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Hoops Rumors Glossary: Salary Cap Exceptions

September 9th 2018 at 5:01pm CST by Luke Adams

There are a number of ways that teams without salary cap space are able to add players. These players’ salaries still count against the team’s cap figure and are taken into account for tax purposes. However, teams can use these exceptions in lieu of available cap room to acquire players.

When we discuss trades and free agency at Hoops Rumors, we’ll often refer to these salary cap exceptions. In case you’re wondering what we mean when we mention a “Non-Bird exception” or a “bi-annual exception,” we’ve compiled a brief overview for reference. The NBA’s salary cap exceptions under the latest Collective Bargaining Agreement are listed below:

  • Bird Exception: If a player has been on the same team for three years (not necessarily full seasons), his team can re-sign him for up to the player’s maximum salary. Generally, a player who changes teams via trade retains his Bird rights, but he loses them if he signs with a new team as a free agent. A Bird player can sign for up to five years with maximum annual raises of 8%.
  • Early Bird Exception: If a player has been on the same team for two years (not necessarily full seasons), his team can re-sign him for up to 175% of his previous salary or the average player salary, whichever is greater. Early Bird contracts must be for at least two seasons (no more than four), with maximum annual raises of 8%.
  • Non-Bird Exception: If a player finishes a season with a team without having earned Bird or Early Bird rights, his team can re-sign him for 120% of his previous salary, 120% of the applicable minimum salary, or – if he’s a restricted free agent – the amount of his qualifying offer. A non-Bird player can sign for up to four years with maximum annual raises of 5%.
  • Mid-Level Exception: A non-taxpaying team can offer a player a contract for up to four years with maximum annual raises of 5% using the mid-level exception. The MLE amount for 2018/19 is $8,641,000; it will increase annually at the same rate as the salary cap. This exception can be used on one or multiple players.
  • Taxpayer Mid-Level Exception: A taxpaying team can offer a player a contract for up to three years with maximum annual raises of 5% using the mid-level exception. The taxpayer MLE amount for 2018/19 is $5,337,000; it will increase annually at the same rate as the salary cap. This exception can be used on one or multiple players.
  • Room Exception: If a team uses room under the cap to sign players, it forfeits its mid-level and bi-annual exceptions. In that case, the team receives this exception, which isn’t available to teams above the cap. After using its cap room, a team can offer a player a contract for up to two years with a maximum raise of 5%. The room exception amount for 2018/19 is $4,449,000; it will increase annually at the same rate as the salary cap. This exception can be used on one or multiple players.
  • Bi-Annual Exception: A team can offer a player a contract for up to two years with a maximum raise of 5% using the bi-annual exception. However, it’s only available to teams that remain over the cap and below the tax apron. The bi-annual exception amount for 2018/19 is $3,382,000; it will increase annually at the same rate as the salary cap. This exception can be used on one or multiple players.. As its name suggests, this exception, which isn’t available to taxpaying teams, can only be used every other year.
  • Minimum Salary Exception: A team can offer a player a contract for up to two years worth the applicable minimum salary. A team can also use this exception to trade for minimum-salary players. There is no limit to the number of players a team can acquire using this exception.
  • Rookie Exception: A team can sign its first-round draft picks for up to 120% of the rookie salary scale amount.
  • Disabled Player Exception: If a player suffers an injury deemed to be season-ending, a team can be granted this exception by the league. It can be used to sign or trade for a replacement player for one year, and is worth 50% of the disabled player’s salary or the amount of the non-taxpayer mid-level exception, whichever is lesser. This exception, which must be applied for between July 1 and January 15, can only be used once and is forfeited if not used by March 10.
  • Traded Player Exception: Any team can replace a traded player – or traded players – simultaneously (in the same transaction) with one or more players whose total salaries amount to no more than 125% of the outgoing salary, plus $100K. For non-taxpaying teams, the incoming value can increase to as high as 175% of the outgoing salary, depending on the amount of that salary. Alternately, both non-taxpaying and taxpaying teams can replace a traded player non-simultaneously (within one year) with one or more players whose total salaries amount to no more than 100% of the traded player’s salary, plus $100K.

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.

An earlier version of this post was published in 2012 by Luke Adams.

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