The minimum salary exception is something of a last resort for capped-out teams seeking to add players, as well as for players seeking NBA contracts. It allows an over-the-cap team to sign a player to a one- or two-year minimum-salary deal, as the name suggests. Teams can use the exception multiple times, allowing clubs that have spent all of their other exceptions an avenue to add to their rosters. It also allows for the acquisition of minimum-salary players via trade, without the players being counted for salary-matching purposes.
Players are entitled to varying minimum salaries based on how long they’ve been in the NBA. In 2013/14, a player with no prior NBA experience was eligible for a $490,180 minimum salary, while a player with 10 or more years of experience was eligible for $1,399,507. Over the course of the current collective bargaining agreement, the minimum salary will increase each season, as Larry Coon’s CBA FAQ outlines. For both this season and next season, the breakdown is as follows:
The graph demonstrates the wide disparity between the minimum salary for rookies and for long-tenured players. A minimum-salary veteran of 10 or more seasons will earn almost three times as much as a rookie making the minimum next season. The NBA doesn’t want clubs to shy away from signing qualified veterans, so the league reimburses teams for a portion of a minimum-salary player’s cost if he has two or more years of experience, as long as the contract isn’t a multiyear deal. For instance, when the Knicks signed 13-year veteran Kenyon Martin for 2013/14 using the minimum salary exception, he earned $1,399,507, but the team’s cap hit was just $884,293. The league reimburses the Knicks for the remaining $515,214.
Most salary cap exceptions can only be used once each season. When a team uses its full mid-level exception to sign one or more players, the club can no longer use that exception until the following season. Unlike the mid-level and other cap exceptions, the minimum salary exception can be used any number of times in a single season. The Nets, for example, used the minimum salary exception to sign four players who ended the season on the team’s roster.
The vast majority of 10-day contracts are for the minimum salary, and it’s the minimum salary exception that allows clubs to accommodate those 10-day deals. Teams used the minimum salary exception to sign 41 players to 10-day contracts during the 2013/14 season.
Many exceptions begin to prorate on January 10th, but the minimum salary exception prorates from the first day of the regular season. Teams often take advantage of this to sign players for cheap at the end of the season primarily so they can use them to help salaries match in a trade over the summer.
For example, the Knicks signed Lamar Odom on the last day of the 2013/14 regular season, even though he wasn’t healthy enough to play in the team’s game that night, and even though the team had already been eliminated from the playoffs. The Knicks used the minimum salary exception to sign Odom to a two-year contract that covered the final day of the 2013/14 season and 2014/15. The 2014/15 portion was non-guaranteed, so the only guaranteed money in the deal was Odom’s prorated minimum salary, equal to 1/170th of 1,399,507. Odom doesn’t stand much of a chance to make the Knicks next season, but if the Knicks make a trade over the summer, they can include Odom’s contract as part of the swap to make the salaries match if necessary, allowing the team that acquires Odom to do the same in another trade or simply waive his non-guaranteed contract at no cost before the 2014/15 season begins.
Earlier versions of this post, written by Luke Adams, were published on May 7th, 2012 and April 28th, 2013.
Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.