New CBA To Include Cap Exception For Second-Round Picks

The NBA’s new Collective Bargaining Agreement will introduce a new cap exception for second-round draft picks, reports Shams Charania of The Athletic (Twitter link).

Under the current system, teams sign their first-round picks to four-year contracts using the “rookie scale exception,” with the compensation amounts dependent on the player’s exact draft position. But if a team wants to sign its second-round pick for more than the rookie minimum or for more than two seasons, it must use cap room or an exception such as the mid-level.

While we don’t yet know exactly what the second-round pick exception will look like, Charania suggests that teams will no longer have to use their mid-level exceptions when they sign their second-rounders to their first NBA contracts, so the new exception should allow for deals up to three or four years.

Here are more updates on the NBA’s new CBA:

• Under the new CBA, there will no longer be any restrictions on how many players on Designated Rookie or Designated Veteran contracts a team can carry, per Adrian Wojnarowski and Bobby Marks of ESPN (Twitter link). In the 2017 CBA, teams were prohibited from having more than two players on each kind of contract on their rosters and couldn’t acquire more than one via trade.
• Restricted free agents will benefit a little from the new CBA, according to Wojnarowski and Marks, who report (via Twitter) that qualifying offers for RFAs will increase by 10% from their current scale amount, while the matching period for offer sheets will be reduced from 48 hours to 24 hours.
• The NBA and NBPA have agreed that prospects attending the annual draft combine will be required to undergo physical exams, per Charania and Mike Vorkunov of The Athletic (Twitter link). The results of those physicals then will be distributed to select teams based on where the player is projected to be drafted, Charania adds. Presumably, that means a team drafting at No. 25 wouldn’t have access to the physical exam for a player projected to be a top-10 pick.
• Charania has also provided more info on how players will be able to invest in NBA and WNBA franchises, explaining that they’ll do so via a private equity firm selected by the NBPA. Additionally, while players will be able to enter into endorsement deals with sports betting companies, there will be “complete separation” from the gambling component, according to Charania (Twitter link).
• Team and league licensing revenue will be added to the NBA’s Basketball Related Income for the first time, report Wojnarowski and Marks (Twitter link). That revenue is estimated to be worth $160MM for 2023/24 and will be added to the BRI total that the players and owners split approximately equally.
• In case you missed it, we’re tracking all the CBA updates in one place right here.

Alex Kirschenbaum contributed to this post.