Remaining Mid-Level, Bi-Annual Exceptions Begin To Decline In Value

Besides being the day when non-guaranteed salaries officially become fully guaranteed, January 10 represents an important date on the NBA calendar for a second reason. It’s also the day when several cap exceptions begin to prorate downward for the rest of the season.

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The non-taxpayer mid-level exception, taxpayer mid-level exception, room exception, and bi-annual exception will all decline in value by 1/174th each day for the rest of the season, beginning today. Trade exceptions and disabled player exceptions will be unaffected.

Each team will be impacted slightly differently by the proration calculations. For instance, the Bulls had $7,290,000 left on their mid-level exception entering Tuesday. Their MLE value will decline by $41,897 per day (1/174th of $7,290,000) for each of the season’s remaining 90 days. By the last day of the season, even if they don’t use it to sign another player, the Bulls’ MLE would be only be worth in the neighborhood of $3.5MM.

A team like the Hornets, with their full $10,490,000 mid-level exception available, will see that exception’s value decline by over $60K per day, while the $691,731 left on the Timberwolves‘ MLE will dip by just $3,975 per day.

Teams’ mid-level and/or bi-annual exceptions will prorate downward daily by 1/174th of the amount left as of January 10, even if that club uses a portion of its exception between now and the end of the season. So if a team has $5MM left on its MLE today and uses $3MM to sign a player tomorrow, that team would still lose 1/174th of $5MM per day the rest of the way, not 1/174th of $2MM.

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These prorating exceptions shouldn’t have a major league-wide impact. However, if a team wants to offer a free agent more than the minimum salary or sign a player to a three- or four-year contract during the second half of the season, they’ll need to use some form of the MLE or BAE. As a result, teams will have to keep tabs on the ever-changing values of those exceptions.

For details on the portions of their mid-level and/or bi-annual exceptions teams have used so far this season, you can check out our trackers here and here.