Hoops Rumors Glossary

Under past NBA Collective Bargaining Agreements, up until the 2016/17 season, a player’s full cap hit was used for salary-matching purposes in trades, whether or not his salary was guaranteed. If a player had an $10MM salary with a partial guarantee of $1MM, his outgoing salary in a trade was the same as it would have been for a player who had a fully guaranteed $10MM contract.

That’s no longer the case, however. Now, only the guaranteed portion of a player’s contract counts for outgoing salary purposes in a trade, limiting the appeal of non-guaranteed salaries as trade chips.

This detail is crucial for determining how much salary a team can acquire in a trade — unless a team is under the cap, the amount of salary it sends out in a trade dictates how much salary it can take back. The amount of salary an over-the-cap team can acquire in a trade ranges from 100% to 200% of its outgoing salary, depending on exactly how much salary the team is sending out and the team’s proximity to a tax apron.

Under the old system, it might have made sense for a cap-strapped club to trade a player with a guaranteed salary for a player earning an equivalent non-guaranteed salary — the cap-strapped club could then waive that newly-acquired player to cut costs. That’s no longer a viable strategy.

Complicating matters further is the fact that a team can’t simply circumvent the new rules by trading a player before a league year ends on June 30, then having his new team waive him once his new non-guaranteed cap hit goes into effect on July 1. After the end of the regular season, a player’s outgoing salary for trade purposes is the lesser of his current-year salary and the guaranteed portion of his salary for the following season.

Here’s a practical example: During the 2024 offseason, the Warriors explored trade scenarios involving Chris Paul, who made $30.8MM in 2023/24 and had a non-guaranteed $30MM salary for ’24/25. Because the ’23/24 season was over, Paul’s outgoing salary for matching purposes would have been $0, his guarantee for ’24/25, which was (far) less than his total 2023/24 salary.

Sending out Paul without guaranteeing any portion of his salary would have been impractical for the Warriors if they hoped to take any salary back themselves, but they did have the ability to partially or fully guarantee his cap hit in order to make the trade math work. For instance, if Golden State had guaranteed $20MM of Paul’s $30MM salary, $20MM would have become his new outgoing amount for matching purposes.

Finding a sweet spot in that scenario was still a challenge. For instance, it would have worked from the Warriors’ perspective to increase Paul’s partial guarantee to $15MM and use his outgoing salary to acquire a player with a $15MM guaranteed salary. But Golden State’s trade partner would have been sending out a $15MM player and having to account for Paul’s full $30MM incoming salary (not just his partial guarantee), so the math likely wouldn’t have worked for that team. Paul was ultimately waived prior to his guarantee deadline when the Warriors couldn’t find a legal deal they liked.

During the first half of a season, the math on non-guaranteed contracts is a little trickier, since the guaranteed portion of a player’s salary increases for each day he’s on the roster.

For example, Pistons big man Paul Reed is making $7,723,000 this season and that amount is non-guaranteed. However, November 30 (the date this article is being published) is the 40th day of the regular season, meaning Reed has already earned 40/174ths of his salary. That works out to $1,775,402, which is what Reed’s outgoing amount for matching purposes would be if he were traded today.

Reed’s outgoing amount will continue to increase every day until January 10, which is the NBA’s league-wide salary guarantee date. At that point, Reed’s $7,723,000 salary would become fully guaranteed and would be his outgoing amount in any trade for the rest of the regular season.

To paint a complete picture of exactly how these new rules work, let’s assume a free agent signed a two-year, $24MM contract during the summer of 2024. His cap hit in each year is $12MM, but the first season of the contract is partially guaranteed for $3MM, while the second year is fully non-guaranteed. Here’s how it would count, for trade purposes, as outgoing salary:

1. From the date of the signing until the one-quarter mark of the 2024/25 season:
   • $3MM
   • Note: Due to other CBA rules, the player wouldn’t become trade-eligible until at least December 15, 2024 anyway.
2. From the one-quarter mark of the 2024/25 regular season until all salaries become guaranteed on January 10, 2025:
   • A prorated amount of the salary based on the player’s earnings to date.
   • Note: The player would earn 1/174th of his $12MM salary per day; so 60 days into the season, his outgoing salary in a trade would be $4,137,931 (60/174ths of $12MM).
3. From January 10, 2025 until the 2025 trade deadline:
   • $12MM
4. From the day after the team’s 2024/25 season ends until the start of the 2025/26 regular season:
   • $0
5. From the start of the 2025/26 regular season until salaries become guaranteed on January 10, 2026:
   • A prorated amount of salary based on earnings to date.
   • Note: The player would once again earn 1/174th of his $12MM salary per day; so 10 days into the season, his outgoing salary in a trade would be $689,655 (10/174ths of $12MM).
     
6. From January 10, 2026 until the 2026 trade deadline:
   • $12MM

This change to the NBA’s trade rules hasn’t stopped teams from tacking on non-guaranteed years to the end of certain players’ contracts, since those non-guaranteed salaries still provide flexibility. However, we’re not seeing teams construct contracts with non-guaranteed cap hits solely for trade purposes like we occasionally used to.

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.

A previous version of this article was published in 2023.

After previously implementing a “player resting policy” in 2017 in an attempt to reduce instances of teams holding healthy players out of games – particularly nationally televised games and road contests – the NBA modified those rules ahead of the 2023/24 season, introducing a new set of guidelines known as the Player Participation Policy.

The stated aim of the policy is to promote player participation over the course of the NBA’s 82-game regular season. It specifically focuses on players considered “stars,” defined by the policy as players who have made an All-Star team or an All-NBA team in any of the three prior seasons (or during the current season, once the All-Star Game has passed).

Unless a team has an approved reason for a star player not participating in a game, that team will be considered in potential violation of the player participation policy in the following scenarios:

1. If a team rests a star player in a game that is nationally televised or in an in-season tournament (NBA Cup) game.
2. If a team rests more than one star in the same game.
3. If a team repeatedly rests a star in road games instead of home games (teams must maintain a balance between one-game absences occurring on the road or at home, with the preference being for rest days to occur in home games).
4. If a team shuts down a healthy star for an extended period of time (e.g. if a tanking team stops playing one if its star players down the stretch).
5. If a star who is being rested is not on the bench and visible to fans.

An automatic NBA investigation is triggered in the event that a star player who is not injured misses a nationally televised or NBA Cup game or if multiple non-injured star players miss the same game. An investigation is also triggered if a player, agent, or team representative – such as the general manager or head coach – makes a statement that contradicts the player’s listing on the injury report.

The league can also open an investigation at its own discretion in other instances. For example, if a star player is continually held out of road games instead of home games or begins to play a “materially reduced role,” the NBA could look into the matter.

A team found to have violated the player participation policy is subject to a fine. The amounts of those fines are as follows:

• First violation: $100K
• Second violation: $250K
• Subsequent violations: $1MM more than the previous penalty (ie. $1.25MM for the third violation, $2.25MM for the fourth violation, and so on)

If the star player has a legitimate reason for being held out of action, the team won’t be penalized for violating the player participation policy. Of course, injuries are the most common reason why players miss games, but there are other exceptions the NBA allows.

For instance, a team is permitted to hold a star player out of one game in each of its back-to-back sets due to age (for a player who is 35 or older as of opening night), career workload (for a player who has logged either 34,000+ career regular season and playoff minutes or appeared in 1,000 career regular season and playoff games), or injury history (evaluated by the league on a case-by-case basis).

If one of the two games in a back-to-back set is nationally televised or is an NBA Cup game, a player who receives league approval to sit out one end of the back-to-back must play in that one. If both games meet that criteria, or if neither game does, it doesn’t matter which one the player misses.

Additionally, if a team has two stars who have been approved to sit out one end of back-to-backs, they can’t both miss the same game — one star must appear in the first one, while the other plays in the second.

Under the player participation policy, the NBA allows a star player to be held out of a game for personal reasons, such as the birth of a child or a death in the family, or in “rare and unusual circumstances,” which must be approved by the league office. The league also affords teams some end-of-season leeway. For example, a star player could be rested for the final game of the regular season if his team has already clinched a specific playoff seed.

A team may be investigated for one possible violation of the NBA’s player participation policy and end up being fined for a different violation. That occurred when the league looked into the Sixers’ decision to sit Joel Embiid for a nationally televised game near the start of the 2024/25 season.

Although the team had insisted Embiid experienced no setbacks after suiting up for the Olympics, the NBA found the big man had a legitimate knee injury and fined Philadelphia $100K for inconsistent statements about Embiid’s health that misrepresented his condition.

The NBA advises teams to “err on the side of over-communicating” with the league office to ensure they’re complying with the player participation policy, which means contacting the league ahead of time to explain a star player’s potential absence instead of waiting until after the NBA launches an investigation.

The list of stars affected by the player participation policy during the 2024/25 season can be found right here.

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. Information from ESPN’s Bobby Marks was used to confirm details in this post.

NBA teams can become hard-capped during a given league year if they use specific cap exceptions or make certain transactions, but the league doesn’t have a hard cap in place for all its teams.

However, in addition to its soft cap, the league does have a luxury tax threshold, which serves to discourage excessive spending. When a team’s total salary is over that line at season’s end, the NBA charges a tax for every surplus dollar the club spends.

The luxury tax line is set each season at 121.5% of the salary cap threshold, rounded to the nearest thousand. In 2024/25, the league’s salary cap is set at $140,588,000, so the luxury tax threshold is $170,814,000. That means any team whose total ’24/25 salary exceeds $170,814,000 on the last day of the regular season is subject to a tax bill.

The NBA’s luxury tax system is set up so that the penalties become more punitive the further teams go beyond the tax line. Teams who are in the first tax bracket will pay a significantly less significant tax rate per dollar than teams operating in the third or fourth bracket (or beyond).

In 2023/24, the amount of each tax bracket was $5MM, which meant a team faced an increased tax rate once its total salary surpassed $5MM over the tax, $10MM over the tax, $15MM over the tax, and so on.

In 2024/25 and in subsequent seasons, the size of those tax brackets will increase at the same rate as the salary cap. For example, since the cap rose by about 3.36% from ’23/24 to ’24/25, the size of each tax bracket increased by 3.36% too, from $5MM to $5,168,000.

Here’s what the luxury penalties will look like in 2024/25:

For each additional $5,168,000 above the tax line beyond $25,840,000 a team operates, its tax rates increase by $0.50 per dollar of team salary. So, the penalty is $3.75 per dollar between $20,672,001 and $25,840,000, $4.25 per dollar between $25,840,001 and $31,008,000, and so on.

Here’s a practical example of how the tax penalties work. The Nuggets currently have a team salary of $182,574,315, which is above this season’s tax line by $11,760,315, putting them in the third tax bracket. Denver’s total salary will likely move up or down before the season is over, but the team’s current projected tax bill is $20,356,788. That’s based on a penalty of $7,752,000 from the first tax bracket, $9,044,000 from the second, and $3,560,788 from the third (a penalty of $2.50 per dollar on $1,424,315).

The rates listed above apply to most taxpayers, including 10 of the 14 teams currently in the tax for 2024/25: the Nuggets, Suns, Timberwolves, Celtics, Knicks, Heat, Sixers, Mavericks, Pelicans, and Cavaliers. However, a team can become subject to a more punitive “repeater” penalty if it paid the tax in at least three of the previous four seasons.

This scenario currently applies to four teams — the Warriors, Clippers, Bucks, and Lakers paid the tax at least three times from 2021 to 2024, which means they’ll be repeat offenders this season.

Here are the penalties that apply to repeat taxpayers in 2024/25:

As is the case with the standard penalties, the tax rate continues to increase by $0.50 per tax bracket, so a repeater taxpayer in the fifth bracket would face a tax rate of $4.75 per dollar; that would increase to $5.25 per dollar in the sixth tax bracket, and so on.

The Clippers are currently carrying $173,279,116 in total salary, surpassing the tax line by $2,465,116. Because they’re charged $2.50 per dollar as a repeater taxpayer, their projected tax bill is $6,162,790 instead of the standard rate of $3,697,674.

The further into tax territory a team goes, the greater the difference between the repeater rate and the standard rate becomes. For instance, the Bucks’ projected tax bill at the moment is $74,837,699. If they weren’t subject to repeater penalties, it would be just $52,554,394.

The 2024/25 season is the last one in which the rates outlined above will apply. Beginning in 2025/26, the NBA is adjusting the tax rates to make them even more punitive for repeater taxpayers and heavy spenders. Conversely, the penalties for standard taxpayers who finish the season in one of the first two tax brackets will be lowered.

Here are the changes coming next season:

These rates will continue to increase by $0.50 per tax bracket beyond the fourth bracket.

The goal of these tweaks is to discourage teams from soaring way beyond the luxury tax line without making the tax line itself a major deterrent.

Since luxury tax penalties are calculated by determining a team’s total cap hits at the end of its season, a team that starts the year above the tax line could get under it before the end of the season by completing trades or buyouts. The Pelicans did just that in 2023/24, moving out of tax territory by salary-dumping Kira Lewis‘ expiring contract in January.

New Orleans is one of just two NBA teams that has never been a taxpayer (Charlotte is the other) and is operating only narrowly above the tax line this season, so it wouldn’t be a surprise to see the team make another mid-season deal to duck the tax.

It’s also worth noting that team salary for tax purposes is calculated slightly differently than it is for cap purposes. Here are a few of the adjustments made at season’s end before a team’s tax bill is calculated:

• Cap holds and exceptions are ignored.
• “Likely” bonuses that weren’t earned are removed from team salary; “unlikely” bonuses that were earned are added to team salary.
  • Note: Bonuses based on playoff-related criteria can be removed or added to team salary after the regular season ends. In that scenario, a team’s tax bill is based on its salary at the end of the team’s season (ie. its playoff run), not the end of the regular season.
• If a player with a trade bonus is acquired after the final regular season game, that trade bonus is added to team salary.
• If a rookie or second-year player signed a minimum-salary free agent contract, the applicable minimum-salary cap charge for a two-year veteran is used in place of that player’s cap charge.
  • Note: This “tax variance” rule only applies to free agents, not drafted players.

So let’s say that five teams finish the season owing a total of $75MM in taxes. Where does that money go? Currently, the NBA splits it 50/50 — half of it is used for “league purposes,” while the other half is distributed to non-taxpaying teams in equal shares. In our hypothetical scenario, the 25 non-taxpaying teams would receive $2MM apiece.

As cap expert Larry Coon explains in his CBA FAQ, “league purposes” essentially covers any purpose the NBA deems appropriate, including giving the money back to teams. In recent years, the NBA has used that money as a funding source for its revenue sharing program.

Coon also notes that the CBA technically allows up to 50% of tax money to be distributed to non-taxpaying teams, but there’s no obligation for that to happen — in other words, the NBA could decide to use 100% of the tax money for “league purposes.”

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.

Earlier versions of this post were published in previous years.

The poison pill provision isn’t technically a term defined in the NBA’s Collective Bargaining Agreement. However, the concept of a “poison pill” has colloquially come to refer to a pair of NBA concepts.

The first of those concepts relates to the Gilbert Arenas Provision, which we’ve explained in a separate glossary entry. When a team uses the Arenas provision to sign a restricted free agent with one or two years of NBA experience to an offer sheet, that team can include a massive third-year raise that’s often referred to as a “poison pill,” since it makes it more difficult for the original team to match the offer.

The second meaning of the “poison poll” is the one that has become more common – and more frequently relevant – in recent years. It relates to players who have recently signed rookie scale extensions.

The “poison pill provision” applies when a team extends a player’s rookie scale contract, then trades him before the extension officially takes effect. It’s a rare situation, but it features its own set of rules, since extensions following rookie contracts often create a large gap between a player’s current and future salaries.

For salary-matching purposes, if a player is traded between the time his rookie contract is extended and the following July 1 (when that extension takes effect), the player’s incoming value for the receiving team is the average of his current-year salary and the annual salary in each year of his extension (including option years, but not including unlikely incentives).

His current team, on the other hand, simply treats his current-year salary as the outgoing figure for matching purposes.

Let’s use Rockets guard Jalen Green as an example. Green was extended by Houston last month, but could theoretically still be a trade candidate this season if the right opportunity arises. He’ll earn $12,483,048 in 2024/25, the final year of his rookie scale contract, then $105,333,333 across the next three years as a result of his extension.

If the Rockets decide they want to trade Green this season, the poison pill provision would complicate their efforts.

From Houston’s perspective, Green’s current-year cap hit ($12,483,048) would represent his outgoing salary for matching purposes. However, any team acquiring Green would have to view his incoming value as $29,454,095 — that’s the annual average of the four years and $117,816,381 he has left when accounting for both his current contract and his new extension.

Even after accounting for the more lenient salary-matching rules for teams operating below the first tax apron, the incoming and outgoing salaries in a trade usually have to be roughly in the same ballpark, as we outline in our traded player exception glossary entry. If one side must view Green as a $29.5MM player while the other side considers him a $12.5MM player, filling out a deal with players and salaries that work for both sides would be a challenge.

[RELATED: 11 Players Affected By Poison Pill Provision In 2024/25]

When a player signs a maximum-salary rookie scale extension whose value will be determined by a percentage of the salary cap, a 4.5% cap increase is presumed for the purposes of calculating his average aggregate salary.

Here’s an example. Since this season’s salary cap is $140,588,000, a 4.5% increase would work out to $146,914,460. Pistons guard Cade Cunningham signed a maximum-salary extension that will begin at 25% of that amount with 8% annual raises, which works out to $213,025,967 over five years. Add that figure to Cunningham’s $13,940,809 salary for 2024/25, divide by six years, and you get $37,827,796, which would be considered his incoming salary in the extremely unlikely event that he’s traded this season.

Cunningham’s rookie scale extension could technically be worth up to 30% of next year’s cap if he meets certain performance criteria (e.g. making an All-NBA team), but that isn’t considered in the calculation for the poison pill provision if the performance criteria has not yet been met.

The poison pill provision is one key reason why a team is unlikely to sign a player to a rookie scale extension unless that team is fairly certain it won’t use him in a blockbuster deal before the upcoming trade deadline.

Of course, there are two sides to that coin. The Warriors, for instance, would have an easier time trading Jonathan Kuminga in the coming months than they would if they had extended him prior to opening night, since his incoming and outgoing cap hits are now both $7,636,307 for the rest of 2024/25. But extending Green in October will make it easier for the Rockets to trade him during the 2025 offseason, whereas Kuminga – a restricted free agent – would be trickier to move at that point due to various sign-and-trade restrictions.

Trades involving a player who recently signed a rookie scale extension are already pretty infrequent. Those players are often young building blocks whose career trajectories are promising enough to have warranted a long-term investment. Those aren’t the kind of players teams often trade. The poison poll provision further disincentivizes a deal involving one of those recently extended players by complicating salary-matching rules, making those trades that much rarer.

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.

Earlier versions of this post were published in previous years.

Each summer when the NBA offseason arrives, a multitude of free agents sign new contracts and teams around the league consummate dozens of trades. On some occasions, these two forms of transactions are combined into something called a sign-and-trade deal.

What is a sign-and-trade?

Sign-and-trades occur when a team re-signs its own free agent, only to immediately send him to another team in exchange for players, draft picks, and/or cash. For the most part, they function like a normal NBA trade, except one of the pieces involved in the trade is a free agent who receives a new contract as part of the deal.

In order for a sign-and-trade deal to be completed, the following criteria must be met:

• A free agent must be signed-and-traded by the team with whom he finished the most recent season. For instance, the Cavaliers could sign-and-trade Isaac Okoro this offseason, but another team couldn’t sign Okoro and immediately move him. Cleveland also wouldn’t be permitted to sign-and-trade Raul Neto, even though the Cavs were his most recent team, because he finished the 2022/23 season with the club, rather than the ’23/24 season.
• If the free agent is restricted, he can’t be signed-and-traded after he signs an offer sheet with a rival team.
• A team acquiring a player via sign-and-trade cannot be over the first tax apron upon the conclusion of the deal and becomes hard-capped at the first apron for the rest of the league year.
• A free agent can’t be signed-and-traded once the regular season is underway.
• A free agent can’t be signed-and-traded using any exception that doesn’t allow for a three-year contract.
• A player receiving a designated veteran contract can’t be signed-and-traded.

Sign-and-trade contracts must cover either three or four seasons. However, only the first year of the deal needs to be fully guaranteed.

A sign-and-trade contract can be worth any amount up to the player’s maximum salary (with 5% annual raises) for a player who has full Bird rights. However, players with Non-Bird or Early Bird rights are subject to the restrictions of those exceptions.

For example, a player who only has Non-Bird rights and is signed-and-traded would be limited to a first-year salary worth up to 120% of his previous salary, 120% of his minimum salary, or the amount of his qualifying offer (if the player is a restricted free agent)

If a sign-and-trade contract includes a signing bonus, either team can agree to pay it, though if the signing team pays it, it counts toward that club’s limit for cash included in trades for that league year, so that’s uncommon. If a trade bonus is included, it would kick in upon any subsequent trade rather than as part of the sign-and-trade transaction itself.

The benefits and challenges of the sign-and-trade

Prior to the NBA’s 2011 Collective Bargaining Agreement, a free agent could receive a five-year contract via sign-and-trade, but that’s no longer the case — the contract restrictions for players acquired via sign-and-trade are the same as those that apply to a player signing outright with a new team via cap room (four years and 5% raises).

The goal of that change was to encourage top free agents to remain with their own clubs in order to maximize their earnings, rather than allowing them to sign similarly lucrative long-term contracts while changing teams.

In more recent CBAs, including the 2023 agreement, a specific set of circumstances is often required for teams and players to be incentivized to participate in sign-and-trades. If a player wants to change teams, it often makes more sense for him to sign with the new team outright, rather than making that club give up assets to complete the acquisition. Even the player’s old team may prefer to simply let the free agent walk and claim the resulting cap space, rather than taking back unwanted assets in a sign-and-trade.

There are other potential roadblocks complicating sign-and-trade deals as well. A signed-and-traded player’s salary may be viewed differently for salary-matching purposes than it would be in a standard trade, which can compromise a team’s ability to meet those salary-matching requirements. We outline those rules in our glossary entry on base year compensation.

However, if a potential suitor is operating over the cap and under the first apron, a sign-and-trade can make sense — especially if that club wants to sign the player for more than the mid-level amount, or if the club can offer the free agent’s prior team something of value.

Sign-and-trades can also come in handy when a team needs to aggregate one more contract in a trade for salary-matching purposes, or when a team that has already used its mid-level exception wants to add a second free agent in that mid-level range.

2024 sign-and-trades

During the 2024 offseason, eight players have changed teams via sign-and-trade. Five of those players were what we’d call “traditional” sign-and-trade participants — DeMar DeRozan (Kings), Klay Thompson (Mavericks), Buddy Hield (Warriors), Kyle Anderson (Warriors), and Kris Dunn (Clippers) were each acquired by teams who didn’t otherwise have the ability to offer the salaries those players received via sign-and-trade.

DeRozan’s and Thompson’s deals exceeded the mid-level exception and were completed by teams without cap room available; Hield, Anderson, and Dunn all got contracts in the mid-level range from clubs who had already used their MLE on another player.

A sixth player, Jonas Valanciunas, could’ve been signed using the Wizards‘ mid-level exception, but the Pelicans agreed to sign-and-trade him to Washington because it was a win-win for the two teams — New Orleans received a heavily protected second-round pick and a trade exception in the deal, while the Wizards absorbed Valanciunas using a trade exception and preserved their full MLE. They used a portion of that mid-level to sign Saddiq Bey, while the remainder could prove useful later in 2024/25.

The final two sign-and-trade contract recipients of the 2024 offseason, Shake Milton and Cody Zeller, were used as salary-matching pieces in the Mikal Bridges and Dejounte Murray trades, respectively.

Because Milton and Zeller were essentially salary filler in those deals and the Nets and Hawks weren’t specifically targeting them, both players received salaries just large enough to meet the matching rules and received only one guaranteed season on their new three-year contracts.

The second apron tweak

While it has become relatively common knowledge among NBA fans that teams above the first tax apron can’t acquire a player via sign-and-trade, a new wrinkle was introduced in the 2023 CBA affecting teams above the second tax apron.

A team that sends out a player via sign-and-trade cannot take back salary – either simultaneously or non-simultaneously – in exchange for that outgoing player if that team is operating above the second tax apron. A team that takes back salary for a signed-and-traded player becomes hard-capped at the second apron for the rest of the season.

For example, when the Timberwolves – who are operating above the second apron in 2024/25 – signed-and-traded Anderson to Golden State, they were prohibited from taking back any salary using Anderson’s outgoing salary for matching purposes. Although the Wolves technically created a trade exception worth approximately $8.8MM (Anderson’s new salary) in that deal with the Warriors, they’ll be ineligible to use that exception as long as their team salary remains above the second apron.

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.

Earlier versions of this post were published in 2013, 2019, and 2020.

Most salary cap workarounds, such as the mid-level exception, can be used every year — or at least every other year, as in the case of the bi-annual exception. However the disabled player exception is only available under certain circumstances. Like other salary cap exceptions though, the DPE allows a team to sign a player without using cap space.

If a player is seriously injured, his team can apply for the disabled player exception to replace him. In order for the exception to be granted, an NBA-designated physician must determine that the player is “substantially more likely than not” to be sidelined through at least June 15 of that league year.

If granted, the disabled player exception allows a club to sign a replacement player for 50% of the injured player’s salary or for the amount of the non-taxpayer’s mid-level exception, whichever is lesser.

For instance, if a team is granted a disabled player exception this season for a player earning $10MM, the exception would be worth $5MM. But if the injured player is earning $30MM, the DPE would be worth the equivalent of the mid-level exception ($12,822,000 in 2024/25).

A team must formally apply for a disabled player exception and it requires the approval of the NBA. If the league-designated physician determines the player will likely be fully recovered and available before June 15, the team’s request will be denied. That happened last season when the Knicks attempted to secure a disabled player exception for Mitchell Robinson‘s ankle injury. That turned out to be the right call by the league, given that Robinson returned to action in late March.

The cutoff to apply for a DPE each season is January 15. If a team has a player go down with a season-ending injury after that date, it cannot obtain a DPE to replace him. A team must also use the exception by March 10 of the current season or it will expire (this deadline can be pushed back to the next business day if March 10 lands on a weekend).

Unlike mid-level, bi-annual, or trade exceptions, the disabled player exception can only be used on a single player, rather than spread out across multiple players. However, a team can use it in a variety of ways — the DPE can be used to sign a free agent, to claim a player off waivers, or to acquire a player in a trade.

If a team uses its disabled player exception to take on salary in a trade, it can acquire a player making up to 100% of the DPE amount, plus $100K. For example, a $5,000,000 DPE could be used to trade for a player making $5,100,000.

A free agent signed using the DPE can only be offered a rest-of-season deal, while a player acquired via trade or waiver claim using the DPE must be in the final year of his contract. Essentially, the purpose of the exception is to give the team some flexibility to replace an injured player for the rest of the season, but not beyond the current season.

The team must have room on its roster to sign the replacement player — the disabled player exception doesn’t allow the club to carry an extra man beyond the usual limits.

In the event that a team is granted a disabled player exception, uses it to acquire a player, and then has its injured player return ahead of schedule (ie. before the end of the season), the team is allowed to carry both players.

However, if a team has an unused disabled player exception and then trades its injured player, the team would lose the exception. The same is true if the injured player returns to action before the DPE has expired or been used.

Most disabled player exceptions ultimately go unused. For instance, the Nuggets were granted a DPE due to DaRon Holmes‘ season-ending Achilles tear, but because he’s earning just $3,065,640 as a rookie, the exception is worth only $1,532,820, 50% of that amount. It doesn’t hurt for a team to have that tool as its disposal, but it will be difficult for Denver to do much with that.

More sizable disabled player exceptions can come in handy, most frequently in trades, where they can allow sometimes allow a team to generate a new trade exception with an outgoing contract rather than using it to match the incoming salary.

For example, after being granted a $12,405,000 DPE in the wake of Ja Morant‘s season-ending shoulder injury last season, the Grizzlies made a trade with Houston that sent out Steven Adams ($12.6MM) and brought back Victor Oladipo‘s expiring $9.45MM contract. Rather than using Adams’ outgoing salary as a salary-matching piece to acquire Oladipo, Memphis used its DPE to take on Oladipo’s deal, generating a new $12.6MM trade exception for Adams’ salary.

Notably, the Grizzlies had also been granted a separate $6.3MM disabled player exception for Adams after losing the big man to a season-ending knee injury, but they were forced to forfeit that DPE when they traded Adams away.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts 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.

Earlier versions of this post were published in 2012, 2017, and 2022.

For NBA teams looking to open up cap room, simply waiving a player isn’t as effective as it is in the NFL, where salaries are often non-guaranteed and most or all of a player’s cap charge can frequently be wiped from a team’s books. Still, the NBA’s Collective Bargaining Agreement does feature a rule that allows teams to spread a player’s cap hit over multiple seasons. This is called the stretch provision.

The stretch provision ensures that any player waived with more than $500K in guaranteed salary remaining on his contract will have the payment schedule of that money spread across multiple years. That schedule is determined as follows:

• If a player clears waivers between the start of the league year and August 31, his remaining salary is paid over twice the number of years remaining on his contract, plus one.
  • Note: A player must be waived by August 29 at 4:00 pm Central time in order to clear waivers on August 31.
• If a player clears waivers between September 1 and the end of his league year, his current-year salary is paid on its normal schedule, with any subsequent years spread over twice the number of remaining years, plus one.
• If a player in the final year of his contract clears waivers after September 1, the stretch provision does not apply.

While the new payment schedule for a waived player is non-negotiable, teams get to decide whether or not to apply the stretch provision to that player’s cap charges as well. A team can stick to the original schedule for cap hit purposes, if it so chooses.

Word broke on Wednesday that the Suns are waiving and stretching Nassir Little, providing a useful real-life example for how the stretch provision functions. Little’s cap hits prior to his release are $6.75MM in 2024/25, $7.25MM in ’25/26, and $7.75MM in ’26/27.

Here’s what that contract would look like if it were waived without applying the stretch provision to the cap hits; if it were stretched before August 31; or if it were stretched after August 31:

As this chart shows, it typically makes sense to waive and stretch a player’s contract in July or August if the team is looking to generate immediate cap flexibility for the current season and isn’t as concerned about the impact in future seasons.

By waiving and stretching Little now, the Suns will trim over $3.6MM from their 2024/25 cap, generating significant short-term savings in projected luxury tax penalties, since they’re operating so far into tax territory. However, Little will remain on their books through 2031 instead of 2027.

Phoenix is utilizing the stretch provision in order to create salary and tax savings. In other cases, stretching one or more players can allow a team to duck below the luxury tax line or to create additional cap room.

Back in the summer of 2022, for example, the Trail Blazers waived and stretched Eric Bledsoe and Didi Louzada, which allowed them to sneak below the tax line. The Pacers, meanwhile, waived and stretched Nik Stauskas, Juwan Morgan, and Malik Fitts in order to carve out a little extra cap room in order to sign Deandre Ayton to a maximum-salary offer sheet.

If a club waiving a guaranteed contract in July or August isn’t seeking immediate cap relief, it generally makes more sense to apply the player’s full current salary to the current salary-cap year, rather than stretching it.

The Hornets took that route when they waived Davis Bertans in July, applying his remaining $5.25MM in guaranteed money entirely to the 2024/25 cap. If they’d stretched it, they could’ve carried $1.75MM for each of the next three seasons, creating an extra $3.5MM in cap room this summer, but they had no immediate use for that cap room and decided it’d be better to clear Bertans from their books in one year, rather than in three years.

There are a few more key rules related to the stretch provision worth noting.

Buyouts:

While the stretch provision regulates when money is paid out, it doesn’t prevent teams and players from negotiating a reduced salary as part of a buyout agreement.

For instance, let’s say a player who has an $18MM expiring contract for 2024/25 agrees in August to give up $3MM in a buyout. As a result of that buyout agreement, his team could stretch his remaining salary and end up with cap hits of $5MM for three seasons (through ’26/27) rather than $6MM.

Non-guaranteed money/years:

Non-guaranteed money isn’t subject to the stretch provision, since a team isn’t obligated to pay the non-guaranteed portion of a contract once it waives a player. However, non-guaranteed years (not counting team options) are taking into account when determining how many years the contract is spread across.

This rule can come in handy when a club decides to waive a player who has one or two non-guaranteed years tacked onto the end of his contract. When the Blazers waived Louzada in August of 2022, he had three years left on his deal, but only his 2022/23 salary of $1,876,222 was guaranteed — the $4,023,212 owed to him for the two seasons beyond that one was fully non-guaranteed.

That means that when they waived Louzada, the Blazers only owed him just $1,876,222 but were able to stretch that figure across seven seasons (twice the three years remaining on his contract, plus one). As a result, Portland is carrying tiny $268,032 cap charges for Louzada on its books through the 2028/29 season.

The stretch limit:

A team isn’t permitted to stretch a player’s salary if the portion of the team’s salary made up of waived players projects to exceed 15% of the salary cap in any future seasons.

For instance, with a $154,647,000 salary cap projected for 2025/26, a team carrying $24MM in dead money for that season wouldn’t have been permitted to use the stretch provision while waiving a player on an expiring contract prior to August 31, 2024. This rule doesn’t come into play often, since it’s extremely rare for a team to carry that much dead money on its books for a future season.

The delayed stretch:

Under the current Collective Bargaining Agreement, if a team waives a player with multiple years of guaranteed money left on his contract and doesn’t utilize the stretch provision at the time of his initial release, the team could still choose to deploy the stretch provision on the contract in a future season.

For instance, when the Cavaliers bought out Ricky Rubio in January 2024, they initially took on cap hits of $3,722,327 for 2023/24 and $1,274,015 for ’24/25, opting not to use the stretch provision. However, prior to the August 31, 2024 deadline, the Cavs decided to stretch the final-year salary owed to Rubio, turning that $1,274,015 into three annual cap hits of $424,672, running through the ’26/27 season.

Rubio’s contract just had two years left on it at the time of his release, but if it had covered, say, four seasons, the Cavaliers could have made the decision to stretch his leftover salary at any time until August 31, 2026.

A contract can only be stretched once, so after stretching JaVale McGee‘s remaining salary across five seasons in 2023, the Mavericks wouldn’t be permitted to “re-stretch” it in a future season.

This delayed stretch rule only applies to contracts that have been terminated since the start of the 2023/24 league year.

Re-signing a stretched player:

Finally, it’s important to clarify that when a team applies the stretch provision to a player’s cap hits, that team becomes ineligible to re-sign the player for the original remaining term of his contract.

For example, after they stretch Little’s contract, the Suns won’t be able to re-sign him until July 2027, which is when his contract originally would’ve expired. That restriction doesn’t apply when a team waives a player and doesn’t stretch his remaining guaranteed salary.

If a team waives a player without stretching his remaining salary, then re-signs or reacquires him before his original contract would have expired, that team isn’t permitted to use the stretch provision on his new deal.

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.

Earlier version of this post were published in 2013, 2017, and 2023.

There are a number of ways that NBA teams without salary cap space are able to add 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 exactly 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 found in the latest Collective Bargaining Agreement are listed below, along with links to more extensive glossary entries on each exception.

• 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%.
  • For further reference: Hoops Rumors Glossary: Bird Rights
• 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 105% of the average player salary from the previous season, whichever is greater. Early Bird contracts must be for at least two seasons (no more than four), with maximum annual raises of 8%.
  • For further reference: Hoops Rumors Glossary: Early Bird Rights
• 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%.
  • For further reference: Hoops Rumors Glossary: Non-Bird Rights
• Non-Taxpayer Mid-Level Exception: A team operating below the first tax apron 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 2024/25 is $12,822,000; it will increase annually at the same rate as the salary cap. This exception, which can be used on one or multiple players, can also be used to acquire players via trade or waiver claim.
  • For further reference: Hoops Rumors Glossary: Mid-Level Exception
• Taxpayer Mid-Level Exception: A team operating below the second tax apron can offer a player a contract for up to two years with a maximum second-year raise of 5% using the mid-level exception. The taxpayer MLE amount for 2024/25 is $5,168,000; it will increase annually at the same rate as the salary cap. This exception, which can be used on one or multiple players, can only be used to sign players, not to acquire them via trade or waiver claim.
  • For further reference: Hoops Rumors Glossary: Mid-Level Exception
• Room Exception: If a team uses room under the cap to sign players, it forfeits its full mid-level exception and 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 three years with maximum annual raises of 5%. The room exception amount for 2024/25 is $7,983,000; it will increase annually at the same rate as the salary cap. This exception, which can be used on one or multiple players, can also be used to acquire players via trade or waiver claim.
  • For further reference: Hoops Rumors Glossary: Mid-Level Exception
• 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 operate over the cap and below the first tax apron. The bi-annual exception amount for 2024/25 is $4,668,000; it will increase annually at the same rate as the salary cap. This exception, which can be used on one or multiple players, can also be used to acquire players via trade or waiver claim. As its name suggests, the bi-annual exception can only be used every other year.
  • For further reference: Hoops Rumors Glossary: Bi-Annual Exception
• 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, as long as their contracts don’t cover more than two seasons and never included a salary above the minimum. There is no limit to the number of players a team can acquire using this exception.
  • For further reference: Hoops Rumors Glossary: Minimum Salary Exception
• Rookie Scale Exception: A team can sign its first-round draft picks for up to 120% of the rookie salary scale amount or as little as 80% of the rookie salary scale amount. The rookie salaries for 2024 first-round picks can be found right here. The rookie scale increases annually at the same rate as the salary cap.
  • For further reference: Hoops Rumors Glossary: Rookie Scale Exception
• Second-Round Pick Exception: A team can sign a second-round pick to a three- or four-year contract with a team option on the final year. A contract signed using the second-round exception can exceed the applicable rookie minimum in the first year (or the first two years, for a four-year deal), but not in the final two years. The details for second-round pick exception signings in 2024/25 can be found right here.
  • For further reference: Hoops Rumors Glossary: Second-Round Pick Exception
• Disabled Player Exception: If a player suffers an injury deemed more likely than not to sideline him through the following June 15, a team can be granted this exception by the league. It can be used to sign 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. It can also be used to acquire a player via trade or waiver claim if he’s in the final year of his contract. 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 (or the next business day, if March 10 falls on a weekend).
  • For further reference: Hoops Rumors Glossary: Disabled Player Exception
• 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 100% of the outgoing salary. For teams operating below the tax aprons, the incoming value can increase to as high as 200% of the outgoing salary (plus $250K), 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.
  • For further reference: Hoops Rumors Glossary: Traded Player Exception

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.

Earlier versions of this post were published in 2012 and 2018.

The NBA’s maximum salary is determined by a player’s years of NBA experience. Players with between zero and six seasons under their belts are eligible for a starting salary worth up to 25% of the salary cap. That figure increases to 30% for players with seven to nine years of NBA experience, and to 35% for players with 10+ years of service.

However, there are certain scenarios in which a player can achieve a higher maximum salary than his years of service dictate. When a player who would normally qualify for the 30% max becomes eligible for a starting salary worth up to 35% of the cap before he gains 10+ years of NBA experience, he can sign a Designated Veteran contract, also known as a “super-max” deal.

A player who has seven or eight years of NBA service with one or two years left on his contract becomes eligible for a Designated Veteran contract extension if he meets the required performance criteria. A Designated Veteran contract can also be signed by a player who is a free agent if he has eight or nine years of service and meets the required performance criteria.

However, a player can’t sign a Designated Veteran deal with a new team — only his current team. Additionally, if he has been traded at any time since his first four years in the NBA or previously changed teams via free agency at any point in his career, he becomes ineligible for such a deal.

That means players like Donovan Mitchell, Lauri Markkanen, and Jalen Brunson would have had no path to becoming eligible for Designated Veteran deals with their current teams, but Brandon Ingram (who was traded during his first four seasons) could become eligible if he remains with the Pelicans and meets the performance criteria.

Speaking of that performance criteria, here’s what it looks like. At least one of the following must be a true for a player to be eligible to sign a Designated Veteran contract:

• He was named to an All-NBA team in the most recent season, or in two of the last three seasons.
• He was named NBA MVP in any of the three most recent seasons.
• He was named NBA Defensive Player of the Year in the most recent season, or in two of the last three seasons.

Given the exclusivity of the MVP and Defensive Player of the Year awards, players who qualify for a Designated Veteran contract do so most often by earning All-NBA nods.

Celtics forward Jayson Tatum was the only player eligible to sign a Designated Veteran contract this offseason. Tatum actually met the performance criteria a year ago by making his second consecutive All-NBA team, but he only had six years of NBA service at the time. He was able to sign his super-max extension this offseason once he registered his seventh year of service.

Tatum was named an All-NBA first-teamer again in 2024, but would have been eligible even if he’d missed out on an All-NBA spot this year, since his nods in 2022 and 2023 ensured he’d made an All-NBA team in at least two of the past three seasons.

Thunder guard Shai Gilgeous-Alexander and Mavericks guard Luka Doncic are following in Tatum’s footsteps. Both players have made All-NBA teams in each of the past two seasons but still have just six years of service under their belts. They’ll meet the service time criteria next summer and will be eligible to sign Designated Veteran contract extensions in July 2025 whether or not they earn All-NBA honors in 2024/25.

As outlined above, if the Thunder were to trade Gilgeous-Alexander or the Mavericks were to trade Doncic, they would no longer be super-max eligible. But obviously those 2024 MVP finalists aren’t going anywhere in the next year.

While the Designated Veteran rule allows players with fewer than 10 years of NBA experience to qualify for contracts that begin at 35% of the cap instead of 30%, the “Rose Rule” allows players with fewer than seven years of service to qualify for contracts that begin at 30% of the cap instead of 25%.

Those are technically two separate rules, and we’ve discussed the Rose Rule at greater length in a separate glossary entry. However, they’re closely linked, and both types of contracts are sometimes referred to a “super-max” deals.

Here are a few other rules related to Designated Veteran contracts:

• Even if a player qualifies for a Designated Veteran contract, his team isn’t obligated to start its extension offer at 35% of the cap. The player is eligible for a salary up to that amount, but the exact amount is still a matter for the two sides to negotiate. For example, after becoming super-max eligible in 2020, Rudy Gobert signed a contract with the Jazz that began at just over 31% of the cap.
• A Designated Veteran extension can’t exceed six years, including the number of years left on the player’s contract. So if a player signs a Designated Veteran extension when he has two years left on his current contract, he could tack on four new years to that deal.
• A player signing a Designated Veteran contract as a free agent can’t sign for more than five years.
• A Designated Veteran extension can only be signed between the end of the July moratorium and the last day before the start of the regular season.
• If a player signs a Designated Veteran contract, he is ineligible to be traded for one year.
• Under the 2017 Collective Bargaining Agreement, a team wasn’t permitted to carry more than two players on Designated Veteran contracts at a time. However, that rule didn’t carry over to the 2023 CBA and that limit no longer applies.

Our list of the players who have signed Designated Veteran contracts since their inception in 2017 can be found right here.

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.

Previous versions of this glossary entry were published in 2018 and 2023.

It’s common practice in the National Football League for a team to renegotiate its contract with a player, but we hear far less about the concept in the NBA. So can an NBA team actually renegotiate a contract with one of its players?

The answer is almost always no, and it’s a firm no if the follow-up question is whether the sides can renegotiate the value of the contract downward. Unlike NFL teams, an NBA club can’t create extra cap flexibility by renegotiating a contract to push present-day cap hits into future years.

However, renegotiations are allowed to make an NBA contract more lucrative, and they can happen as long as a specific set of circumstances are in place:

• Only contracts that cover four or more seasons can be renegotiated, though that rule doesn’t apply to rookie scale deals — even though they run for four years, they can’t be renegotiated.
• Renegotiations can only occur after the third anniversary of a contract signing, an extension, or a previous renegotiation (assuming the previous renegotiation increased the salary in any season by 5% or more).
• Perhaps most importantly, teams can’t renegotiate any contracts if they’re over the cap, and they can only increase the player’s salary in the current season by the amount of cap room they have (or to the player’s maximum salary).

If a renegotiation happens at the same time as an extension, the player’s salary can increase or decrease by as much as 40% from the last season of the existing contract to the first season of the extension. Following the first year of the extension, raises (or pay cuts) are limited to 8% annually.

Here are a few other rules related to contract renegotiations:

• Teams can’t renegotiate contracts between March 1 and June 30, so the last day of February is always the deadline to complete renegotiations in a given league year.
• Renegotiations can’t occur as part of a trade. If a player is traded, he’s ineligible to renegotiate his contract for the next six months. Similarly, if a player renegotiates his contract, he’s ineligible to be traded for six months.
• In order for a signing bonus to be included in a renegotiation, the contract must be extended as well.
• Two-way contracts can’t be renegotiated.

Renegotiating a contract to include a significant raise for the current season can be a clever way of incentivizing a long-term extension for a player who would otherwise reach free agency. Contract renegotiations are rare, due to the specific series of requirements necessary to pull them off, but we’ve seen a few completed within the past 13 months.

Domantas Sabonis renegotiated and extended his contract with the Kings last July, while Jordan Clarkson did the same with the Jazz. Jonathan Isaac also completed a renegotiation and extension with the Magic earlier this month.

The Clarkson and Isaac deals were prime examples of how teams can use their cap room in a current season to “overpay” a player in the short term in order to get him on more favorable terms in future seasons.

Clarkson, for instance, entered the 2023/24 league year on an expiring $14,260,000 base salary. The Jazz used their cap space to renegotiate that figure up to $23,487,629, then negotiated a 40% pay cut for the first season of a two-year extension, so Clarkson will earn $14,092,577 in ’24/25 and $14,285,714 in ’25/26. Simply offering that two-year, $28.38MM extension may not have been enough to get Clarkson to sign, but increasing his current-year salary by more than $9MM helped incentivize him to put pen to paper.

The Magic made a similar move with Isaac this summer, bumping his current salary all the way up to $25MM, then having it decline by 40% to $15MM for the first season of a four-year extension.

Sabonis, meanwhile, had a $19.4MM base salary in 2023/24 as he entered the final year of his current contract. The Kings didn’t have the cap room necessary to bump him up to his maximum salary of $40,806,300, but they were able to renegotiate his ’23/24 salary up to $28MM. From there, they gave Sabonis a 40% raise in year one of his extension, starting his new four-year deal at $39.2MM (plus incentives) in ’24/25.

This year’s top remaining renegotiation candidate is Jazz forward Lauri Markkanen, who is on an expiring $18,044,544 contract and will become eligible for a renegotiation as of August 6. Markkanen’s maximum salary for 2024/25 would be $42,176,400 and Utah is the only NBA team that has the cap room necessary to give him that $24MM+ raise.

If the Jazz and Markkanen do renegotiate his contract on or after August 6, it will be interesting to see what the terms of his extension look like. He has a case for a maximum-salary contract, but if Utah is essentially giving him $24MM+ in free, up-front money before the extension begins, the team may have some leverage to ask him to take less than his max.

I certainly wouldn’t expect the Jazz to try to negotiate a 40% pay cut for year one of a Markkanen extension like they did with Clarkson, but even a modest dip would make the forward’s contract more team-friendly down the road.

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.

Earlier version of this post were published in 2015, 2017, and 2022.