million Non-Taxpayer Mid-Level exception may not combine the exception and the cap room to sign a player for $14 million. This is explained more thoroughly in question number 90.

28. When a player signs mid-year for the rest of the season, is his salary pro-rated? What is a "Rest-of-Season" contract?

A "Rest-of-Season" contract is exactly what its name implies -- it is a contract signed after the start of a season, which is in effect for the remainder of that season.

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

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 177 days in the season, then a minimum salary contract signed on the 60th day of the season is worth 117/177 of the full minimum salary amount.1 If a player signs a multi-year minimum salary contract partway through a season, then the first season is pro-rated and the salary in subsequent seasons is the full minimum salary.

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 $950,000 to $1.05 million (plus or minus 5% of the first season 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).

The D-League salary in a Two-Way contract (see question number 82) is pro-rated as well, if the contract is signed during the season. In addition, the 45 day maximum for NBA service on a Two-Way contract is also pro-rated.


1 It is not considered a minimum-salary contract if a player signs for more than the pro-rated minimum -- i.e., the player cannot be signed using the Minimum Player Salary exception (see question number 25), the player cannot be traded as a minimum-salary player (see question number 88), and the team cannot receive reimbursement for a portion of the player's salary (see question number 22).

29. 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 112). The penalties increase for subsequent violations.

See question number 106 for more information on circumvention.

Incidentally, players are not 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. The only payment a team can make to a player is for rendering services as a basketball player.

30. 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 of 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 signing2. 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 29. 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 112), 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 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.

Claims that a team violated the "Undisclosed Agreements" rule go before the league's system arbitrator, although the Commissioner has the authority to impose penalties of up to $250,000 without having the case heard by the arbitrator.


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.
2 During the July Moratorium (see question number 105), teams may not enter into verbal or written agreements with free agents (with certain exceptions). Therefore any agreements that are struck during the Moratorium are still characterized as negotiations, and are not binding on either party. An example of this occurred in 2015 when DeAndre Jordan agreed to sign with the Dallas Mavericks, and then changed his mind prior to the conclusion of the July Moratorium, instead re-signing with the LA Clippers.

31. How is "average salary" defined?

The league computes the average player salary for a season by dividing the total salaries paid during that season 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. In addition to regular player salaries, the total salaries paid also includes the following:

The average player salary for a season is not determined until the league audit in July, following the conclusion of that 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 exception1, the cap hold for unsigned free agents, and the salaries of reinstated players. Here are the estimated and actual average salary values for each season:

Season Estimated average salary Average salary
2017-18 $7,843,500


1 The Estimated Average salary is defined as 104.5% of the average salary for the previous season, but the definition of the Early Bird exception says 105%. As of this writing it is not clear if this is a typo.

32. 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:

33. 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.

34. 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.

35. 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, $10.5 million, $11 million and $11.5 million, respectively, for the four seasons. The deal then gets reported as four years for $43 million. But only the first-year salary counts when determining whether the team has enough cap room, and the first-year salary fits perfectly.

36. 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.

Essentially, if a team retains the right (i.e., Bird rights) to sign a player while above the cap, the league assumes the team will do so, and sets aside an amount of money under the team's cap in anticipation of that signing. This keeps teams from signing other teams' free agents using their cap room, and then turning their attention to their own free agents once their cap room is all used up, using the Bird exception to re-sign their own players.

The free agent amount is based on 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 he is likely to receive in his next contract. Such a rough guideline is obviously not perfect -- for example, in 2015 Kawhi Leonard's free agent amount was just $7.2 million, even though his value as a basketball player was much higher. By waiting to sign Leonard last, the Spurs also were able to sign LaMarcus Aldridge away from the Trailblazers. Had they instead signed Leonard first, they would not have had enough cap room to sign Aldridge. They eventually signed Leonard for a starting salary of $16.4 million.

37. 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 22)
Larry Bird, not coming off rookie scale contract At least the average salary1 150% of his previous salary2
Larry Bird, not coming off rookie scale contract Below the average salary1 190% of his previous salary2
Larry Bird, following the fourth season of his rookie scale contract At least the average salary1 250% of his previous salary (effective 2018-19) or 200% of his previous salary (2017-18 only)2
Larry Bird, following the fourth season of his rookie scale contract Below the average salary1 300% of his previous salary (effective 2018-19) or 250% of his previous salary (2017-18 only)2
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
Two-Way Any One-year veteran minimum salary

Here's an example of how to use this chart: Let's say a player who made $10 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 $13 million is included in team salary while he is a free agent.

If the player was signed pursuant to the Gilbert Arenas provision (see question number 43), the percentages in the above chart are based on the team salary value (the average salary in the entire contract), and not on the actual salary in the final season of the contract.

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

See question number 47 for more information on rookie "scale" contracts, question number 39 for information on renouncing players, and question number 42 for information on restricted free agency.


1 Above or below the estimated average salary from the previous season, not the actual average salary (see question number 31).
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 numbers 22 and 23).
3 This implies that the free agent amount for a player receiving a maximum qualifying offer would be the maximum salary.

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

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

39. What does renouncing a player mean?

As detailed in question number 36, 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 exception (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 exception1. The exception to this rule is that an Early Bird free agent, at the team's option, can be renounced to the Non-Bird level. A team 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.

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 is renounced and then re-signs with his prior team, 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 sign the player to a Two-Way contract (see question number 82) or trade the player in a sign-and-trade agreement (see question number 92).


1 The team is bound to the restrictions on salary, contract length and raises associated with the means they use to sign the player -- for example, if a team renounces its Bird free agent and then re-signs him with the Non-Taxpayer Mid-Level exception, the contract must conform to the requirements of the Non-Taxpayer Mid-Level exception. However, if a team renounces its Bird free agent and later re-signs him using its cap room, the player can still receive the contract length and raises associated with the Bird exception. This is because the maximum contract length and raises in a cap room signing are determined by the player's original free agent status, and are not affected by renouncement.

40. 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.

See question number 42 for more information on restricted free agency.

41. 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 13 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 still will have a non-zero team salary.

42. 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:

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 29. 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 depends on the situation:

However, a player coming off a standard NBA contract (not a Two-Way contract) 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 at least 41 games or playing at least 2,000 minutes in the regular season.

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 8% 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 44).

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 two days to match.4 The offer sheet must be for at least two seasons (not including option years), and a standard NBA contract (not a Two-Way contract). 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 two days (by issuing a First Refusal Exercise Notice), 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 two days (or provides written notice that it is declining its right of first refusal), the player is deemed to be under 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:

Both an offer sheet and a first refusal exercise notice can be conditioned on the player passing a physical. If the offer sheet team requires a physical which the player subsequently fails, and the offer sheet is matched, then the matching team may elect to continue, in which case the match remains in effect, or elect not to continue, in which case the player becomes a restricted free agent.

If the first refusal exercise notice is conditioned on the player passing a physical, and the player subsequently fails, then the matching team can withdraw its first refusal exercise notice, at which time the player is deemed to be under contract with the offer sheet team. If the matching team does not withdraw its first refusal exercise notice, then the team is considered to have waived the physical, and the player is deemed to be under contract with the matching team.

If the player refuses to report for his physical with the matching team within two days, the first refusal exercise notice remains in effect until the player reports. The matching team also has the option to withdraw its first refusal exercise notice if the player refuses to report for his physical. If this happens, then both the first refusal exercise notice and the offer sheet are invalidated, the player returns to being a restricted free agent, and he cannot sign with or be acquired by the offer sheet team for one year.

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. In order to match an offer sheet, the matching team must have room for both the regular salary and any unlikely bonuses.

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 43.

An offer sheet can be signed during the July Moratorium (see question number 105), however the two-day matching period does not commence until the end of the Moratorium. 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 13. It can be withdrawn after July 13 if the player consents, in which case the player is also renounced as a free agent7 (see question number 39). 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. Teams also can't try to scare teams that might sign their restricted free agents, for example by declaring publicly that they will match any and all offers.

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 92). 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 A player can have up to two Two-Way contracts, but can't play under Two-Way contracts for the same team more than more than two years in total, including under multiple Two-Way contracts. A player also can't have more than three years of service at any point during a Two-Way contract. See question number 82 for more information.
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 2019 a qualifying offer is based on the scale amount for the 21st pick in the 2015 draft class, since the rookie scale contracts for the 2015 draft class are finishing in 2019. 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 two 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. They do not include other incentive compensation, because that could create a situation where the offer sheet team includes incentives which they know they won't have to pay, but the matching team will.
7 If a team withdraws its qualifying offer on or before July 13 it retains its Bird rights to the player.

43. 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 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 4.5% 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 (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, it 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 5% of the first-season salary, then the team only has to fit the first season salary under the cap.

Putting this all together, if a team that is $12 million under the cap in 2017-18 wants to submit a four-year offer sheet, and wants to provide a large raise in the third season, it can offer a total of $48 million over four years. The first-year salary is limited to the Non-Taxpayer Mid-Level exception, or $8.406 million. The second-year salary will be $8.8263 million (5% raise). This leaves $30.768 million to be distributed over the final two seasons of the contract, with a 4.5% raise from year three to year four. So the entire contract looks like this:

Season Salary Notes
1 $8.406,000 Non-Taxpayer Mid-Level amount for 2017-18
2 $8,826,300 5% raise over season 1
3 $15,045,330 This is the amount that yields $30.7677 million over the final two seasons with a 4.5% raise3
4 $15,722,370 Raise is 4.5% of season 3 salary
Total $48,000,000 Average is $12 million, which equals the team's cap room

For the team making this offer, this contract would count for $12.0 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, it can choose whether the actual salary in each season or the average salary counts toward its team salary4. The matching 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 effectively utilize this provision. For example, suppose the Non-Taxpayer Mid-Level exception amount is $10 million, and a team wants to provide a four-year offer sheet. If they offer a third-year raise greater than 5%, their cap hit will be determined by the contract's average salary, so the total contract can pay up to $40 million. However, since a four-year offer starting at $10 million with standard 5% raises would total $43 million, the Arenas provision would be ineffective unless it offered more than this amount. So the team in this example would need more than $10.75 million in cap room in order to effectively 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 - 2.05E) / 2.05. 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 5% raise, and the first two seasons together account for E + 1.05E, which is 2.05E. So the last two seasons total 4R - 2.05E, and with a 4.5% raise from year three to year four, we can say (if Y is the year 3 amount) Y + 1.045Y = 4R - 2.05E, so the year three amount is (4R - 2.05E) / 2.045.
4 The matching team can only choose to have the average salary count toward its team salary if at the time it matches the offer sheet its team salary (with the average salary of the matched contract) is less than the salary cap. 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 cap hit the team chose when matching the offer sheet is charged to his new team's cap.

44. 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 is reduced to an official contract with the new team after two 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 43.

45. 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.

46. 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.

47. 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 once common for rookies to hold out, not signing with their team until they got the contract they wanted. There also was 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.

Beginning in 1995 salaries for first round picks were set according to a strict scale, determined by their draft position. In previous CBAs the salary scales for all seasons were negotiated into the agreement. In the current CBA only the 2017-18 salary scale was determined in advance. Starting in 2018-19 they determine the salary scale for the upcoming season on or before June 30. The scale is calculated by applying the percentage change in the salary cap to all dollar amounts in the previous rookie salary scale. For example, if the salary cap increases by 4% from 2021-22 to 2022-23, then all rookie scale amounts also will increase by 4% from 2021-22 to 2022-23. Any scale amounts that are expressed as a percentage (for example, the raise from the third season to the fourth season) do not change from year to year.

There is a special procedure in place to phase-in a 45% increase to the rookie salary scales for the 2017-18 through 2019-20 seasons (15% per year over three years). There is a "baseline" scale for 2017-18 that does not include the 15% increase used for the actual 2017-18 rookie scale. For 2018-19 they first apply the percentage change in the salary cap from 2017-18 (as described above) to the 2017-18 baseline scale to create the 2018-19 baseline scale, and then they increase all resulting amounts by 30% to create the actual rookie scale. For 2019-20 they repeat the process, starting with the baseline scale for 2018-19, applying the cap percentage increase or decrease to create the 2019-20 baseline scale, and then applying a 45% increase to create the 2019-20 rookie scale.

Rookie scale contracts that pre-date the current CBA also receive the phased-in increase (15% in 2017-18, 30% in 2018-19, and 45% in 2019-20), called a "conforming increase." These increases are funded out of a league-wide pool created for this purpose. The player's official salary value does not include the increase amount, nor is the increase amount included in the team's team salary. However, these increases count toward the players aggregate salary guarantee (see question number 15).

If a salary in an existing rookie scale contract is below the minimum salary for that season, even after the phased-in increase, then it is further increased to the minimum salary. If this happens, then the increase is not funded by the league-wide pool, and the minimum salary is used both for the player's official salary value and for team salary.

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 42) following his fourth season.

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).

The full rookie scale amounts for the current and all previous seasons can be found HERE. As an example, here are the scale salary figures for the #1 overall draft pick in 2017-18, along with the 80% (minimum) and 120% (maximum) amounts, and also the "baseline" amounts (as explained above):

1st year salary 2nd year salary 3rd year team option salary 4th year team option Qualifying offer
Rookie Scale: $5,855,200 $6,949,900 $8,121,000 26.1%* 30.0%*
80% of Scale: $4,684,160 $5,559,920 $6,496,800 $8,192,464 $10,650,204
120% of Scale: $7,026,240 $8,339,880 $9,745,200 $12,288,697 $15,975,306
Baseline Scale: $5,091,500 $5,346,100 $5,600,700 26.1%* 30.0%*

* Percent raise over previous salary

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 177 days in the season, then the scale amount reduces by 1/177th 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 311 preceding the player's second regular season to exercise their option for the player's third season. Likewise, they have until the October 311 preceding the player's third regular season to exercise their option for the player's fourth season (see question number 57 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 42 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 signings, 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 42).

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 115).

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 Or the next business day, if October 31 falls on a weekend or holiday.

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

Unlike first round picks, who have a scale salary (see question number 47), 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. A second round picks may also be signed to a Two-Way contract1 (see question number 82).

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 Player 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 Player Salary exception. However, since the Minimum Player 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 43).

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


1 If a player is a second-round pick, his team submits a required tender (retaining its draft rights to the player), the player signs his required tender, and the team subsequently waives the player, then that team is the only team that can sign or convert (see question number 83) that player to a Two-Way contract in that season.

49. 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.

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

Unsigned first round picks are included in team salary at 120% of the player's scale salary amount immediately upon their selection in the draft. 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 52).

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 early second round picks in order to clear cap room.

As described in question number 89, the trade value of an unsigned first or second round draft pick is always $0.

51. 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 contract with a (then) three-year guarantee, the Bulls renounced him, making him a free agent.

52. 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.

53. 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 5%1 -- 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 8%1 See question number 25
Early Bird exception 4 8%1 See question number 25
Non-Bird exception 4 5% See question number 25
Non-Taxpayer Mid-Level exception 4 5% See question number 25
Taxpayer Mid-Level exception 3 5% See question number 25
Room Mid-Level exception 2 5% See question number 25
Bi-Annual exception 2 5% See question number 25
Disabled Player exception 1 N/A See question number 25
Minimum Player 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 47
"Arenas" restricted free agents 4 Can have a substantial raise in year 3 See question number 43
Sign-and-Trade 4 5% See question number 92
Extensions (veteran) 52 8% of the salary in the first season of the extension See question number 58
Extensions (rookie scale contracts) 52 8% of the salary in the first season of the extension See question number 58
Extensions (Designated Veterans) 62 8% of the salary in the first season of the extension See question number 58
Extend-and-Trade 32 5% of the salary in the first season of the extension See question number 95
Renegotiations Same as original contract Additional salary can increase 8% over the additional salary in the first renegotiated season See question number 59
Two-Way 2 Two-Way portion defined in salary scale; NBA portion always rookie minimum See question number 82

The raise limit also applies to salary decreases -- for example, since the Larry Bird exception limits raises to 8% of the first-year salary, the salary may also decrease by up to 8% of the first-year salary.

The percentage (5% or 8%) 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). The same limit also usually applies separately to likely and unlikely incentives (see question number 74), and to 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 $9 million of cap room and uses it to sign a player for four years with 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 $7,183,099 100% $1,816,901 $9,000,000
2 $7,542,254 100% $1,816,901 $9,359,155
3 $7,901,408 100% $1,816,901 $9,718,310
4 $8,260,563 0% $0 $8,260,563

The base salary in the first season is $7,183,099, and 5% of that amount is $359,155 which is the maximum amount that either the base salary or the total salary (the rightmost column) can change (up or down) from year to year. However, in the fourth season the total salary decreases by $1,457,746, because the non-guarantee means that none of the signing bonus is allocated to that season. 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 54% guarantee in the final season:

Year Base salary Guarantee Signing bonus Total
1 $7,411,330 100% $1,588,670 $9,000,000
2 $7,781,897 100% $1,588,670 $9,370,567
3 $8,152,463 100% $1,588,670 $9,741,133
4 $8,523,030 54% $857,882 $9,380,991

Incidentally, raises take effect July 1 of each year.


1 The maximum raise is 8% for players who qualify for the Larry Bird or Early Bird exception (see question number 25), even if they are signed without using the Bird exception. For example, a team might renounce its own free agent and later re-sign that player using its remaining cap room.
2 Extensions always include the remaining seasons of the current contract.

54. 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 (5% maximum raises) to a four-year contract starting at $10 million, the maximum raise is $500,000 each year. This player's four-year salary would be:

Year 1 $10,000,000
Year 2 $10,500,000
Year 3 $11,000,000
Year 4 $11,500,000

55. 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:

There are also rules which prevent teams from padding extra years onto contracts for older players. The "Over-38" rule is described in question number 56.

56. What is the "Over-38" rule?

The Over-381 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 $9 million. With 5% raises, a three-year contract would total $28.35 million. But if they added a fourth year to the contract, the salary would total $38.7 million. If the player retires after three seasons and continues drawing his salary for the additional season, then he effectively will be paid $38.7 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-38 rule.

Certain contracts that extend past the player's 38th birthday are deemed Over-38 contracts. In an Over-38 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 $9 million, and a 36-year-old player signs a contract with 5% raises. Here are the three-year and four-year versions of the contract:

Season Three-year Four-year
1 $9 million $9 million
2 $9.45 million $9.45 million
3 $9.9 million $9.9 million
4 N/A $10.35 million
Total $28.35 million $38.7 million

The four-year contract is classified as an Over-38 contract. In this contract, salary in the fourth season is classified as deferred compensation earned in the first three seasons. Therefore, the $10.35 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 $9,000,000 $3,285,714 $12,385,714
2 $9,450,000 $3,450,000 $12,900,000
3 $9,900,000 $3,614,286 $13,514,286
4 $10,350,000 $0 $0
Total $38,700,000 $38,700,000

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 $9 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 $6,593,023 $2,406,977 $9,000,000
2 $6,922,674 $2,527,325 $9,450,000
3 $7,252,325 $2,647,674 $9,900,000
4 $7,581,977 $0 $0
Total $28,350,000 $28,350,000

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 $9 million -- so the total fits within the team's Non-Taxpayer Mid-Level exception.

Note the effect the Over-38 rule has on the contract -- since the salary had to be reduced, the player earns exactly the same amount ($28.35 million) over four years as he would have earned with a three-year contract that was not subject to the Over-38 rule. In other words, the Over-38 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 sometimes reported that the Over-38 rule prevents teams from signing older players to long contracts, but this is false. Teams are not prevented from signing longer contracts -- the Over-38 rule simply removes the incentive for doing so2.

The Over-38 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-38 rule has been reduced.

So what contracts are classified as Over-38 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-38 rule, and which years are zero years. For example, if a 35-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-38, and the fifth season is considered a zero year. "N/A" indicates that the contract is not considered Over-38 because it is specifically excluded from the Over-38 rule in the CBA.

Qualifying Veteran Free Agents3 Other Free Agents
Age 4 year contract 5 year contract 4 year contract
34 N/A 5* N/A
35 or 36 N/A 5 4
36+ 4 4 and 5 4

* If he signs before October 1 and his birthday is October 1 or earlier.

For the Over-38 rule, seasons are defined to commence on October 1. So if the player's birthday is October 1 or later, then the season will commence before his birthday, but the Over-38 rule applies only to seasons that commence after the player's 38th birthday -- essentially gaining such players an extra year where the Over-38 rule doesn't apply. Also, if the player's birthday is during the July Moratorium (July 1-6) and he signs is contract on or before July 11, then he is not charged with being a year older when he signs. For example, if the player turns 35 on July 3 and he signs his contract on July 9, then for Over-38 purposes he is considered to be 34 when he signs his contract.

Other notes about Over-38 contracts:

The Over-38 rule has an additional component. As the player continues playing, and therefore proves wrong the assumption that he will retire before earning all his salary, 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 $6,922,674 $2,527,325 $9,450,000
3 $7,252,325 $2,647,674 $9,900,000
4 $7,581,977 $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 $9.45 million, $9.9 million and $0. The average of these amounts is $6,45. This becomes the team salary amount for those three seasons:

Season Paid Team Salary Amount
2 $6,922,674 $6,450,000
3 $7,252,325 $6,450,000
4 $7,581,977 $6,450,000

Prior to the third season they repeat this process, averaging the team salary amounts for the third and fourth seasons.

Season Paid Team Salary Amount
3 $7,252,325 $7,417,151
4 $7,581,977 $7,417,151

Repeating the process prior to the fourth season, the actual salary becomes the team salary amount in the fourth season:

Season Paid Team Salary Amount
4 $7,581,977 $7,581,977

1 Perhaps reflecting the fact that many modern players continue to be productive well into their 30s, the threshold age for this rule has increased over time. It was the Over-35 rule through the 1995 CBA, and then the Over-36 rule through the 2011 CBA, before becoming the Over-38 rule in the current CBA.
2 Teams might still find some reason for signing a player to a longer contract. For example, a longer contract provides a longer basis should the player ever be waived and stretched (see question number 65).
3 A Qualifying Veteran Free Agent is considered an ordinary free agent for Over-36 purposes when he signs for a sign-and-trade transaction (see question number 92).

57. 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, either in the same year (such as a player option and a team option in the same year) or in different years. The exception is rookie scale contracts for first round draft picks, which contain a team option before both the third and fourth seasons. No other options are permitted in rookie scale contracts. See question number 47 for more information.

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 65 for an interesting implication of this rule.

The salary in an option year may be greater (but not less) than the salary in the previous season, and the payment schedule (see question number 115) for base compensation may be different. Other than these exceptions, all other contract terms, including the percentage of salary that is guaranteed, must be the same as in 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 101), 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 60, under these circumstances the team and player can mutually amend the contract to remove the option or ETO. A contract can be amended like this with the condition that the trade must be completed within 48 hours, otherwise the amendment is canceled.

Player options once were used as a way to give the player more money. The team and player agreed to a long-term deal with a player option after the player obtained full Bird rights (which used to be after one season). The player invoked the option, became a free agent, and then signed a new contract for more money using the Bird exception. However they mostly closed this loophole by making Bird rights ramp-up over three seasons, and by allowing options only on the last year of a contract. The most common usage today is for a player to change teams by signing a two-year contract, with the second year being a player option. In this case the second season acts as an insurance policy, and the player opts-out after the first season (unless he suffers a severe injury). He then signs another of these "1+1" contracts as a non-Bird free agent, receiving a 20% raise. He can then either play both years under this contract and enter free agency with full Bird rights, or opt-out again and repeat the process. Both LeBron James (re-signing with Cleveland) and Kevin Durant (Golden State) used this "1+1" strategy when changing teams.

A Two-Way contract (see question number 82) cannot contain an option or ETO.


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.

58. Can existing contracts be extended?

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

Type of contract Can be extended
Three and four seasons Second anniversary after contract signed
Five and six seasons Third anniversary after contract signed
Extended contracts Second anniversary after extension signed1, if the extension lengthened the contract to three or four seasons (including any remaining seasons on the exsting contract). If the extension lengthened the contract to five or six seasons (including any remaining seasons on the existing contract), it can be extended on the third anniversary after extension signed.
Renegotiated contracts Third anniversary after renegotiation signed, if a salary was renegotiated upward by more than 10%
Rookie scale contracts From the end of the July Moratorium to the day before the start of the regular season preceding the player's last option season2

A contract cannot be extended unless the player will have full Bird rights at the end of the contract (prior to the extension). Two-Way contracts (see question number 82) cannot be extended under any circumstance.

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 up to two players3 (called "Designated Rookies") who can receive five-year extensions, bringing the total contract length to six seasons (see question number 24 for more information on designated players).

The complete list of Designated Players (including players signed under the 2011 CBA whose contract is still in effect in the 2017 CBA) is as follows:

Team Designated Player Expires
Cleveland Kyrie Irving 2020
Houston James Harden 2018
Indiana Paul George 2018
Washington John Wall 2019

In general, the salary in the first year of an extension to a rookie scale contract may be any amount up to the player's maximum. This is usually the 0-6 year maximum, which is 25% of the salary cap (see question number 23). However, a player may receive up to the 7-9 year maximum, which is 30% of the cap, if he meets the "5th Year 30% Max Criteria," as explained in question number 24.

The salary in the first year of an extension to a rookie scale contract for a Designated Player must be the player's maximum salary. If the player has also met the 5th Year 30% Max Criteria, his 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:

In addition, the exact percentage of the cap can be based on how the player meets the 5th Year, 30% Max criteria. For example, that the player will receive 27% of the cap if he meets the criteria by being named to the All NBA Second Team, 28% if he meets the criteria by being named to the All NBA First Team, or 30% if he meets the criteria by being named Most Valuable Player.

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 under the 2017 CBA using the 5th Year 30% Max criteria:

Team Player Year

Raises in a rookie scale extension are limited to 8% 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 95).

Veteran extensions:

Note: certain players (called Designated Veterans) can receive longer and more lucrative extensions than described here, if they meet specific service, tenure and performance criteria. Designated Veteran Extensions are covered in question number 24.

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 57 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 100), his contract may not be extended for six months following the trade.

Veteran extensions are limited to five seasons, including the seasons remaining on the current contract. Even if the extension is signed in late June, the current, almost concluded season counts as one full season toward the total. For example, a contract with two seasons remaining (the remainder of the current season, plus the next season) may be extended for up to three additional seasons.

If an extension is signed in conjunction with an Extend-and-Trade transaction (see question number 95), the limit is 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 120% of the player's previous salary5, or 120% of the estimated average salary (see question number 31), whichever is greater, 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 number 23).

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 8% 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 8%, 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 59). 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 If more than one season remains on a previously extended contract when a new extension is signed, then the extension can only be signed from the end of the July Moratorium to the last day of the offseason. If a previous extension was signed after October 1 but before the start of the regular season, then its anniversary is considered to be October 1.
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.
3 Teams can have at most one designated rookie who was acquired via trade.
4 Raises in a rookie scale extension for a team's Designated Player must be 8%.
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 5% (see question number 95).

59. 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 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 100), 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 are based on the salary that is added to the first renegotiated season -- 8% of the amount that is added to the first renegotiated season becomes the maximum additional (renegotiated) salary in each subsequent season.

A renegotiated contract can be extended simultaneously (see question number 58). 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:

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

Other than extensions (see question number 58) and renegotiations (see question number 59), a team and player can mutually modify an existing contract as follows:

Contracts are sometimes amended to eliminate an option or ETO in order to facilitate a trade. For example, before the Hornets traded Chris Paul to the Clippers in 2011 they amended his contract to remove his player option, thereby locking Paul into his contract for two seasons rather than allowing him to leave after one season with the Clippers.

61. 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 team can apply to have the player's salary excluded starting on the first anniversary of the player's last regular season or playoff game, and not before the one-year anniversary of the first regular season game for which the player was on the team's roster under his current contract. If the player played in fewer than 10 games in the last season in which he played, the team can apply on the one-year anniversary of the player's last regular season or playoff game, or 60 days after his last game in the current season, whichever is later.

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, or by a Fitness to Play panel (see question number 62). 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.2 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.
2 If the player's salary was excluded because a Fitness to Play panel determined that the player had a materially elevated risk of death, then the player's salary doesn't go back onto the team salary even if he plays in 25 games.

62. What is a Fitness to Play Panel?

Sometimes a player and team can disagree over whether the player is physically capable of playing, or whether his continuing to play would carry an elevated risk of serious injury or even death. Fitness to Play panels exist to bring a consensus of objective medical expertise to decisions about whether players in these situations can continue to play.

A Fitness to Play panel consists of three physicians, one appointed by the league, one by the players association, and with the third appointed by the first two physicians. The panel members must be board certified and fellowship-trained specialists in the applicable area of medicine, with at least 10 years of post-fellowship clinical experience. There are multiple Fitness to Play panels, established for different medical fields:

The league, player's team or players association can refer a player to a Fitness to Play panel if a physician advises the league, his team or the players association in writing that the player is unable or unfit to play as a result of an injury, illness or other health condition, or if his continuing to play carries an elevated risk of death. Once a player has been referred to a Fitness to Play panel, the player can no longer play or practice with his team until he is cleared by the panel.

The panel will review the player's medical information and examine him personally (unless a personal examination is determined to be unnecessary) and report to the league, team and players association whether the player is fit to play, guided by current medical knowledge, authoritative medical guidelines, and the best available objective evidence.

If the panel finds the player to be fit to play, he must sign an informed consent and assumption of risk, and then he is cleared to play. If the panel does not find the player fit to play and material circumstances later change, then the player can be re-referred to the panel after nine months, or after the first day of the next regular season, whichever is later.

The team is not forced to let the player play, even after he is cleared by the panel. However, if the team doesn't let the player play, and the player is not in the last season of his contract (excluding any option year) when cleared, then within 60 days the team must either trade the player, add an "Exhibit 7" to his contract1, or waive him. Under these circumstances a waiver can be either full or partial -- see question number 68 for more information on partial waiver claims.

If a Fitness to Play panel finds that a player is physically unfit to play, then the team also can request that the panel's decision be used to establish that the player has suffered a career-ending injury or illness in order to have his salary excluded from the team's team salary2 (see question number 61).


1 Exhibit 7 is a contract addendum that replaces the standard contract language allowing the team to suspend the player if he does not stay in game shape, with language more favorable to the player that limits suspensions to a week at a time, and provides the player with the ability to appeal to an independent physician.
2 If the Fitness to Play panel determines that the player has a materially elevated risk of death if he continues playing, then the player's salary does not return to the team salary even if the player subsequently plays in 25 or more games.

63. 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), attempted suicide or self-inflicted injury, alcohol or substance abuse, commission of a felony, not complying with the terms of his contract, etc.

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 64) 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. For contracts and extensions signed under the current CBA, guarantees can be contingent only upon one of the following:

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 66). 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.3 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 53 for more information.

A Two-Way contract (see question number 82) can have a maximum of $50,000 guaranteed. This guarantee is pro-rated if the player is signed after the start of the regular season.

If a player is waived from a standard NBA contract with more than $50,000 protected, then for the rest of that season he can't play for that team's D-League affiliate or sign a Two-Way contract.


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 January 20 for Two-Way contracts. The guarantee for Two-Way contracts is the full D-League portion of the player's Two-Way salary, plus any earned NBA salary.
3 If a Two-Way player is injured as a direct result of providing playing services, then his salary protection is his entire D-League salary plus any NBA salary he already earned, minus any D-League salary he already earned.

64. 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 57) 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. The team can sign a new player or acquire one via trade immediately, without waiting for the player to be claimed or to clear waivers. The team continues to pay the guaranteed portion of the terminated contract (see question number 63).

Individually negotiated revisions to the payment schedule are not allowed. For contracts for with more than $250,000 of remaining guaranteed salary, the guaranteed salary for the remaining seasons2 is "stretched" and paid in equal amounts over a greater time span, as follows:

If $250,000 or less of guaranteed salary remains at the time the player is waived, the player's remaining guaranteed salary continues to be paid according to the contract's original payment schedule.

The effect of stretched players on the team's salary cap is described in question number 65.

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 All seasons remaining on a contract are considered "remaining seasons" for the purpose of the stretch provision except seasons following a team option. For example, the Clippers waived and stretched Miroslav Raduljica in 2014 with two seasons remaining on his contract, one fully guaranteed and the other non-guaranteed. Both seasons counted in his stretch calculation, so his remaining guaranteed salary was stretched over five seasons.
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 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.
5 Interestingly, a player can 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. While this has not happened in practice, the league clarified its interpretation of this rule in 2017, in regard to a possible instance with Andrew Bogut.

65. How do released or stretched 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. For example, if a player is waived with $10 million in guaranteed base salary remaining on his contract, then that $10 million will continue to be included in team salary. If a player is waived partly 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 64, if the contract had more than $250,000 in remaining guaranteed salary, the remaining guaranteed salary is paid over twice the number of remaining years, plus one, per the Stretch provision. The team gets to choose whether the player's cap hit is stretched as well, or stays on its original schedule.1 For example, if a team waives a player with one season and a guaranteed $6 million remaining, his salary payments will be stretched over three years, at $2 million per year. The team gets to choose whether the team salary is charged the original $6 million over one season, or the stretched $2 million per season over three seasons.

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 57, 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 salary2) 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 during the season in which the player is waived (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 $2 million contract with another team for the 2017-18 season, his original team gets to set off $2 million minus $1,312,611 (the minimum salary for a one-year veteran in 2017-18), divided by two, or $343,694. The team is still responsible for paying $4,656,306 of the original $5 million. Note that between his prior team and new team the player will earn a combined $6,656,306, which was more than he earned prior to being waived.

If a player has been waived and his salary has been stretched, his salary can be set-off only during the original term of the contract. For example, suppose a player is signed for 2017-18 and 2018-19, and he is waived during the 2017-18 season, with his 2018-19 salary stretched across 2018-19, 2019-20 and 2020-21. If the player signs with another team, only his 2017-18 and/or 2018-19 salary can be set off.

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 66), but not at other times.


1 If a team elects to stretch the team salary charge, it must inform the league by 11:59 PM on the day following the day the player clears waivers. 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. 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.
2 Set-off amounts are not deducted from team salary until after the end of the regular season (when they know for sure how much the player has earned in his new contract, and that the new contract won't be affected before the end of the season by a buyout or waiver), however they apply set-off retroactively to the last game of the regular season.

66. 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 63, 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.

After a buyout in which the player's guaranteed salary is reduced, the team cannot re-sign the player or claim him of waivers for one year, or until the waived contract would have ended, whichever is later.

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.

67. 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 65 for details.

68. What are partial waivers?

Partial waivers are an alternative form of waivers that allow other teams to claim the player with a bid for less than his full salary. Under the current agreement partial waivers are available only when a player is referred to a Fitness to Play panel (see question number 62), is cleared to play by the panel, and the player's team still refuses to let him play. Under the 2011 CBA partial waivers were available in conjunction with the Amnesty provision.

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. 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 team. 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 via regular waivers.

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

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.


1 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.

69. What is the Amnesty provision?

Amnesty was a component of the 2005 and 2011 CBAs that allowed teams to release one player via the waiver process (see question number 64) and remove him from their team salary and luxury tax computations. The Amnesty provision does not exist in the current agreement.

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 22). 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 end of the July Moratorium (see question number 105) 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 63). 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. A team also cannot have more than six players at one time who are signed to contracts with an Exhibit 9.

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 87) 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 61 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, Bryce Dejean-Jones, 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 61.

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 in 2008, 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 not likely 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. When determining whether the team can sign a contract or extension that includes an unlikely bonus, its room (cap room or remainder of an exception) is reduced by the sum of 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, suppose a team has $10 million in cap room and signs a player to a contract with $5 million in base salary and $750,000 in unlikely bonuses. The team then has $5 million in remaining cap room1, and can sign another player for $5 million with no unlikely bonuses. But if the team also wants to include an unlikely bonus for this player, the player's full salary (including the unlikely bonus) cannot exceed $4.25 million (the team's remaining cap room minus the $750,000 unlikely bonus given to the other player).

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 honors2. 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 could easily push Team A's win total above 30).3

Other rules related to incentives:


1 This example ignores empty roster charges in order to simplify the explanation.
2 Any performance benchmarks must be based on official NBA statistics available on NBA.com. 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.
3 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 $9 million, then a team could sign a player to a four-year contract with 5% raises (without a signing bonus) as follows:

Without Signing Bonus
Year Salary
1 $9,000,000
2 $9,450,000
3 $9,900,000
4 $10,350,000
Total $38,700,000

The maximum (15%) signing bonus is $5,805,000. 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 $9 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 $7,564,895 $1,435,105 $9,000,000
2 $7,943,140 $1,435,105 $9,378,245
3 $8,321,384 $1,435,105 $9,756,489
4 $8,699,629 $1,435,105 $10,134,734
Total $32,529,048 $5,740,420 $38,269,468

Note that in order to fit the first-year amount (salary plus a pro-rated portion of the signing bonus) within the $9 million exception, the first-year base salary had to be reduced to $7,564,895. The net effect is that the player gets more money in the first year (he receives his base pay of $7,564,895 plus his entire signing bonus of $5,740,420, for a total of $13,305,315), but he receives less in the subsequent years. Also note that the total value of the contract ($38,269,468) 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 59) 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 92 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 is 15% of the modified contract and not the original contract. 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 53 for more information. A spreadsheet for calculating contracts (including contracts with signing bonuses) is available here.

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 otherís 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 ďexisting and validly bindingĒ 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 playerís team or organization in order to release the player to sign in the NBA (see question number 77).

The NBAís 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 canít 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
2017-18 $675,000
2018-19 $700,000
2019-20 $725,000
2020-21 $750,000
2021-22 $775,000
2022-23 $800,000
2023-24 $825,000

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 2017 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 $675,000 is excluded in 2017-18, $325,000 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 contract2 (see question number 47), 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 2017 draft has a scale amount of $1,162,100. The player could be paid $929,680 (80% of the scale amount), with up to $1,394,520 (120% of the scale amount) charged to the team salary in 2017-18. 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 $1,604,6803.

An international player payment cannot be provided when signing a player to a Two-Way contract or a contract with an Exhibit 10 (see question number 83).


1 This applies to any player playing on an international team, and not just to "international players."
2 Unless the player waits three years without signing or playing intercollegiately in the interim (see question number 49).
3 Two times the difference between 80% and 120% of the scale amount for the 30th pick in 2017-18, plus the $675,000 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.

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 177 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 5/177 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?

Normally an NBA team can have a maximum of 15 players on its roster during a season (and up to 201 during the offseason, starting on the day after the team's season ends). A team normally has 12 or 13 players on its Active List, 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 hardship2.

Teams must suit-up at least eight players and have two players on its Inactive List for every game. The following table summarizes the allowable compositions of team Active and Inactive Lists:

Inactive
Active With 0 Two-Way With 1 Two-Way With 2 Two-Ways Notes
13 2 3 4
13 1 2 3
13 0 1 2 Two week limit
12 3 4 5
12 2 3 4
12 1 2 3 Two week limit
11 2 3 4 Two week limit
11 1 2 3 Two week limit

A team gets two roster spots exclusively for Two-Way players (see question number 82). A Two-Way player must be on his team's Active List or Inactive List while playing in the NBA. For each Two-Way player on the team's Active List or Inactive List, the number of players required to be on the team's Inactive List increases by one, as indicated in the above chart. For example, if a team can have 13 active and two inactive players if it does not have any Two-Way players; 13 and three if it has one Two-Way player; or 13 and four if it has two Two-Way players.

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 14 players (13 active and one inactive, or 12 active and two inactive), the NBA also guarantees a league-wide average of at least 14.5 players per team (not including Two-Way players), however the average must be under 14.5 in two consecutive seasons for a violation to occur. If a violation occurs, then for the following two seasons the requirements for the number of players on teams' Inactive Lists increases by one.

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 on standard NBA contracts who are assigned to the D-League (see question number 81) are automatically placed on their team's Inactive List.

Since players who are on the Two-Way, Suspended, NBA Draft, Voluntarily Retired or Armed Services lists are on neither the Active nor Inactive List, these players are ignored for roster size limitations. For example, in early 2015 the Sixers had 15 players on its roster, and had placed Andrei Kirilenko on its Suspended List. This freed up a roster spot for the team to acquire Jared Cunningham from the Clippers.


1 Including Two-Way players.
2 A hardship can be deemed to exist when a team has four players who are sick or injured and have missed at least three regular season games, and will continue to be unable to play. If a hardship is granted, the hardship ends when one of the sick or injured players is physically able to resume playing. The team must then release player(s) to get back to the roster limit, although teams have the option to retain the hardship player and release a different player to get back to the limit.

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 5 each season (even if January 5 falls on a weekend or holiday). Teams cannot sign players to 10-day contracts that would extend past their last regular season game. In other words, after their 80th game 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.

The number of 10-Day contracts a team is allowed to have active is dependent on the number of players on its roster (counting active players, inactive players and other 10-day contracts, but not Two-Way contracts):

Number of players 10-Days allowed
12 0
13 1
14 2
15 3

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).

A team cannot sign a 10-Day contract that is also a Two-Way contract.

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

The NBA Developmental League (also known as the NBA D-League, G-League or NBADL) is a separate league run in affiliation with the NBA. An NBA team may assign its players (who are on standard NBA contracts) to its affiliated NBA D-League team as follows:

Years of Exp. Assignment rule
0-2 Can be assigned at any time
3+ Can be assigned if the player and the union consent.

If an active player on a standard NBA contract is assigned to the 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.

If a player on a standard NBA contract who is on a D-League assignment is suspended for less than 20 games, he loses 1/145 of his salary per game. If the suspension is for 20 or more games, he loses 1/110 of his salary per game. Players stay on the team's Two-Way list for their entire suspension.

Two-Way players and Two-Way contracts are covered in question number 82.

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 is a Two-Way player?

A Two-Way player is a hybrid of a standard NBA player and a D-League player (see question number 81). A player on a Two-Way contract is principally a D-League player, but he can spend up to 45 days with his affiliate NBA team. His salary is pro-rated by day, depending on which team he is on, and he can only play for the affiliated NBA team while on a Two-Way contract Ė he canít be poached by another NBA team.

A Two-Way player differs from a regular D-League player because he receives a higher salary and can be called up to the parent NBA club while remaining under his Two-Way contract. A regular D-League player can sign with an NBA team at any time, which terminates his D-League contract. A Two-Way player differs from a standard NBA player in that he only earns NBA salary and amenities while with the parent NBA club. A player on a standard NBA contract can be assigned to the D-League affiliate, but continues to receive his NBA salary while on assignment.

Teams are allowed to sign up to two players on Two-Way contracts, and teams receive additional roster spots beyond the standard 15 in order to do so (see question number 79). A Two-Way player can be signed starting on July 1 (during the July Moratorium), and can be signed through January 15. A player is ineligible to sign a Two-Way contract if he will have more than three years of NBA service at any point in the contract. A player cannot play under Two-Way contracts for the same team for more than three years total.

A Two-Way player must be on the NBA teamís Active List or Inactive List (see question number 79) when with his NBA team, or on the Two-Way List when assigned to the D-League (only during the NBA regular season or playoffs). A Two-Way player canít appear on the NBA teamís playoff roster or play in a playoff game, but he can be on the NBA teamís Inactive List during the playoffs, can travel and practice with the NBA team.

A Two-Way player is signed using Exhibit 1B of the Uniform Player Contract. A Two-Way contract can be for one or two seasons. The playerís NBA salary is the rookie minimum salary (see question number 22), pro-rated per day, for each day he is with the NBA team (which includes days on the Active List for an NBA game, or days he engages in practice, drills, conditioning, workouts or travel with the NBA team). The player receives the Two-Way salary for each day he is not credited with an NBA day of service, according to the Two-Way scale:

Season Two-Way salary
2017-18 $75,000
2018-19 $77,250
2019-20 $79,568
2020-21 $81,955
2021-22 $84,414
2022-23 $86,946
2023-24 $89,554
2024-25 $92,241

A Two-Way contract cannot contain an option or ETO (see question number 57), and cannot contain bonuses, incentives, deferred compensation, loans or advances (see question number 115). A 10-Day contract (see question number 80) cannot also be a Two-Way contract. An international player payment (see question number 77) cannot be provided when signing a Two-Way contract. A Two-Way contract cannot be extended (see question number 58) or renegotiated (see question number 59).

A Two-Way player is not included in his teamís Team Salary (see question number 13), so teams donít need cap room or an exception to sign, acquire or convert (see question number 83) a Two-Way contract. A player is not credited for a day of NBA service during training camp or the playoffs, or on days he is traveling between his NBA and D-League teams.

A Two-Way playerís salary may be guaranteed (see question number 63) for no more than $50,000, which is pro-rated if he signs after the start of the season. If a player is waived from a standard NBA contract with a guarantee greater than $50,000, then for the rest of that season he cannot play for that teamís D-League affiliate or sign a Two-Way contract with any team.

The payment schedule (see question number 115) for a Two-Way player is 24 semi-monthly paydays, with each paycheck including a fraction of his D-League salary, plus any NBA salary he earned during the previous pay period.

If a Two-Way player is injured while providing playing services then while he is injured his salary is protected for up to his entire Two-Way salary, plus any NBA salary already earned, minus any D-League salary already earned.

On January 201 all Two-Way salaries become fully guaranteed for the remainder of that season. Two-Way players are guaranteed to receive their full Two-Way salary, plus any earned NBA salary.

A Two-Way player can be traded 30 days after he is signed. A Two-Way player never creates a trade exception (see question number 85) when he is traded.

When a Two-Way player becomes a free agent, his free agent amount (see question number 37) is the one year veteran minimum salary. A player finishing a Two-Way contracts is subject to restricted free agency (see question number 44) if he was on an NBA Active List or Inactive List for at least 15 days in the previous season. As with any other restricted free agent, the team must make a qualifying offer in order to retain its right of first refusal. The qualifying offer for a Two-Way player must be:

The following rules also apply to Two-Way contracts:

Discipline and suspensions for Two-Way players are covered in question number 107.


1 Rather than January 10 for standard NBA contracts (see question number 63).

83. Can a Two-Way player be converted to a regular NBA player? Can a regular NBA player be converted to a Two-Way player? What is Exhibit 10?

If a standard NBA contract includes an attachment called Exhibit 10, the team receives the right to convert the contract to a Two-Way contract. Whether or not an eligible contract includes an Exhibit 10 is a matter of negotiation between the player and team. To be eligible to contain an Exhibit 10, a contract must be for one season at the minimum salary, with no bonuses of any kind (other than an optional Exhibit 10 bonus), and no compensation protection (see question number 63)1.

An Exhibit 10 bonus can pay the player from $5,000 to $50,000 if the player is waived by his NBA team, signs with the D-League, is assigned to the NBA team's D-League affiliate, and stays there at least 60 days. A team can only add an Exhibit 10 bonus if the team actually has a D-League affiliate team. An Exhibit 10 can also specify a Conversion Protection Amount between $5,000 and $50,000, which becomes compensation protection if the contract is converted to a Two-Way contract. If a contract contains an Exhibit 10 bonus it must also contain a Conversion Protection Amount in the same amount.

Other rules related to Exhibit 10:

Any Two-Way contract can be converted to a standard NBA contract at the teamís option. A Two-Way contract can be converted from the start of the July Moratorium through the day of the teamís last regular season game in the last year of the Two-Way contract. Once converted, the contract becomes a standard NBA contract that is in effect for the remainder of the term of the Two-Way contract. The playerís salary becomes the NBA minimum salary based on his years of service (pro-rated based on when the contract is converted). If the contract contains an Exhibit 10 bonus, the bonus amount converts to a salary guarantee.

If a Two-Way contract is converted to a standard NBA contract, the regular trade restriction exists for the first three months or until December 15, whichever is later (see question number 101). The three month period begins on the date the contract is converted.

In lieu of converting a Two-Way contract to a standard NBA contract, teams and players are also free to negotiate and sign a standard NBA contract. If a new NBA contract is signed, the Two-Way contract becomes null and void.


1 A contract that contains an Exhibit 10 also cannot be extended or renegotiated, and cannot contain an international player payment (see question number 77).

84. 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 Player 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 90 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 must be notified of a trade no later than one hour after the trade call, and no less than one hour before any public announcement.

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.

Since salary can be deferred or paid on an alternate schedule (see question number 115), a team can trade a player to whom it owes salary for services rendered prior to the trade. When this happens, the team sends any back salary to the player's new team, and the new team pays the player.

When a player is traded, his full season salary is transferred to the team salary of his new team, and he counts $0 toward his old team's team salary. The exception is when determining whether teams have met their minimum team salary obligations (see question number 14). For minimum team salary purposes the salary of a traded player is divided among the teams for which he played. For example, if a $10 million player is traded exactly 60% of the way through the season, then the player's original team counts $6 million of the player's salary for minimum team salary purposes, and the player's new team counts $4 million of the player's salary for minimum team salary purposes.

85. What is the Traded Player exception?

As described in question number 84, 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 $100 million, a team has a team salary of $105 million, and they want to trade a $10 million player for a $6 million player, they still have to use an exception. Even though their team salary is decreasing by $4 million as a result of the trade, the fact that they would finish over the salary cap ($101 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 86. 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 87.

In short:

To determine the outgoing salary for trade purposes, they typically use a player's base salary (not bonuses). However, there are exceptions where a different outgoing salary can be used:

It is important to view a trade separately from each team's perspective, 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 started 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.

86. 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 amount of outgoing salary1 and whether the team is a taxpayer.2 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.3,4

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 $6,533,333 175% of the outgoing salary, plus $100,0005
$6,533,334 to $19.6 million The outgoing salary plus $5 million5
$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, "aggregating" their salaries in order to acquire a replacement player with a higher salary than can be acquired by trading any outgoing player alone. 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 in outgoing salaries the team can receive up to $15.1 million in return, 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 used an exception to acquire a player (which means it acquired the player by any means other than using cap room), it cannot include that player in an aggregated trade for two months.6

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 87).

As described in question number 84, 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 $13 million.


1 See question number 85 for more information on how outgoing salaries are determined for trade purposes.
2 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. 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 43), the cap amount for the trading team is used, which may be either the actual salary or average salary for the contract.
3 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% (as the rule allowed at the time) 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.
4 For extended rookie contracts, the Poison Pill Provision (see question number 91) does not affect the determination of whether the team can take back 125% plus $100,000, 175% plus $100,000, or the outgoing salary plus $5 million. Only the resulting Team Salary value is used.
5 Note that the benefit of these margins may be 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%).
6 It is commonly misreported that a team cannot aggregate a player (usually worded as trading the player with other players) for two months if the team is over the cap, or that a team that was under the cap when it made the initial trade cannot aggregate the player in a subsequent trade if it went over the cap in the meantime. Neither of these is true. All that matters is whether the player was acquired with an exception or with cap room.

87. 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 86) 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 is a taxpaying team with three players making $4 million, $5 million and $7 million, and these two teams want to complete a three-for-one trade with these four 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, and 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 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 See question number 85 for more information on how outgoing salaries are determined for trade purposes.
2 If the one-year anniversary of the trade falls on a weekend or holiday, the trade exception expires on the next business day.

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

The "Minimum Player Salary exception" allows teams to acquire minimum-salary players1 without regard to salary matching under the Traded Player exception (see question number 85). 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 $2 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 Player 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 $1.5 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 $9 million in salary. However, the two $1.5 million players are covered by the Minimum Player 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, the bonus takes effect when the player is traded, so the receiving team must use some means other than the Minimum Player Salary exception to complete the trade. If no other means are available, the player can elect to waive his trade bonus so the trade complies with the Minimum Player Salary exception.

Teams trading away minimum-salary players do count their salaries (the portion not paid by the league -- see question number 15) as outgoing salary when comparing salaries for trade.


1 Any player whose contract is longer than two seasons cannot be signed or acquired using the Minimum Player Salary exception, even if he is paid the minimum salary.

89. 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 120% of his scale amount once he is selected in the draft, until he signs a contract with the team holding his draft rights or with a non-NBA team (see question number 47) or agrees in writing not to sign an NBA contract that season (see question number 13). If an unsigned first round draft pick is traded, then 120% 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 drafts into the future (for example, if this is the 2017-18 season, then a 2024 pick can be traded, but a 2025 pick cannot). It is common to "protect" picks depending on their position (for example, "we keep it if if it falls #1 through #14, 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 1980 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 2018; 1-10 in 2019; 1-6 in 2020; and unprotected in 2021. If the team's picks in 2018, 2019 or 2020 fall within the protected range, then they keep it; otherwise it is conveyed to the other team. If they make it to 2021 without having conveyed a pick, then the other team gets their 2021 pick unconditionally.

A team may protect its pick through all seven upcoming drafts. However, if a protected pick is not conveyed by the seventh draft, the obligation to convey a pick either must extinguish after the seventh draft, or convert to a permissible alternative (such as a second round pick).

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 1980 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 2017-18 season, then a team can trade its 2018 first round pick without regard to whether they had traded their 2017 pick, since their 2017 pick is no longer a future pick. But they can't trade away both their 2018 and 2019 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 a team can't trade a pick if there is any chance at all that it will leave the team without a first round pick in consecutive future drafts.

If a team trades two future first round picks and the first of those picks is protected, then that pick would be conveyed in the first draft in which the protection does not apply (as described above), and the second pick would be conveyed two years after the first pick is conveyed. 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 up to two picks with this two-year waiting period in effect at any time. In order to have two such picks with subsequent conveyance, the protection on the first trade cannot last longer than two years (i.e., the first pick must be conveyed by the third year, so the first subsequent pick is conveyed by the fifth year, and the second subsequent pick is conveyed by the seventh year).

Other rules that pertain to trading draft picks:

90. 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 $1.5 million each on minimum-salary contracts. The Minimum Player 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.

The other legal combining of exceptions is aggregation, as described in question number 86, where the outgoing salaries of multiple players sometimes can be combined in a single simultaneous trade.

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 85 and 87 for more information on the Traded Player exception and non-simultaneous trades. See question number 88 for more information on the Minimum Player 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 101, when a team acquires a player in trade using an exception (and not cap room), the team cannot aggregate that player's salary in trade for two months. 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.

91. 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 58) 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 $5 million in 2018-19, and his contract is extended for four seasons starting at $10 million, with 5% raises, then his salary in each season will be:

Season Salary
2018-19 $5,000,000
2019-20 $10,000,000
2020-21 $10,500,000
2021-22 $11,000,000
2022-23 $11,500,000

If this player is traded during the 2018-19 season, then his outgoing salary from the sending team's perspective is his actual salary -- $5 million. But the player's incoming salary from the receiving team's perspective is $9.6 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 43) also has 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 substantially higher salaries than the first two seasons. Houston used this provision to its advantage when signing Jeremy Lin and Omer Asik in 2012. However, the impact of this poison pill was reduced in the 2017 CBA, when matching teams were given the ability to choose whether the actual or average salary counted toward their team salary.

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

The sign-and-trade rule allows teams to re-sign their own free agents for trading purposes. 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. A sign-and-trade is treated like a single, atomic transaction, and not two separate transactions between which one party can change its mind -- if the trade is not completed, then the signing is invalidated.

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 (see question number 39), 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 seasons3. 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 32).

A Designated Veteran contract cannot be used in a sign-and-trade.

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 24) he cannot receive a salary greater than 25% of the cap. Raises are limited to 5%. The player also may be considered to have a lower outgoing salary for trade purposes, which can complicate the trade (see question number 93).

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 98), 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 96 for more information on how long a team must wait before they can trade a player.

If a team acquires a player in a sign-and-trade, then the Apron effectively becomes a hard cap for the remainder of that season. See question number 20 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 13 for details.
3 Since the contract must be for at least three seasons, the receiving team cannot use the Disabled Player exception to acquire the player. The Disabled Player exception can only be used to acquire players with one season on their contracts (see question number 25).

93. 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 outgoing 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 92). 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 immediately 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), instead of December 15, when the signing satisfies the BYC critieria3 (see question number 101). The extension to January 15 applies to both sign-and-trade transactions and regular signings.


1 The team salary being over the cap immediately 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.

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

Teams benefit because they can get something in return for players they otherwise would lose to free agency. For players the benefits are limited, because a player can receive no bigger contract via sign-and-trade than he can get by signing with his new team directly (four years, 5% raises), and can receive a larger Bird contract or Designated Veteran contract only when staying with his previous team. It also 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 really only needs 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 a high enough 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.

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

Similar to a sign-and-trade arrangement (see question number 92), a team may sign an eligible player to an extension (see question number 58) 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 5% raise over the last season of the existing contract, and subsequent raises are limited to 5% of the salary in the first season of the extension. The 5% limit also applies to both likely and unlikely bonuses.

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 5% raises vs. four seasons and 8% 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 47) 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 58) 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.

96. 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 49). 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.

A Two-Way contract (see question number 82) can be traded 30 days after it is signed. If the Two-Way contract is converted to a standard NBA contract it adopts the standard rule of not being tradable for three months or until December 15, whichever is later, with the three months beginning on the date the contract is converted.

See question number 101 for more information on trade restrictions.


1 January 15 if the signing meets the Base Year Compensation criteria (see question number 93).

97. 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.

98. 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," which is $5.1 million in 2017-18, with the amount in each subsequent season determined by applying the percentage change in the salary cap to the previous amount. For example, if the salary cap increases by 4% from 2017-18 to 2018-19, then the Maximum Annual Cash Limit will increase by 4% from 2017-18 to 2018-19.

Season Amount
2017-18 $5.1 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 2017-18 a team may pay up to an aggregate $5.1 million in all trades it makes during the season, and it may receive up to an aggregate $5.1 million in all trades it makes during the season.

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-20 protected this season, top-10 protected next season, and converts to $1 million cash if a pick is not conveyed by next season. $1 million is applied to the team's 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 92).

99. 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 is paid by the team trading away the player. The trade bonus can be defined as a specific dollar amount, a specific percentage of the remaining value of the contract, or some combination (for example, "$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 four-year contract that pays $10 million per year. This player also has a $5 million 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 $5 million trade bonus
1 $40,000,000 $6,000,000 $5,000,000
2 $30,000,000 $4,500,000 $4,500,000
3 $20,000,000 $3,000,000 $3,000,000
4 $10,000,000 $1,500,000 $1,500,000

Notes on trade bonuses:

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

The value of a trade bonus is applied to the team salary among the remaining seasons of the contract (excluding non-guaranteed seasons -- see question number 63, and seasons following an Option or ETO -- see question number 57), in proportion to the percentage of salary in each of those seasons that is guaranteed. For example, suppose the player from question number 99 is traded at the start of the third season of his contract. Per the chart in that question, the actual value of his trade bonus at that time is $3 million. If every season of the contract is fully guaranteed and there is no Early Termination Option, then $1.5 million of the trade bonus is charged to each of the final two seasons of the player's contract. The allocation is not proportionate to the salary itself, but rather to how much of the salary is guaranteed. If the fourth season was only 50% guaranteed, then two-thirds of the bonus would be allocated to the third season, and one-third to the fourth season.

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

If a contract that contains a trade bonus is extended, and the trade bonus is removed from the extension, then the value of the trade bonus is applied to the team salary across the remaining seasons of the original contract, and not across the extension.

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 its $9 million player for the player used in the example above, in the third season of that player's contract. Assuming there is no Early Termination Option or non-guaranteed season, $1.5 million of the trade bonus counts in the current season, so the trade cannot be made. The team trading the $9 million player can accept up to $11.35 million in return (see question number 85), but the player with the trade bonus counts as $11.5 million in incoming salary.

The CBA allows the player to waive all or part of his trade bonus, at his discretion. To make the above trade work, the player could choose to waive $300,000 of his $3 million trade bonus. The bonus would then be worth $2.7 million, and $1.35 million of that would be charged to the current season. The player would therefore count $11.35 million as incoming salary, which exactly matches the maximum the other team can accept in return for their $9 million player.

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 no guarantee in the fourth season of his contract, so if he is traded during the third season, the entire bonus is allocated to that season. This means that following a trade, $13 million would be included in his new team's team salary. Suppose a taxpaying team wants to trade their $13 million player for this player. That team has $13 million outgoing and $13 million incoming, so there is no problem on their end. But our player counts as $10 million in outgoing salary, so the most we can accept in return is $12.6 million. 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 salary for that season (based on his years of service). For example, in 2017-18 the maximum salary for a player with 7-9 years of service is $29,727,900. If such a player has a $28 million salary and a $2 million trade bonus, then his trade bonus is pared down to $1,727,900 when he is traded1. 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 47) the trade bonus is reduced automatically when the player is traded.

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.


1 Since a player's maximum salary is the greater of the league-wide maximum and 105% of his previous salary (see question number 23), the player could be entitled to more of his bonus depending on his salary in the previous season.

101. 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 clauses -- currently only Carmelo Anthony, LeBron James and Dirk Nowitzki 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 Interestingly, a player can 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. While this has not happened in practice, the league clarified its interpretation of this rule in 2017, in regard to a possible instance with Andrew Bogut.
7 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.

102. 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 contending 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 18). 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 even 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 team might be able to parlay mediocre players with ending contracts into a much better basketball player or draft picks, as long as they are willing to assume a long-term financial obligation. One such trade occurred in June 2017 when Brooklyn sent Brook Lopez and his ending contract (along with a late first round draft pick) to the LA Lakers for Timofey Mosgov (who had three years and $48 million remaining on his contract) and D'Angelo Russell (the 2nd overall pick in the 2015 draft). For the Lakers, Russell was the price for unloading Mosgov's awful contract in order to reduce their team salary for the 2018 offseason.

A similar technique involved trading players with high salaries and small guarantees, such as when Cleveland traded Brendan Haywood to Portland in 2015. However, for contracts signed during the current CBA only the guaranteed portion of the player's salary is counted as outgoing salary for trade purposes, so the usefulness of these contracts as trade chips is reduced (see question number 85).

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 101 and 104).

103. 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. Prior to the 2011 CBA teams were allowed to sign-and-trade (see question number 92) 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 32 for details), so many teams continue to hold Bird rights to players who have long since retired.

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 85). 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 102). 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 2011 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.

104. 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. The prohibition on trades lasts until the day following the team's final game of the season (see question number 101).

105. What is the July Moratorium?

It is a "negotiation" period during early July in which teams may not sign most free agents or make trades. Teams may negotiate with free agents beginning July 1, but they have to wait until the Moratorium ends before signing a contract. Any verbal agreements that are struck during the Moratorium are still characterized as negotiations, do not count toward team salary, and are not binding on either party. Since these agreements are not official or binding, either side may back out, with no repurcssions1.

The July Moratorium lasts from 12:01 AM Eastern Time on July 1 to 12:00 PM Eastern time on July 6 each season -- even if these dates fall on weekends or holidays. The salary cap and tax level take effect on July 1, coinciding with the start of the Moratorium. Exceptions (see question number 25) arise on July 1 as well.

There are a few types of signings that are allowed to take place during the July Moratorium:

All other signings must wait until the Moratorium ends.


1 This happened during the 2015 Moratorium with the Dallas Mavericks and DeAndre Jordan. After verbally agreeing to sign with the Mavericks, Jordan had second thoughts and instead re-signed with the LA Clippers.

106. 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 can't insist on a "one strike and you're out" policy or that the player attend mandatory drug counseling -- instead they must follow the negotiated drug program (see question number 109).

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 signing or trade that they feel circumvents the CBA, even though it 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.

107. 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, and the league retains the right to rescind any team discipline within 48 hours and impose its own. 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 a portion of his salary, whether suspended for a preseason, regular season or postseason game (see question number 13 for information on how suspensions impact team salary) as follows:

Suspensions for Two-Way players (see question number 82) depend on the player's status and the type of suspension:

If an NBA player is suspended while on a D-League assignment:

A suspended player can be traded.

The league and union have agreed to bargain over new player conduct rules beginning in 2017-18.


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.

108. 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.

109. 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 (two times for HGH) and up to two times during an offseason (one time for HGH; offseason testing is conducted for SPEDs, HGH 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 drug of abuse or marijuana (but not SPEDs). 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 league1, and he enters the first stage of the Drugs of Abuse program. If a player tests positive for marijuana, SPEDs, HGH or diuretics2, 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 marijuana1. When a player is dismissed from the league his contract is voided (see question number 112), 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.

If a player provides "clear and convincing" evidence to the league's grievance arbitrator that he was not at fault or negligent for the presence of a drug of abuse or SPED, the grievance arbitrator has the authority to reduce or rescind the player's penalty. This can apply under unusual circumstances, such as when the player had no reason to know or suspect that he was taking a prohibited substance.

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."


1 Dismissal and disqualification under the drug program may be reduced or rescinded by the league's grievance arbitrator.
2 If a player tests positive for a diuretic, he is treated as testing positive for a SPED.

110. What is the league's domestic violence program?

The league's domestic violence program addresses cases of domestic violence, child abuse and sexual assault, and covers such cases wherever they occur. The focus of the program is prevention through educational programs and awareness training. There is a hotline established for players, families and other victims.

The league or players association may refer players to the program through a disciplinary determination made by the Commissioner, or as the result of a criminal conviction. A player also can voluntarily seek assistance.

The program is overseen by a policy committee consisting of two NBA representatives, two players association representatives, and three independent experts. When a player is referred to the program an expert conducts an evaluation, and a treatment and accountability plan is developed. The policy committee oversees compliance and certifies when the player has completed the program.

If a player fails to comply with the program without a reasonable explanation the NBA is notified and the player is warned. If he fails to heed the warning, he is then fined $10,000 per further day of non-compliance. If there is a substantial non-compliance or willful disregard, the penalties increase to a one-game suspension, followed by successively longer suspensions.

If an investigation is pending the Commissioner can put the player on administrative leave with pay, but only when justified by criteria such as the nature and severity of the allegations, the player's history of prior conduct, and the risk of reputational damage to the NBA or to the player's team.

On a positive finding the Commissioner can fine, suspend or disqualify the player from the league, and the policy committee can also require training, education, counseling and/or community service. The penalties are determined on a case-by-case basis, and the Commissioner can take into account both aggravating and mitigating factors. Aggravating factors include prior allegations or convictions for prohibited conduct, the use of weapons or other means of coercion, the use or threat of force or violence, the vulnerability of the victim, the presence of minors, and the nature and extent of any injuries. Mitigating factors include the acceptance of responsibility, evidence of self-defense, voluntary participation in treatment or counseling programs, and the player's character and reputation.

The domestic violence program and policies also apply to NBA players and Two-Way players on a D-League assignment.

111. 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.

Player-to-player tampering is considered to be a relatively common occurrence, and while technically illegal, it is rarely addressed by the league. For instance during the 2016 playoffs, Mavericks player Chandler Parsons referred to Rockets player Dwight Howard saying, "[. . .] I think he can still be a player in this league. And I think he's going to leave Houston, so why not come here?" Former Commissioner David Stern clarified in 2012 that such player-to-player recruitment is generally "not tampering or collusion that is prohibited."

112. 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 64). 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:

113. 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:

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.

114. 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 42) 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 57). 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 87) 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 14) 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 31). 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.

115. 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 15. The default is 24 paychecks paid over one calendar year. Teams and players whose salaries are over the minimum salary can agree to a 12-check or 36-check schedule, paid over six months or 18 months, respectively. Two-Way players (see question number 82) are paid on a 24-check schedule over one calendar year. Each Two-Way player's paycheck contains a portion of his Two-Way salary plus the NBA salary for each day of NBA service during the preceding pay period.

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, 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 64 and 65 for more information.

Other rules:


2 The market rate is defined as the prime rate plus 1%, but no less than 7% and no greater than 9%.

116. 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, and Basketball Insiders is the source of NBA salaries that is endorsed by the author of this FAQ: Basketball Insiders.

117. 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.

118. 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.

119. 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

120. 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 105)
Salary cap adjusts (see question number 12)
Luxury tax threshold adjusts (see question number 18)
Salaries adjust
Exceptions arise (see question number 25)
Free agents become free. Teams can negotiate with free agents
Unrenounced free agents, scale amounts for first round picks playing outside the NBA, and roster charges are applied to team salary (see question number 13).
Poison Pill provision expires (see question number 91)
Rookie scale contracts can be signed (see question number 47)
A second round draft pick can accept a required tender
A restricted free agent can accept a qualifying offer or maximum qualifying offer (see question number 42)
A restricted free agent can sign an offer sheet (see question number 42)
Minimum salary contracts can be signed (see question number 22)
Teams may apply for a Disabled Player exception (see question number 25)
Free agents can be renounced (see question number 39)
Two-Way players can be signed (see question number 82)
Two-Way contracts can be converted to standard contracts (see question number 83)
Contracts with Exhibit 10 can be converted to Two-Way contracts (see question number 83)
Salary can be paid for the upcoming season (see question number 115)
July 6 (12:01 PM) July Moratorium ends (see question number 105)
Teams can sign unrestricted free agents and make trades
Contracts can be renegotiated (see question number 59)
Contracts can be extended (see questions number 58)
Matching period begins for offer sheets signed during the July Moratorium (see questions number 42)
July 13 Last day to withdraw a qualifying offer to a restricted free agent without the player's consent (see question number 42).
July 16 First round draft picks become free agents if not given a required tender (see question number 47)
August 31 Last day to waive a player with the Stretch provision applying to the current season (see question number 64)
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 42)
October 31 Last day to exercise option years on rookie scale contracts (see question number 47)
Late October (date varies by year) Last day of offseason
Roster limit decreases to 15 players
Last day rookie scale contracts can be extended (see question number 58)
Last day veteran contracts can be extended, if more than one season remains (see question number58)
Last day a designated veteran extension can be signed (see question number24)
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 92)
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 13).
Last day a contract with an Exhibit 10 can be converted to a Two-Way contract (see question number 83)
November 15 First league payday (see question number 115)
December 15 Players who signed a contract on or before September 15 can be traded2 (see question number 96)
January 5 10-day contracts can be signed (see question number 80)
January 7 Last day to waive a player with non-guaranteed salary before his salary becomes guaranteed for the remainder of that season (see question number 63)
January 10 Contracts (other than Two-Way contracts) guaranteed for rest of season (see question number 63). 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 47 and 26)
January 15 Last day to apply for a disabled player exception (see question number 25).
Last day to sign a player to a Two-Way contract (see question number 82).
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 93).
January 20 Two-Way contracts guaranteed for rest of season (see question number 63).
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 59)
March 1 Players waived after this date are ineligible for the playoffs
Last day for a restricted free agent to accept a qualifying offer (if extended) or sign an offer sheet (see question number 42)
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.
Last day to convert a Two-Way contracts to a standard contract (see question number 83)
Exceptions expire (see question number 25)
Snapshot date for luxury tax (see question number 18).
Snapshot date for minimum team salary (see question number 22).
June 24 Last day to exercise player option if player will be a restricted free agent (see question number 42).
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 57)
June 30 Deadline to extend a qualifying offer (see question number 42)
Last day to sign an extension (see question number 58)
Players are credited with one year of service
Figures for next salary cap year (cap, minimum team salary, luxury tax threshold, maximum salaries, etc.) announced
Salary cap year ends

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

121. 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.com/cba/. It is also available through the University of New Hampshire School of Law's Sports and Entertainment Law Institute web site, at https://ipmall.law.unh.edu/content/unh-sports-law-repository-collective-bargaining. 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 https://ak-static-int.nba.com/wp-content/uploads/sites/3/2015/12/NBA-Constitution-and-By-Laws.pdf. The league continues to keep the Operations Manual confidential.

122. What if this FAQ 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 employed by the NBA, any of its teams or the NBA players association.

123. 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, and in addition some responses get 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 (which usually is a good thing).

There is also a Facebook page for this FAQ, where I also answer questions, and I occasionally host online chats at ESPN.com and BasketballInsiders.com where I field questions from readers.

Finally, if you're really interested in exploring this in depth (along with many other aspects of working in sports), I am the General Manager of Sports Business Classroom, which is a week-long seminar held during the Las Vegas Summer League.

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 get buried in my inbox where I don't find them again until much, much later. Apologies to anyone who has sent me an e-mail and didn't receive a reply.

124. 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.

125. 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:

126. 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 (2017); "NBA Salary Cap/Collective Bargaining Agreement FAQ"

http://www.cbafaq.com, last visited July 1, 2017

127. Where can this FAQ be downloaded?

This is the fourth edition and latest version of this FAQ. It can be found at http://www.cbafaq.com.1

See question number 10 for links to previous versions of this FAQ.


1 I have been asked why this question is a part of the FAQ. It's in case it is printed and a reader of a printed copy wants to know where to find it online.

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. The original draft of this FAQ 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 published 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.

The third edition of the FAQ was completed in 2012 and covered 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. My thanks also to Andy Stein, 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.

This is the fourth edition of the FAQ, covering the 2017 CBA.

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.


Andy Stein:

My friend Andy Stein passed away on December 28, 2015. If you have reviewed the revision history of this FAQ will have seen his name all over it -- indeed, Andy's fingerprints are all over this entire document. Andy was one of a handful of people who have shared a keen interest in this topic, and he participated with me in the development of this FAQ for over a decade. He was whip smart, logical and insightful, and helped me work through almost every difficult CBA-related issue I encountered. He also was usually the first set of eyes to look over anything new I wrote, because I knew he'd immediately spot any issues, no matter how subtle. Andy had long been retired, after a career that included a stint in the Carter White House, and he also worked in an agency representing NBA players. More recently he had the opportunity to do some contract work with an NBA team when a mutual friend took over as the General Manager. Andy was a true gentleman, scholar and friend. He will be missed, and future versions of this FAQ will suffer from his absence.


About the author:

Larry Coon is a computer scientist by both education and trade. He works in IT management 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, Orange County Register 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 also has contributed to the New York Times Off the Dribble blog, and to RealGM.com.

Larry also leads Sports Business Classroom, which is a one-of-a-kind educational and training initiative focusing on the business of basketball, giving attendees the opportunity to train and interact with top executives while performing real work in team video, scouting and analytics; social media & public relations; broadcast production and distribution; and the league salary cap. Sports Business Classroom takes place during the NBA Summer league in Las Vegas.

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

Appendix: Significant differences between 2017 and 2011 CBAs

2017 2011 See
Salary cap goes into effect on July 1 Salary cap goes into effect at the end of the July Moratorium 12
For minimum team salary purposes, a traded player's salary is pro-rated between his old and new teams (new contracts only) A traded player's new team receives the entire benefit of his salary 13
The Apron is $6 million over the tax threshold in 2017-18, with future changes tied to the cap The Apron is $4 million over the tax threshold 20
The minimum salary scale is determined in advance for 2017-18 only; rises and falls with the salary cap in subsequent seasons The minimum salary scale is determined in advance for all seasons 22
The minimum salary scale in effect when a contract is defined determines the salary for all seasons of a minimum-salary contract The minimum salary scale in effect when a contract is defined determines the salary for only the first season of a minimum-salary contract 22
Maximum salaries are exactly 25%, 30% and 35% of the salary cap Maximum salaries are slightly below 25%, 30% and 35% of the salary cap, due to differences in the formulas 23
The 5th Year, 30% Max criteria are based on the player being named MVP (any of last three seasons), or All-NBA/DPOY (last season, or both prior seasons combined) The 5th Year, 30% Max criteria are based on the player being named MVP, All-NBA (twice) or an All-Star starter (twice) 24
Free agent amounts for players coming off rookie scale contracts are 300% or 250% of the player's previous salary (effective 2018) Free agent amounts for players coming off rookie scale contracts are 250% or 2000% of the player's previous salary 37
The deadline for making a qualifying offer to a restricted free agent is June 29 The deadline for making a qualifying offer to a restricted free agent is June 30 42
A team can withdraw its qualifying offer to a restricted free agent up to July 13 A team can withdraw its qualifying offer to a restricted free agent up to July 23 42
Teams are given two days to match an offer sheet to a restricted free agent Teams are given three days to match an offer sheet to a restricted free agent 42
After matching an offer sheet to an Arenas free agent, the team can choose whether the contract's actual or average salary is applied to team salary each season After matching an offer sheet to an Arenas free agent, the contract's actual salary is applied to team salary each season 43
120% of an unsigned first round draft pick's scale salary applies to team salary 100% of an unsigned first round draft pick's scale salary applies to team salary 47
The rookie scale is determined in advance for 2017-18 only; rises and falls with the salary cap in subsequent seasons The rookie scale is determined in advance for all seasons 47
Most annual raises are limited to 8% or 5% Most annual raises are limited to 7.5% or 4.5% 56
Long term contracts containing seasons that begin after the player's 38th birthday are restricted Long term contracts containing seasons that begin after the player's 36th birthday are restricted 56
Three- and four-year contracts can be extended after the second season Three-year contracts cannot be extended; four year contracts can be extended after the third season 58
If more than one season remains on a contract or extension, it can only be extended during the offseason A contract or extension can be extended again during the regular season, even if more than one season remains 58
A veteran extension can include five total seasons (a designated veteran extension can contain six total seasons) A veteran extension can include four total seasons 58
A player can receive 120% of his previous salary in the first season of an extension A player can receive 107.5% of his previous salary in the first season of an extension 58
A rookie scale extension can be signed up to the last day before the start of the regular season of the player's fourth season A rookie scale extension can be signed through October 31 preceding the player's fourth season 58
Fitness to Play panels can determine whether the player with a potential health risk is fit to play There is no standardized, objective system in place to determine whether a player with a potential health risk is fit to play 62
If $250,000 or less is owed to a player when he is waived, his salary is not stretched All remaining salary is stretched when a player is waived 64
An amnesty clause does not exist Teams can waive one player whose salary is excluded from team salary, per the Amnesty rule 69
The league guarantees a league-wide average roster size of 14.5, but the league must be out of compliance in consecutive seasons for a violation to occur The league guarantees a league-wide average roster size of 14 79
If the league is in violation of its average roster size guarantee, then for the next two years teams' inactive roster size increases by one The league makes a shortfall payment to the union if it in violation of its average roster size guarantee 79
Players can be signed to Two-Way contracts Players are signed to either NBA contracts or D-League contracts, which are separate and distinct 82
Teams can take back 175% of the outgoing salary in a simultaneous trade if they are not taxpayers and the outgoing salary is less than $6,533,334 Teams can take back 150% of the outgoing salary in a simultaneous trade if they are not taxpayers and the outgoing salary is less than $9.8 million 86
The outgoing salary amount for trade purposes does not include non-guaranteed salary (new contracts and extensions only) The outgoing salary amount for trade purposes includes non-guaranteed salary 86
Trade bonuses can be waived for any reason Trade bonuses can only be waived in order to make a trade legal 99
Extensions to contracts with an unearned trade bonus can specify that the trade bonus does not apply to the extension If an extended contract contains an unearned trade bonus, the trade bonus continues in the extension 100
Offer sheets can be signed during the July Moratorium Offer sheets cannot be signed during the July Moratorium 105
The July Moratorium ends at 12:00 PM ET on July 6 The ending date of the July Moratorium varies 105

Index:

----- Note: Index not yet updated for 2017 -----

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

5th Year 30% Max criteria 24, 58, 92
10-day contract 28, 32, 64, 80, 120
Active List 79, 80
Active roster See "Active List"
Advance (salary) 115
Age (eligibility) 55
Aggregation (of salaries in trade) 86, 87, 90, 101
Amnesty 13, 14, 18, 25, 32 40, 64, 65, 69, 101, 120
Antitrust laws 4, 6, 7, 118
Apron 13, 20, 25, 92, 100
Arenas provision See "Gilbert Arenas provision"
Average salary 25, 31
Base Year Compensation (BYC) 93
Basketball Related Income (BRI) 7, 11, 12, 15, 16, 19, 21, 114
Benefits 12, 15, 16, 17, 78, 114
Bi-annual exception 13, 20, 25, 26, 53, 100
Bird rights See "Larry Bird exception"
Bonus (performance) See "Incentive"
Bonus (signing) See "Signing Bonus"
Bonus (trade) See "Trade Bonus"
Buyout (international) 14, 47, 75, 77
Buyout (player contract) 60, 64, 65, 66, 67, 79
Cap hold (draft pick) 13, 50
Cap hold (free agent) 13, 36, 37, 38, 39
Cap room 13, 25, 26, 27, 35, 36, 39, 40, 42, 43, 47, 49, 50, 58, 59, 69, 74, 75, 94, 102
Career ending injury 13, 61, 72
Cash in trade 50, 92, 98
CBA See "Collective Bargaining Agreement (CBA)"
Circumvention 29, 30, 33, 106
Collective Bargaining Agreement (CBA) 4, 6, 7, 8, 9, 10, 17, 118, 121, 122
Combining exceptions 27, 87, 90
Contract length 25, 53, 58, 70, 92
Contraction 114
D-League See "NBA Developmental League (D-League)"
Death (player) 25, 61, 63, 72, 114
Decertification 6, 118
Deferred Compensation 56, 115
Designated Player 53,58
Disabled Player exception 13, 25, 26, 53, 61, 64, 84, 120
Disclaimer of interest See "Decertification"
Dismissal (from the NBA) 109
Disqualification See "Dismissal (from the NBA)"
Draft pick 13, 41, 47, 49, 50, 51, 52, 53, 84, 89, 96
Draft rights 49
Dress code 117
Drugs of abuse 109
Drug testing 109
Duty days 78
Early Bird exception 25, 31, 32, 37, 39, 43, 53, 64, 69, 96, 101
Early entry player 55
Early Qualifying Veteran Free Agent See "Early Bird exception"
Early Termination Option (ETO) 57, 58, 60, 64, 65, 99, 100, 120
Ejection (game) 113
Ending contract 102
Escrow 13, 15, 16, 17, 19, 20
Estimated Average salary See "Average Salary"
ETO See "Early Termination Option"
Exception 2, 3, 13, 18, 20, 25, 26, 27, 39, 84, 85, 90, 120
Excluded International Player Payment amount 77
Exhibit 9 63, 70
Expansion 114
Expansion draft 13, 32, 114
Extend-and-trade 53, 58, 95
Extension 30, 53, 54, 56, 57, 58, 59, 74, 75, 91, 95, 101, 120
FIBA 7, 76
Fines 29, 30, 84, 107, 108, 109, 111, 113
First Refusal Exercise Notice 42
First round draft pick 13, 25, 42, 47, 49, 50, 51, 52, 53, 57, 75, 77, 80, 89, 105, 115, 120
Forecasted BRI 15
Free agent 13, 22, 25, 26, 30, 32, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 49, 51, 55, 56, 64, 70, 92, 96, 97, 102, 114, 120
Free agent amount See "Cap hold (free agent)"
Free agent cap hold See "Cap hold (free agent)"
Gilbert Arenas provision 20, 37, 42, 43, 53, 86, 87, 91
Grievance 13, 18, 108
Guarantee (player salary) 43, 47, 51, 60, 61, 64, 65, 66, 67, 69, 70, 73, 77, 92, 100, 103, 115, 120
Guarantee (league wide salary) 7, 12, 15, 16, 17, 18, 69
Guarantee (league wide roster size) 79
Hard cap 2, 7, 13, 25, 92
Human Growth Hormone (HGH) 8, 109
Inactive List 79, 80, 81
Incentive 13, 69, 74 81, 99
Income tax 78
Incomplete roster charge 13, 41, 120
Injured Reserve 79
Injury (career ending) See "Career ending injury"
Insurance 70, 73, 76, 84
International Buyout See "Buyout (international)"
International player 55, 75, 76, 77
Jock tax 78
July Moratorium 13, 64, 105, 120
Labor negotiations 6, 7, 8, 118
Larry Bird exception 25, 26, 30, 32, 33, 34, 35, 36, 37, 39, 40, 42, 53, 64, 69, 92, 101, 103
Length (contract) See "Contract length"
Letter of clearance 7, 76
Likely bonus See "Bonus (performance)"
Loans 47, 115
Lockout 6, 7, 55
Luxury tax 1, 1, 18, 19, 20, 21, 61, 69, 120
Maximum annual cash limit See "Cash in trade"
Maximum qualifying offer 42, 105
Maximum salary (player) 23, 24, 37, 42, 58, 59, 105
Mid-Level exception See "Non-Taxpayer Mid-Level exception" and "Taxpayer Mid-level exception"
Minimum age See "Age (eligibility)"
Minimum Player Salary exception 25, 28, 53, 84, 88, 90
Minimum salary (player) 18, 22, 25, 26, 28, 74, 80, 88, 105
Minimum team salary See "Team salary (minimum)"
NBA Developmental League (D-League) 79, 81
NBA Draft List 79
No-trade clause 101
Non-Bird exception 25, 26, 37, 39, 43, 53, 101
Non-NBA team 7, 13, 49, 50, 77, 89, 120
Non-Qualifying Veteran Free Agent See "Non-Bird exception"
Non-simultaneous trade See "Trade (non-simultaneous)"
Non-Taxpayer Mid-Level exception 13, 20, 25, 26, 43, 53, 100
Offer Sheet 13, 25, 37, 40, 41, 42, 43, 44, 63, 75, 92, 101, 120
Option year 11, 25, 42, 47, 53, 57, 58, 60, 63, 64, 65, 69, 75, 95, 99, 100, 101, 102, 114, 120
Over-38 rule 56
Overage (escrow) 12, 15, 16, 17, 18, 19
Pay days See "Pay schedule"
Pay schedule 42, 57, 60, 64, 65, 66, 115
Payroll (team) See "Team payroll"
Performance bonus See "Incentive"
Player discipline 107, 108
Players Association 4, 6, 7, 9, 12, 15, 18, 55, 61, 64, 74, 106, 107, 108, 109, 114, 117, 118, 121
Poison Pill provision 86, 91, 120
Pro-ration (bonuses) 56, 58, 75, 77, 99, 100
Pro-ration (exceptions) 25, 26, 28, 47, 120
Pro-ration (salaries) 28, 56, 80
Projected BRI 12, 15, 17, 18
Protected draft pick 89
Qualifying offer 13, 25, 37, 42, 45, 47, 63, 101, 105, 120
Qualifying Veteran Free Agent See "Larry Bird exception"
Raises 25, 28, 42, 43, 49, 53, 54, 58, 59, 74, 75, 92, 94, 95
Reinstatement 25, 109
Renegotiation 56, 58, 59, 75, 115, 120
Renouncing (draft rights) 50, 51, 52
Renouncing (exceptions) 13, 25, 26
Renouncing (free agents) 32, 38, 39, 40, 41, 42, 92, 120
Required tender 13, 105, 120
Rest-of-season contract 22, 25, 28
Restricted free agency 6, 40, 42, 4757, 63, 75
Restricted free agent 13, 20, 25, 37, 42, 43, 44, 45, 47, 53, 101, 105, 114, 120
Retired player 13, 61, 66, 71, 79, 103
Revenue sharing 7, 11, 19, 21
Right of first refusal See "Restricted free agency"
Rookie exception 25, 47
Rookie free agent 49. 76
Rookie scale contract 13, 22, 25, 37, 39, 42, 47, 49, 50, 51, 52, 53, 57, 58, 59, 63, 75, 77, 89, 91, 95, 100, 101, 105, 115, 120
Room Mid-Level exception 25, 26, 53
Room (under the cap) See "Cap room"
Roster charge See "Incomplete roster charge"
Roster size 79, 120
Salary cap 1, 5, 6, 12, 17, 105, 114, 120
Salary decrease 53, 59, 74
Salary increase See "Raises"
Salary (maximum player) See "Maximum salary (player)"
Salary (minimum player) See "Minimum salary (player)"
Salary (player) 58, 116
Salary (team) See "Team Salary"
Scale salary See "Rookie scale"
Second round draft pick 22, 42, 43, 50, 89, 105, 120
Set-off 13, 60, 65, 66
Seven Year Rule 89
Sign-and-trade 13, 20, 25, 32, 39, 42, 53, 63, 87, 89, 92, 93, 94, 96, 98, 99, 100, 101, 103, 120
Signing bonus 42, 47, 58, 59, 75, 77, 92, 98, 115
Simultaneous trade See "Trade (simultaneous)"
Soft cap 2, 3, 25
Starter criteria 42, 47
Stepien rule See "Ted Stepien rule"
Steroids and Performance Enhancing Drugs See "Drugs of abuse"
Stretch provision 13, 60, 64, 65, 120
Summer contract 13, 65, 70, 115, 120
Suspended List 79
Suspension 13, 30, 60, 79, 84, 107, 108, 109, 111, 113
Tampering 107, 111
Taxpayer Mid-Level exception 13, 20, 25, 26, 43, 53, 92
Team option 47, 57, 63, 65
Team payroll 1, 14, 92
Team salary 13, 14, 18, 20, 25, 26, 34, 36, 37, 38, 39, 41, 43, 49, 50, 56, 58, 61, 64, 65, 67, 69, 70, 71, 72, 74, 75, 77, 85, 86, 89, 92, 100, 107, 114, 115, 120
Team Salary (minimum) 14, 69, 114
Technical foul 113
Ted Stepien rule 89
Trade bonus 18, 42, 57, 58, 59, 60, 75, 84, 92, 99, 100
Trade call 84
Trade deadline 101, 102, 104
Trade exception 13, 26, 64, 85, 86, 87, 90, 100, 114
Trade kicker See "Trade bonus"
Trade (non-simultaneous) 85, 86, 87, 90
Trade restriction 42, 64, 96, 101
Trade rules 20, 25, 39, 42, 64, 79, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 107, 120
Trade (simultaneous) 20, 85, 86
Traded Player exception 13, 25, 26, 84, 85, 87, 88, 90, 98
Undisclosed agreement 30
Uniform Player Contract (UPC) 63, 70
Union See "Players Association"
Unlikely bonus See "Incentive"
Unrestricted free agent 30, 42, 45, 47, 114
UPC See "Uniform Player Contract (UPC)"
Verbal agreement 13, 30, 50
Voluntarily Retired List 61, 66, 79
Waivers 32, 40, 57, 61, 63, 64, 65, 66, 67, 69, 70, 86, 101, 105, 114, 115, 120
Years of service 22, 120

Miscellaneous links:

1999 CBA FAQ http://www.cbafaq.com/salarycap99.htm
2005 CBA FAQ http://www.cbafaq.com/salarycap05.htm
2011 CBA FAQ http://www.cbafaq.com/salarycap11.htm
CBA FAQ Blog http://www.cbafaq.com/blog
Rookie salary scale http://www.cbafaq.com/scale17.htm
Minimum salary scale http://www.cbafaq.com/minimums.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. There were 16 revisions to the third version of this FAQ (covering the 2011 CBA), which have been consolidated into the 12/24/2016 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.
12/24/2016 Final revision covering 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, Nick Silva, Andy Stein.
6/30/2017 Extensive revision for the 2017 CBA. Thanks Nate Duncan, Ryan Hoak, David Lord, Kevin Pelton, Eric Pincus, Nick Silva.

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