Hoops Rumors Glossary: Qualifying Offers

Players eligible for restricted free agency don’t become restricted free agents by default. In order to make a player a restricted free agent, a team must extend a qualifying offer to him — a player who doesn’t receive one becomes an unrestricted free agent instead.

The qualifying offer, which is essentially just a one-year contract offer, varies in amount depending on a player’s service time and previous contract status.

If a player reaches free agency with three or fewer years of NBA service time under his belt, his qualifying offer is worth 125% of his prior salary, or his minimum salary plus $200K, whichever is greater.

For instance, after earning $1,416,852 this season, Grizzlies guard De’Anthony Melton will be eligible for a qualifying offer worth a projected $1,907,576 this offseason, based on a $115MM cap — that’s calculated by adding $200,000 to his projected minimum salary for 2020/21 ($1,707,576).

The exact value of Melton’s qualifying offer will depend on where exactly the ’20/21 salary cap ends up, since minimum salary increase or decrease at the same rate as the cap. If the cap drops significantly, it’s possible he’d instead receive a QO worth $1,771,065 (125% of his previous salary).

Bogdan Bogdanovic is one example of a player whose qualifying offer will be 125% of his previous salary no matter where the cap lands. Bogdanovic is earning $8,529,386 in 2019/20, far above the minimum, so the Kings guard will receive a qualifying offer worth 125% of that figure: $10,661,733.

The qualifying offer for a former first-round pick coming off his rookie scale contract is determined by his draft position. The qualifying offer for a first overall pick is 130% of his fourth-year salary, while for a 30th overall pick it’s 150% of his previous salary — QOs for the rest of the first-rounders fall somewhere in between. The full first-round scale for the draft class of 2016, whose first-rounders will be hitting free agency this summer, can be found here, courtesy of RealGM.

Here are a pair of examples for this offseason: 2016’s second overall pick, Pelicans forward Brandon Ingram, is coming off a fourth-year salary of $7,265,485, so he must be extended a qualifying offer of $9,481,458 (a 30.5% increase) to become a restricted free agent. Meanwhile, the 19th overall pick, Timberwolves guard Malik Beasley, will be eligible for a qualifying offer of $3,895,424, a 42.6% increase on this season’s $2,731,714 salary.

A wrinkle in the Collective Bargaining Agreement complicates matters for some RFAs-to-be, since a player’s previous usage can impact the amount of his qualifying offer. Certain players who meet – or fail to meet – the “starter criteria,” which we break down in a separate glossary entry, become eligible for higher or lower qualifying offers. Here’s how the starter criteria affects QOs:

• A top-14 pick who does not meet the starter criteria will receive a same qualifying offer equal to 120% of the amount applicable to the 15th overall pick.
  • Note: For the summer of 2020, the value of this QO will be $4,642,800.
• A player picked between 10th and 30th who meets the starter criteria will receive a qualifying offer equal to 120% of the amount applicable to the ninth overall pick.
  • Note: For the summer of 2020, the value of this QO will be $5,087,871.
• A second-round pick or undrafted player who meets the starter criteria will receive a qualifying offer equal to 100% of the amount applicable to the 21st overall pick.
  • Note: For the summer of 2020, the value of this QO will be $3,752,338.

Spurs big man Jakob Poeltl is one example of a player who falls into the first group, since he didn’t meet the starter criteria this year. The No. 9 overall pick in 2016, Poeltl will be eligible this offseason for a QO worth $4,642,800 instead of $5,087,871. Conversely, Suns forward Dario Saric (a former No. 12 overall pick) met the starter criteria and will be eligible for a QO worth $5,087,871 instead of $4,791,213.

A qualifying offer is designed to give a player’s team the right of first refusal. Because the qualifying offer acts as the first formal contract offer a free agent receives, his team then receives the option to match any offer sheet the player signs with another club.

A player can also accept his qualifying offer, if he so chooses. He then plays the following season on a one-year contract worth the amount of the QO, and becomes an unrestricted free agent at season’s end if he has at least four years of NBA experience. A player can go this route if he wants to hit unrestricted free agency as early as possible, or if he feels like the QO is the best offer he’ll receive. Accepting the qualifying offer also gives a player the right to veto trades for the season.

No restricted free agents accepted their qualifying offers during the 2019 offseason, but Rodney Hood did so with the Cavaliers in 2018. When Cleveland agreed to send him to the Trail Blazers prior to the 2019 trade deadline, Hood had to give his consent to be dealt, which he did.

Finally, while the details outlined above apply to players on standard NBA contracts who are eligible for restricted free agency, a different set of rules applies to players coming off two-way contracts. For most of those players, the qualifying offer would be equivalent to a one-year, two-way salary, with $50K guaranteed.

If a player coming off a two-way contract is ineligible to sign another one – either because he’s coming off a two-year, two-way deal, he has already been on two-way deals with his current team for at least two seasons, or he has four years of NBA service – his qualifying offer would be a standard, minimum-salary NBA contract. The guarantee on that QO would have to match or exceed what a two-way player would earn in the G League.

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 and salary information from Basketball Insiders was used in the creation of this post.

Earlier versions of this post were published in previous years. Photo courtesy of USA Today Sports Images.