Hoops Rumors Glossary

Although some NBA teams can become hard-capped during a given league year if they use certain exceptions or make certain transactions, the NBA doesn’t have a set hard cap for all teams. In addition to its soft cap though, the league does have a luxury tax threshold, which serves to discourage excessive spending. When a team’s total salary ends up over that tax line at season’s end, the NBA charges a tax for every extra dollar the club spends.

The formula to determine the luxury tax line is a complicated one, related to the NBA’s projected basketball related income (BRI) and projected benefits. Generally though, it comes in around 20-22% above the salary cap line. For instance, in 2017/18, the league’s salary cap was set at $99.093MM, while the luxury tax threshold is at $119.266MM. So any team whose total ’17/18 salary exceeds $119.266MM 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 if teams go further beyond the tax line. Here’s what those penalties look like:

• $0-5MM above tax line: $1.50 per dollar (up to $7.5MM).
• $5-10MM above tax line: $1.75 per dollar (up to $8.75MM).
• $10-15MM above tax line: $2.50 per dollar (up to $12.5MM).
• $15-20MM above tax line: $3.25 per dollar (up to $16.25MM).
• For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar (ie. $3.75 for $20-25MM, $4.25 for $25-30MM, etc.).

For instance, if a team is over the tax by $14MM, its tax bill would be $26.25MM — $7.5MM for the first $5MM over the tax, $8.75MM for the $5-10MM bracket, then $10MM for the final $10-14MM increment.

While those are the rates that apply to most taxpayers, including the Warriors, Thunder, and Wizards this season, a team can become subject to a “repeater” penalty if it paid the tax in three of the previous four seasons. This scenario currently applies to Cleveland — the Cavaliers were a taxpaying club in 2015, 2016, and 2017, which means they’ll be a repeat offender this season. Here are the penalties that apply to repeat taxpayers:

• $0-5MM above tax line: $2.50 per dollar (up to $12.5MM).
• $5-10MM above tax line: $2.75 per dollar (up to $13.75MM).
• $10-15MM above tax line: $3.50 per dollar (up to $17.5MM).
• $15-20MM above tax line: $4.25 per dollar (up to $21.25MM).
• For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar (ie. $4.75 for $20-25MM, $5.25 for $25-30MM, etc.).

If the team described above, over the tax by $14MM, was a repeat taxpayer, its bill would increase to $40.25MM.

Generally speaking, luxury tax penalties are calculated by determining a team’s total cap hits at the end of the regular season. So 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 Trail Blazers did just that when they sent Noah Vonleh and his $3.5MM salary to Chicago in a deadline deal earlier this month, slipping below the luxury tax threshold.

However, 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.
• If a player with 0-1 years of NBA experience signed a minimum-salary free agent contract, the minimum-salary cap charge for a two-year veteran is used in place of that player’s cap charge.
• If a player with a trade bonus is acquired after the final regular season game, that trade bonus is added to team salary.

So let’s say that five teams finish the season owing a total of $50MM 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 that scenario, the 25 non-taxpaying teams would receive $1MM 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.

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

Gilbert Arenas hasn’t played in the NBA since 2012, but his legacy lives on in the NBA’s Collective Bargaining Agreement. The NBA introduced the Gilbert Arenas provision in the 2005 CBA as a way to help teams retain their restricted free agents who aren’t coming off standard rookie scale contracts.

While Arenas isn’t specifically named in the CBA, the rule colloquially known as the Arenas provision stems from his own restricted free agency in 2003. At the time, the Warriors only had Early Bird rights on Arenas, who signed an offer sheet with the Wizards starting at about $8.5MM. Because Golden State didn’t have $8.5MM in cap room and could only offer Arenas a first-year salary of about $4.9MM using the Early Bird exception, the Warriors were unable to match the offer sheet and lost Arenas to Washington.

The Arenas provision limits the first-year salary that rival suitors can offer restricted free agents who have only been in the league for one or two years. The starting salary for an offer sheet can’t exceed the amount of the non-taxpayer’s mid-level exception, which allows the player’s original team to use either the mid-level exception or the Early Bird exception to match it. Otherwise, a team without the necessary cap space would be powerless to keep its player, like the Warriors were with Arenas.

An offer sheet from another team can still have an average annual salary that exceeds the non-taxpayer’s mid-level, however. The annual raises are limited to 5% between years one and two, and 4.5% between years three and four, but a team can include a significant raise between the second and third years of the offer.

As long as the first two years of a team’s offer sheet are for the highest salary possible, the offer is fully guaranteed, and there are no incentives included, the third-year salary of the offer sheet can be worth up to what the player’s third-year maximum salary would have been if not for the Arenas restrictions.

Based on a projected $101MM cap for 2018/19, here’s the maximum offer sheet a first- or second-year RFA could receive this coming summer:

In order to make the sort of offer outlined above, a team must have enough cap room to accommodate the average annual value of the contract. So a team with $19MM in cap space could extend this offer sheet to a first- or second-year RFA. But a team with only $15MM in cap space would have to reduce the third- and fourth-year salaries in its offer sheet to get the overall average salary of the offer down to $15MM per year.

The application of the Arenas provision is infrequent, since first- and second-year players who reach free agency rarely warrant such lucrative contract offers. First-round picks sign four-year rookie deals when they enter the NBA, so the Arenas provision generally applies to second-round picks or undrafted free agents whose first NBA contracts were only for one or two years.

One notable recent example of the Arenas provision at work was Tyler Johnson‘s restricted free agency in 2016. The Heat had Early Bird rights on Johnson, who had only been in the NBA for two seasons. The Nets attempted to pry him away with an aggressive offer sheet that featured salaries of $5,628,000, $5,881,260, $19,245,370, and $19,245,370. It wasn’t the maximum that Brooklyn could have offered Johnson, but the massive third-year raise was a tough pill for Miami to swallow.

Overall, the deal was worth $50MM for four years. If the Heat had declined to match it, the Nets would have flattened out those annual cap hits to $12.5MM per year, the average annual value of the deal. However, due to the Arenas provision, Miami was able to match Brooklyn’s offer sheet with the Early Bird exception, even though the Heat wouldn’t have been able to offer Johnson a four-year, $50MM contract using the Early Bird exception outright.

When a team matches an Arenas-provision offer sheet, it also has the option of flattening those cap charges. However, that option is only available if the team has the cap room necessary to accommodate the average annual value of the deal. Otherwise, the club has to keep the unbalanced cap charges on its books. That’s why Johnson’s cap hit for the Heat will jump from $5,881,260 this season to an eye-popping $19,245,370 in 2018/19.

This coming summer, there aren’t many restricted free agents who will be candidates for an Arenas-provision offer sheet. Top RFAs like Aaron Gordon and Clint Capela have four years of experience, so the rule won’t apply to them. Patrick McCaw looked like a potential Arenas-provision candidate coming into the season, but he has struggled and his value has declined. The best candidate for an Arenas-provision offer sheet may be Raptors guard Fred VanVleet, who has played a key role for Toronto’s excellent second unit. Still, I’d be pretty surprised if VanVleet gets an offer worth more than the standard non-taxpayer’s MLE.

Finally, just because a club is given the opportunity to use the Arenas provision to keep its restricted free agent doesn’t mean it will necessarily have the means. Here are a few situations in which the Arenas provision wouldn’t help a team keep its restricted free agent:

• If the team only had the taxpayer mid-level exception or room exception available, it would be unable to match an offer sheet for a Non-Bird free agent if the starting salary exceeded the taxpayer mid-level or room exception amount.
• A team would be unable to match an offer sheet for a Non-Bird free agent if it used its mid-level exception on another player, including another one of its own Non-Bird free agents. A team could use Early Bird rights to match if those rights are available, however.
• If the player is a Non-Bird or Early Bird free agent with three years of NBA experience, the Arenas provision would not apply — only players with one or two years in the league are eligible.

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 2015 by Luke Adams and Chuck Myron.

Once the NBA trade deadline passes, the league’s buyout season begins. And as a result of the decision to move this season’s trade deadline up by two weeks, the 2018 buyout period will last longer than usual. So what exactly are buyouts, and how do they work? Today’s Hoops Rumors glossary entry will examine those questions. Let’s dive in…

What is a buyout?

While the term “buyout” is often applied colloquially when any veteran is waived after the trade deadline, it applies specifically to a player who gives up a portion of his salary to accommodate his release. Rather than waiving a player outright, a team will negotiate the terms of the player’s release. Then, once the player clears waivers, his guaranteed salary with his previous team will be reduced or eliminated altogether.

So far this season, we’ve seen players like Greg Monroe, Joe Johnson, Brandan Wright, and Marco Belinelli agree to buyouts. Those players reportedly surrendered between $300K and $1.5MM in salary to their respective teams in order to reach free agency and sign with a new team closer to contention.

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While relying on ESPN.com’s Trade Machine may be the simplest way to verify whether or not a trade will work under NBA rules, it’s worth examining the primary tool in the league’s Collective Bargaining Agreement that determines a trade’s viability — the traded player exception.

Teams with the cap room necessary to make a trade work don’t need to abide by the traded player exception rules. However, if a team makes a deal that will leave its total salary more than $100K above the salary cap, the club can use a traded player exception to ensure the trade is legal under CBA guidelines.

There are two different types of traded player exceptions used in NBA deals. One applies to simultaneous trades, while the other applies to non-simultaneous deals. In a simultaneous trade, a team can send out one or more players and can acquire more salary than it gives up. In a non-simultaneous trade, only a single player can be dealt, and the team has a year to take back the equivalent of that player’s salary, plus $100K.

Let’s look into each scenario in greater detail….

Simultaneous:

In a simultaneous trade, different rules applies to taxpaying and non-taxpaying clubs. A non-taxpaying team can trade one or more players and take back….

• 175% of the outgoing salary (plus $100K), for any amount up to $6,533,333.
• The outgoing salary plus $5MM, for any amount between $6,533,333 and $19,600,000.
• 125% of the outgoing salary (plus $100K), for any amount above $19,600,000.

Here’s a recent example of these rules in effect:

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While a rule like the Gilbert Arenas provision can flatter its namesake, the late Ted Stepien, former owner of the Cavaliers, may have preferred not to go down in history as the reference point for the Ted Stepien rule. Stepien owned the Cavs in the early 1980s, and made a number of trades that left the franchise without first-round picks for several years. As a result, the NBA eventually instituted a rule that prohibited teams from trading out of the first round for consecutive future seasons.

Because the Stepien rule applies only to future draft picks, teams are still permitted to trade their first-rounders every year if they so choose, but they can’t trade out of the first round for back-to-back future seasons. For instance, since the Rockets have traded their 2018 first-round pick to Atlanta, they aren’t allowed to trade their 2019 first-rounder. Following the 2018 draft though, the Rockets will regain the right to trade that 2019 first-round pick, since their ’18 first-rounder will no longer be considered a future pick.

The Stepien rule does allow a team to trade consecutive future first-round picks if the team has acquired a first-rounder from another team for either of those years. So if Houston were to trade for a new 2018 first-rounder, that would give the Rockets the flexibility to move their 2019 pick without having to wait until after the 2018 draft.

Teams are permitted to include protection on draft picks. This can create complications related to the Stepien rule, which prevents teams from trading a first-round pick if there’s any chance at all that it will leave a team without a first-rounder for two straight years. For example, the Raptors have traded a lottery-protected 2018 first-round pick to Brooklyn. That traded 2018 pick is protected through 2023, and as long as there’s still a chance it won’t convey immediately, the Raptors are prevented from unconditionally trading any of their next few first-round picks — their 2020 first-rounder is trade-eligible, but only conditionally.

[RELATED: Trade restrictions on future draft picks by team]

Teams will have to consider the Stepien rule over the next few weeks as they mull trading draft picks in deals for immediate help. Miami, for instance, is one of the teams most significantly impacted by the Stepien rule at the moment. As part of their Goran Dragic deal with the Suns, the Heat will send their 2018 and 2021 first-round picks to Phoenix, so the Stepien rule currently prevents them from also trading their first-rounders in 2019, 2020, or 2022 — moving any of those selections would leave the team without first-round picks in consecutive future seasons.

Here are a few more rules related to trading draft picks:

• For salary-matching purposes, a traded draft pick counts as $0 until the player signs a contract.
• The “Seven Year Rule” prohibits teams from trading draft picks more than seven years in advance. For instance, during the 2017/18 season, a 2024 draft pick could be traded, but a 2025 pick could not be dealt.
• A team can add protection to a pick it has acquired as long as there wasn’t already protection on the pick. For example, when the Celtics flipped the Nets’ 2018 first-round pick to the Cavaliers, Boston could have tried to include top-three protection on the pick.

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 2012 by Luke Adams.

This Friday marks the renewal of the annual tradition of the ultimate on-the-job tryout in professional sports. The 10-day contract has been the foot in the door for several players who’ve gone on to lengthy, successful NBA careers, like Anthony Mason, Bruce Bowen, Raja Bell, Kurt Rambis, Howard Eisley, and several others. C.J. Watson saw his first NBA action on a pair of 10-day contracts with the Warriors in 2008, and blossomed into a sought-after backup point guard. He signed a three-year, $15MM deal with the Magic in 2015.

Ten-day deals also help veterans make comebacks. Chris Andersen languished in free agency for six months after the Nuggets used the amnesty clause to get rid of him, but two 10-day contracts with the Heat in 2013 kick-started a revival for the Birdman. He wound up signing for the rest of the season that year and played a key role in Miami’s championship run. Andersen reprised that role on a guaranteed minimum-salary contract the next season, and that led the Heat to re-sign him in 2014 to a two-year, $10.375MM deal.

More recently, players like David Nwaba, Okaro White, and Yogi Ferrell jump-started their respective NBA careers last season with 10-day contracts, parlaying those deals into multiyear pacts. While those guys remain on NBA rosters, the 10-day is often a fleeting glimpse at NBA life for players on pro basketball’s fringe — the majority of last year’s signees aren’t currently in the league.

Beginning on Friday, January 5, a team can sign a player to as many as two 10-day contracts before committing to him for the rest of the season or, as in many cases, turning him away. A player can’t sign three 10-day contracts with the same team, but after signing two 10-day deals with one club, he’s allowed to sign another with a separate club.

Ten-day deals are almost always for a prorated portion of the minimum salary, though they can be worth more. A minimum-salary 10-day contract for a rookie this season is worth $46,080, or 10/177ths of the full-season rookie minimum salary. A one-year veteran would earn $74,159. A minimum-salary 10-day deal for any veteran of two or more seasons would represent a cost of $83,129 to the team.

Veterans with more than two years of NBA experience would earn more than $83,129 on a 10-day contract, but the league would pay the extra freight. However, teams gain no financial advantage if they eschew 10-day contracts with more experienced players to sign rookies or one-year veterans to 10-day deals in an effort to avoid the tax, as those deals count the same as the ones for two-year veterans when the league calculates a team’s salary for tax purposes.

Teams would have to pay slightly more if they sign a player to a 10-day contract and they have fewer than three games on their schedule over that 10-day period. In those cases, the length of the 10-day contract is extended so that it covers three games for the team. It’s rare that any team would have such a light schedule, since most play at least three games a week, but the rule sometimes comes into play around the All-Star break.

If there are fewer than 10 days left in the NBA regular season, a team can’t sign a player to a 10-day contract.

A team may terminate a 10-day contract before it runs to term if it wants to use the roster spot to accommodate a waiver claim, signing, or trade acquisition. Players whose 10-day contracts end early don’t go on waivers, so they become free agents immediately. Still, those players receive their full 10-day salaries — the contracts are fully guaranteed for the 10 days.

While clubs close to the luxury tax threshold may be wary of bringing players aboard via 10-day contracts, other teams will make liberal use of those deals, in part because they’re relatively inexpensive. A year ago, the rebuilding Mavericks and the short-handed Pelicans each signed six different players to at least one 10-day deal.

Usually, teams only have one player on a 10-day contract at a time, though they’re allowed to carry as many 10-day contracts as they have players on the inactive list. If a team has 13 players on the active list, it can carry one more 10-day contract than the number of inactive players it has, meaning that if a team has a full 15-man roster, as many as three of those players may be on 10-day deals.

Young players recently released by NBA teams, like Kay Felder and Gary Payton II, figure to draw consideration for 10-day contracts, as should notable veteran free agents, such as Jordan Crawford and Derrick Williams. G League standouts like Trey Burke, Xavier Munford, and Amile Jefferson could all find paths to the NBA via 10-day contracts. Other NBA hopefuls from the G League will make their cases to scouts at a four-day showcase which will take place later this month in Mississauga, Ontario.

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, 2014, 2015, 2016, and 2017 by Luke Adams and Chuck Myron.

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.