Hoops Rumors Glossary

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 at least $250K 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 is waived between July 1 and August 31, his remaining salary is paid over twice the number of years remaining on his contract, plus one.
• If a player is waived between September 1 and June 30, his current-year salary is paid on its normal schedule, with any subsequent years spread over twice the number of remaining years, plus one.
  • Note: If a player in the final year of his contract is waived between September 1 and June 30, the stretch provision does not apply.

To create a clearer picture of what these rules look like, let’s focus on a specific player. We’ll use Knicks center Joakim Noah as our example, since his exorbitant salary makes him a candidate to be stretched at some point. Here’s what Noah’s current contract looks like, along with what it would look like if the Knicks waive and stretch him by next August 31, or after August 31:

Because the Knicks didn’t waive and stretch Noah before August 31, 2017, his 2017/18 salary is locked in at $17,765,000, barring a buyout. If New York had wanted to reduce that number, the club could have waived and stretched him in July or August and spread his cap hits across seven years (at about $7.94MM annually). That would have created additional ’17/18 cap room, but the Knicks determined that wasn’t necessary.

If the Knicks do stretch Noah, they’ll have to decide whether to do it before August 31 or sometime after that. The decision may come down to whether or not the team wants to create cap room in 2018 at the expense of future flexibility. Stretching Noah in July or August would create nearly $11MM in additional room right away, but it would mean taking on mid-sized cap hits for the following five years. If the Knicks were to stretch Noah after August, they wouldn’t gain immediate cap room, but their future commitments would be far more modest.

Here are a few more rules related to the stretch provision:

• Although 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.
• Non-guaranteed money isn’t subject to the stretch provision, since a team isn’t obligated to pay any non-guaranteed portion of a contract once it waives a player.
• While the new payment schedule for a waived player is non-negotiable, teams have the option of 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.

All these rules came together when the Hawks waived Jamal Crawford in July. Crawford had two years and approximately $28.7MM left on his contract, but only about $17.2MM of that money was guaranteed. So if the Hawks had decided to stretch his cap hits, they’d only have had to account for that guaranteed portion, spreading $17.2MM across five years.

Instead, the team negotiated a buyout with Crawford, who wanted to go to a contender, reducing his total guaranteed salary to about $13.24MM. The Hawks then decided not to stretch Crawford’s cap hits, since they preferred cap flexibility in future seasons rather than in 2017. After the buyout, Atlanta could have stretched Crawford’s cap charges across five years at about $2.65MM annually. Instead, he’ll count against the Hawks’ cap for $10.94MM this year, then $2.3MM next year.

Here’s one final example of how a team can use the stretch provision to create a tiny bit of extra cap room: Back in July, the Celtics waived Demetrius Jackson when he had three years left on his contract, but only $650K in guaranteed money. The final year of Jackson’s deal was a team option, which would normally be declined when a players is waived. In Jackson’s case though, the team option was non-guaranteed.

That meant the Celtics could exercise the option without being on the hook for any extra guaranteed money, and doing so allowed the team to stretch Jackson’s cap charges across seven years instead of five years, since there were now officially three years left on his deal instead of two. So instead of counting against Boston’s cap for the next five years at $130K annually, Jackson will count for about $93K for the next seven years. Gaining that extra $37K of flexibility this season helped the Celtics make use of every last dollar under the cap.

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 2013 by Chuck Myron.

The rules governing the number of players an NBA team can carry on its roster vary depending on the time of year. During the regular season, teams aren’t allowed to carry more than 15 players on their rosters, except in rare instances. Generally, when a club with 15 players on its roster acquires a new player, it must waive someone to clear a spot. In the offseason though, teams are permitted to carry up to 20 players on their rosters.

The NBA’s new Collective Bargaining Agreement has complicated roster counts to some extent by introducing two-way contracts, which allow each team to carry two extra players. Someone on a two-way deal is essentially a G League player, but can spend up to 45 teams with his NBA team, and can’t be poached by a rival NBA club, as we explain in our FAQ.

During the regular season, two-way players don’t count toward the 15-man limit, meaning teams can essentially have 17 players under contract. However, two-way players do count toward the 20-man limit in the offseason. If a club is carrying 20 players on standard NBA contracts in August, it can’t sign a player to a two-way deal without waiving someone.

[RELATED: 2017/18 NBA Roster Counts]

A team ravaged by injuries can sometimes get an extra spot on its regular-season roster via a hardship exception. The NBA can grant this exception when a team has at least four players who have missed three consecutive games and will continue to miss time. Just this week, the Suns were granted an injury exception because Brandon Knight, Alan Williams, Davon Reed, and Devin Booker are all sidelined. Phoenix signed Isaiah Canaan, and now temporarily has a 16-man roster. When one of those players – most likely Booker – is ready to return, the Suns will have to get back to the 15-man limit by waiving Canaan or another player.

A club is also permitted to add a 16th man to its regular season roster if it has a player on the suspended list. A player who is suspended by his team for four or more games may be placed on the suspended list following the third game of his ban, while a player suspended by the NBA for six or more games can be placed on the suspended list following the fifth game of his ban. Teams can’t make use of the suspended list for shorter suspensions.

For instance, Knicks center Joakim Noah received a 20-game suspension from the NBA back in March. He served eight games last season, meaning New York was able to place him on the suspended list to open the 2017/18 campaign. That allowed the Knicks to carry a 16th player for their first 12 games of the season before Noah returned, at which point the team waived Mindaugas Kuzminskas to get back down to 15 players.

The fewest number of players an NBA team can have on its roster during the regular season is 14, not counting two-way players. Still, a team can dip to 13 or even 12 for a limited time, under special circumstances — in those instances, the team must get back up to 14 players within two weeks.

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 2012 and 2013 by Luke Adams.

Fans often wonder if NBA Team X can renegotiate its contract with Player Y, as is common practice in the National Football League. 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, as the Sixers showed last month. Philadelphia renegotiated its contract with Robert Covington as part of a long-term extension agreement. The move gave Covington a huge raise for 2017/18, increasing his current-year salary from just $1,577,230 to $16,698,103.

Only contracts that cover four or more seasons can be renegotiated, but 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 lifted the salary in any season by 5% or more). That’s why Covington’s new deal was agreed to on November 15, as he initially signed with the Sixers on November 15, 2014.

Perhaps most importantly, teams can’t renegotiate any contracts if they’re over the cap, and they can only increase the salary in the current season by the amount of cap room that they have. In Covington’s case, the Sixers were under the cap by $15,120,873, and put that entire amount toward the forward’s renegotiation.

Another set of rules restricts just how much can change in a renegotiation. The raises for any seasons that follow the first renegotiated season in a contract are limited to 8%. That’s also true of salary decreases, though if a renegotiation happens at the same time as an extension, as was the case with Covington, the player’s salary can drop by as much as 40% from the last season of the existing contract to the first season of the extension.

The 76ers took advantage of that rule with Covington, who will see his salary decrease by over 37% in 2018/19 – from $16,698,103 to $10,464,092 – before he begins to receive 8% annual raises in 2019/20. Structuring the deal in that manner will allow Philadelphia to preserve as much cap room as possible during the summer of 2018.

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, and if a player waives a portion of his trade kicker to facilitate a trade, he’s ineligible to renegotiate his contract for the next 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, like the one Covington received, can be a clever way of incentivizing a long-term extension for a player who would otherwise reach free agency. However, an extensive set of rules limits the appeal of that sort of deal, and teams generally require substantial cap room to pull it off, so contract renegotiations are rare.

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 2015 by Chuck Myron.

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.

This season, for instance, two teams have applied for and received a disabled player exception. One was the Celtics, who lost Gordon Hayward, and the other was the Clippers, who had Patrick Beverley ruled out for the season. Hayward is earning over $29.7MM this year, so Boston’s disabled player exception is worth $8.406MM, the value of the non-taxpayer’s mid-level exception. Beverley, on the other hand, has a salary of just over $5.5MM, so the Clippers’ DPE is worth half of that amount (about $2.76MM).

[RELATED: Explaining the Celtics’ disabled player exception]

A team must formally apply for a disabled player exception and it requires the approval of the league. 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 its DPE by March 10 of the current season or it will expire.

Unlike mid-level, bi-annual, or trade exceptions, the disabled player exception can only be used on a single player. 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 $4MM DPE could be used to trade for a player making $4.1MM. A free agent signed using the DPE can be offered a maximum of one year, while a player acquired via trade using the DPE must be in the final year of his contract. A player claimed off waivers must also be in the final year of his contract, and his salary must fit into the team’s DPE.

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 (before the end of the season), the team is allowed to carry both players. However, the team would lose its exception if it trades the injured player, or if the player returns to action before the DPE has expired or been used.

The disabled player exception is rarely exercised, but it does give teams a backup plan of sorts, providing the means to replace seriously injured players.

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.

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

The mid-level exception is the most common way for over-the-cap NBA teams to sign free agents from other clubs for more than the minimum salary. It ensures that each club heads into the offseason with a little spending flexibility, even if that team is deep into luxury tax territory.

Each team is eligible to use a specific type of mid-level exception depending on its proximity to the salary cap. The most lucrative kind of mid-level is available to teams that are over the cap but less than $6MM above the tax threshold. Still, clubs deep into the tax, and even those under the cap, have access to lesser versions of the MLE. Here’s a glance at how all three forms of the exception are structured:

For over-the-cap teams:

• Commonly called either the full mid-level exception, the non-taxpayer’s mid-level exception or simply the mid-level exception.
• Contract can cover up to four seasons.
• First-year salary is worth $8,406,000 in 2017/18.
• Once used, the team cannot surpass the “tax apron” ($6MM above tax line) for the remainder of the season.

For teams above the cap and the tax apron:

• Commonly called the taxpayer’s mid-level exception.
• Contract can cover up to three seasons.
• First-year salary is worth $5,192,000 in 2017/18.

For teams with cap room:

• Commonly called the room exception.
• Contract can cover no more than two seasons.
• First-year salary is worth $4,328,000 in 2017/18.

Each form of the mid-level allows for annual raises of up to 5% of the value of the first season’s salary. Back in June, we broke down the maximum total salaries that players signed using the mid-level exception could earn. Those numbers can be found right here.

While teams can use their entire mid-level exception to sign one player, as the Spurs did this year with Rudy Gay, clubs are also allowed to split the mid-level among multiple players, and that’s a common course of action. For instance, the Grizzlies have used their MLE to complete four separate signings, devoting parts of it to Ben McLemore, Ivan Rabb, Rade Zagorac, and Dillon Brooks.

Players drafted near the top of the second round often sign contracts for part of the mid-level because it allows teams to give them contracts for more years and more money than the minimum salary exception provides. For example, the Grizzlies used their mid-level to sign Ivan Rabb to a three-year contract that starts at $950,000. Without the MLE, Memphis would have been limited to a two-year deal starting at $815,615, and would have only had Early Bird rights on Rabb when his contract ended, rather than full Bird rights.

Some front offices prefer to leave all or part of their mid-level exception unused in the offseason so it’s still available near the end of the regular season — at that point, a contender could use its MLE to try to sign an impact veteran on the buyout market, while a rebuilding club could use it to lock up an intriguing developmental player to a long-term contract.

Unlike the bi-annual exception, the mid-level exception can be used every season. So whether or not a team uses its mid-level in 2017/18, each club will have the opportunity to use some form of the MLE when the new league year begins on July 1, 2018.

Under the old Collective Bargaining Agreement, the mid-level exception increased annually at a modest, fixed rate, which limited its value as the salary cap spiked. However, under the new CBA, the mid-level will increase at the same rate as the salary cap, ensuring that its value relative to cap room remains about the same from year to year. Based on the NBA’s current $101MM salary cap projection, the 2018/19 non-taxpayer MLE would start at $8,567,770.

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 the Basketball Insiders salary pages were used in the creation of this post.

Earlier versions of this post were published in 2012, 2013, 2014, 2015, and 2016 by Luke Adams and Chuck Myron.

There are many NBA players technically on maximum salary contracts, but most of those players aren’t earning identical salaries this season, making the league’s “maximum salary” something of a misnomer. While each NBA player has a maximum salary that he can earn in a given season, that number varies from player to player, with a handful of factors playing a part in determining the exact figure.

The primary factor in determining a player’s maximum salary is his years of service. If a player has been in the NBA for six years or fewer, he can earn up to 25% of the salary cap in the first year of his deal. Players with seven to nine years of experience can earn up to 30%, while veterans with 10 or more years in the NBA are eligible for up to 35% of the cap. In 2017/18, the salary cap is $99,093,000, meaning the maximum salaries are as follows:

The figures above help explain why Otto Porter, who signed a maximum salary offer sheet in July, is earning a salary of $24,773,250 this season. But they don’t explain why his teammate John Wall, who has three more years of NBA experience than Porter and is also on a max contract, is earning just $18,063,850.

The reason Wall’s maximum salary is relatively modest compared to Porter’s is that those league-wide maximum salary figures only apply to the first year of a multiyear contract. When a player signs a maximum contract, he can receive annual raises of up to either 8% or 5%, depending on whether he signs with his previous team or a new team. So by the third or fourth year of his contract, he could be earning significantly more or less than the max for that season.

Because Wall signed his maximum salary contract several years ago and the cap has spiked since then (including a jump of nearly 35% in 2016), his annual raises couldn’t keep up with the cap growth. He’ll start over on a new max deal in 2019/20, at which point his salary will nearly double — he’ll go from $19,169,800 in the last year of his previous max contract to a projected $37,800,000 in the first year of his new pact.

Here are a couple more ways a player’s usual maximum salary can fluctuate:

• A free agent’s maximum salary is always at least 105% of his previous salary. For example, LeBron James is earning $33,285,709 this season, and can become a free agent in July. His new maximum salary is expected to be $35.35MM, based on a $101MM cap projection. But if the cap didn’t increase, James would still be eligible for a new max salary worth 105% of his 2017/18 figure, which would work out to $34,949,994.
• In certain situations, players eligible for new contracts can earn the maximum salary for the level above the one they’d typically fall into. For instance, a player receiving a designated rookie extension can earn up to 30% of the cap instead of 25% if he meets certain criteria. A veteran can become eligible to earn up to 35% of the cap instead of 30% if he meets the same criteria, which are related to MVP, Defensive Player, or All-NBA honors.

A player who signs a maximum salary contract can receive a trade kicker as part of his deal, but he can’t cash in on that bonus for any amount beyond his maximum salary in a given league year. For instance, Gordon Hayward‘s max salary contract with the Celtics features a 15% trade kicker, but if Hayward were traded this season, he wouldn’t be eligible to receive that bonus, since it would exceed his maximum salary.

Similarly, a maximum salary player whose team finishes the season below the minimum salary floor isn’t eligible to receive a share when the team distributes that money to its players, since his max salary for that year can’t be exceeded.

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 2012 and 2014 by Luke Adams and Chuck Myron.

The Cavaliers have committed only about $76MM in guaranteed money to player salaries for 2018/19, but that doesn’t mean the team will begin the offseason with $25MM of room under the projected $101MM salary cap. In fact, the Cavs won’t open the new league year with any cap space at all. Each of Cleveland’s own free agents will be assigned a free agent amount – or “cap hold” – until the player signs a new contract or the Cavs renounce his rights.

The general purpose of a cap hold is to prevent teams from using room under the cap to sign free agents before using Bird rights to re-sign their own free agents. If a team wants to take advantage of its cap space, it can renounce the rights to its free agents, eliminating those cap holds. However, doing so means the team will no longer hold any form of Bird rights for those players — if the team wants to re-sign those free agents, it would have to use its cap room or another kind of cap exception.

The following criteria are used for determining the amount of a free agent’s cap hold:

• First-round pick coming off rookie contract: 300% of previous salary if prior salary was below league average; 250% of previous salary if prior salary was above league average.
• Bird player: 190% of previous salary (if below average) or 150% (if above average).
• Early Bird player: 130% of previous salary.
• Non-Bird player: 120% of previous salary.
• Minimum-salary player: Two-year veteran’s minimum salary, unless the free agent only has one year of experience, in which case it’s the one-year veteran’s minimum.
• Two-way player: One-year veteran’s minimum salary.

A cap hold for a restricted free agent can vary based on his contract status. A restricted free agent’s cap hold is either his free agent amount as determined by the criteria mentioned above, or the amount of his qualifying offer, whichever is greater.

No cap hold can exceed the maximum salary for which a player can sign. For instance, the cap hold for a Bird player with a salary above the league average is generally 150% of his previous salary, as noted above. But for someone like LeBron James, who is earning $33,285,709 this season, 150% of his previous salary would go far beyond the maximum salary threshold. James’ cap hold will be equivalent to the max for a player with 10+ years of NBA experience, which currently projects to be $35.35MM based on a $101MM salary cap.

One unusual case involves players on rookie contracts whose third- or fourth-year options are declined, such as Jahlil Okafor, who had his fourth-year option turned down by the Sixers. Because they declined that option, the 76ers wouldn’t be able to pay Okafor more than what he would have earned in the option year ($6,313,832). That rule is in place so a team can’t circumvent the rookie scale and decline its option in an effort to give the player a higher salary — the rule applies even if the player is traded, so a team acquiring Okafor before this year’s deadline couldn’t get around it. Rather than coming in at 300% of this year’s salary, as would be the case with most players coming off rookie scale contracts, Okafor’s 2018 cap hold will equal the amount of his option: $6,313,832.

If a team holds the rights to fewer than 12 players, cap holds worth the rookie minimum salary are assigned to fill out the roster. So, even if a front office chooses to renounce its rights to all of its free agents and doesn’t have any players under contract, the team wouldn’t be able to fully clear its cap. In 2018/19, incomplete roster charges will be worth $831,311, meaning a team with 12 of those charges would have just under $10MM on its cap, even before adding any players.

Cap holds aren’t removed from a team’s books until the player signs a new contract or has his rights renounced by the club. For example, the Cavaliers are still carrying cap holds on their books for James Jones, Deron Williams, Dahntay Jones, and multiple other players who haven’t signed new contracts since playing for Cleveland. Keeping those cap holds allows teams some degree of cushion to help them remain above the cap and take advantage of the mid-level exception and trade exceptions, among other advantages afforded capped-out teams.

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 the Basketball Insiders salary pages were used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

The most common tool over-the-cap teams use to sign free agents from other teams is the mid-level exception, but that’s not the only exception those clubs have to squeeze an extra player onto the payroll. The bi-annual exception is a way for a team to sign a player who may command more than the minimum salary, but less than the mid-level.

As its name suggests, the bi-annual exception can only be used every other season. Even if a team uses only a portion of the exception, it’s off-limits during the following league year.

The bi-annual exception is available only to a limited number of clubs, even among those that didn’t use the exception during the previous season. Teams that create and use cap space forfeit the BAE, along with all but the smallest version of the mid-level (the room exception). Additionally, teams lose access to the bi-annual exception when they go more than $6MM over the tax threshold, exceeding what’s known as the tax apron. So, only teams over the cap but under the tax apron can use the BAE.

If a team uses all or part of the bi-annual exception, it triggers a hard cap for that season. Clubs that sign a player using the BAE can later go under the cap, but can’t go over the tax apron at any time during the season once the contract is signed.

The bi-annual exception allows for a starting salary of up to $3.29MM in 2017/18. Under the NBA’s previous Collective Bargaining Agreement, the value of each season’s bi-annual exception was determined in advance. However, under the 2017 CBA, the value of the BAE in future league years will be tied to salary cap increases. If the cap goes up by 5%, the value of the bi-annual exception will also increase by 5%.

A player who signs a contract using the bi-annual exception is eligible for a one- or two-year deal, with a raise of 5% for the second season. For players who signed using the BAE in 2017/18, the maximum value of a two-year contract was $6,744,500. Teams also have the option of splitting the bi-annual exception among multiple players, though that happens much less frequently than it does with the mid-level exception, since a split bi-annual deal may not even be worth more than a veteran’s minimum salary.

The bi-annual exception starts to prorate on January 10, decreasing in value by 1/177th each day until the end of the regular season.

During the 2017/18 league year, the Clippers were ineligible to use the bi-annual exception, since they used it to sign Luc Mbah a Moute in 2016/17. Three teams have used the BAE this season, with the Grizzlies signing Tyreke Evans, the Rockets signing Tarik Black, and the Pistons signing Anthony Tolliver. Those three clubs won’t have the exception at their disposal during the 2018/19 league year.

Several teams, including the Spurs, Bucks, Pelicans, and Raptors, remain eligible to use the bi-annual exception this season, but if they don’t take advantage of that opportunity, they’ll retain their eligibility to use it in ’18/19.

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 2012, 2013, 2014, 2015, and 2016 by Luke Adams and Chuck Myron.

The minimum salary exception is something of a last resort for capped-out teams seeking to add players, as well as for players seeking NBA contracts, but it’s the most commonly used cap exception. It allows an over-the-cap team to sign a player to a one- or two-year minimum-salary deal, as its name suggests.

Teams can use the exception multiple times in a given league year, allowing clubs that have spent all of their cap room and other exceptions an avenue to add to their rosters. It also allows for the acquisition of minimum-salary players via trade, and players signed via the minimum salary exception don’t count as incoming salary for salary-matching purposes.

Players are entitled to varying minimum salaries based on how long they’ve been in the NBA. In 2017/18, a player with no prior NBA experience was eligible for a $815,615 minimum salary, while a player with 10 or more years of experience was eligible for $2,328,652. Over the course of the current Collective Bargaining Agreement, the minimum salary will increase each season. For 2018/19, the breakdown is as follows:

Those numbers demonstrate the wide disparity between the minimum salary for rookies and for long-tenured players. A minimum-salary veteran of 10 or more seasons will earn almost three times as much as a rookie making the minimum next season.

The NBA doesn’t want those pricier deals to discourage clubs from signing veterans, however, so the league reimburses teams for a portion of a minimum-salary player’s cost if he has three or more years of experience, as long as the contract is a one-year deal. For instance, when the Cavaliers signed 14-year veteran Dwyane Wade to a one-year pact for 2017/18 using the minimum salary exception, the contract called for a salary of $2,328,652, but the team’s cap hit was just $1,471,382. The league reimburses the Cavs for the remaining $857,270, which is important for a Cleveland team with a massive projected tax bill.

Most salary cap exceptions can only be used once each season. For example, when a team uses its full mid-level exception to sign one or more players, the club can no longer use that exception until the following season. Unlike the mid-level and other cap exceptions though, the minimum salary exception can be used any number of times in a single season. The Cavs, for instance, used the minimum salary exception to sign Jeff Green, Derrick Rose, and Jose Calderon in addition to Wade.

While many exceptions begin to prorate on January 10, the minimum salary exception prorates from the first day of the regular season. Under the new CBA, the season is 177 days long, so if a player signs after five days have passed, he would only be paid for 172 days. That’s what happened this season with Jameer Nelson, who joined the Pelicans via the minimum salary exception on October 22, the sixth day of the regular season, making his salary and cap hit 172/177 of their usual amounts. Instead of a $1,471,382 cap charge for New Orleans, Nelson’s cap charge is $1,429,818. Meanwhile, his salary is $2,262,871 instead of $2,328,652.

Finally, the vast majority of 10-day contracts are for the minimum salary, and often the minimum salary exception is the only way for clubs to accommodate any 10-day deals.

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 the Basketball Insiders salary pages were used in the creation of this post.

Earlier versions of this post were published in 2012, 2013, 2014, and 2015 by Luke Adams and Chuck Myron.