Hoops Rumors Glossary

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.

Players and teams have to meet certain criteria to earn Bird rights and Early Bird rights, but Non-Bird rights are something of a given. They apply to a player who has spent a single season or less with his team, as long as he finishes the season on an NBA roster. Teams can also claim Non-Bird rights on Early Bird free agents if they renounce them. The primary utility in doing so would be so that the team could sign the free agent to a one-year contract, a move that’s not permitted via Early Bird rights.

Teams are eligible to sign their own free agents using the Non-Bird exception for a salary starting at 120% of the player’s previous salary, 120% of the minimum salary, or the amount of a qualifying offer (if the player is a restricted free agent), whichever is greatest. Contracts can be for up to four years, with 5% annual raises.

The cap hold for a Non-Bird player is 120% of his previous salary, unless the previous salary was the minimum. In that case, the cap hold is equivalent to the two-year veteran’s minimum salary, which in 2018/19 will be $1,499,698.

The salary limitations that apply to Non-Bird rights are more severe than those pertaining to Bird rights or Early Bird rights, so in many cases, the Non-Bird exception isn’t enough to retain a well-regarded free agent. For instance, the Heat had Non-Bird rights for James Johnson and Dion Waiters this past summer, since those players had signed one-year deals with Miami in 2016.

The Heat technically would have been able to use Non-Bird rights to go over the cap to sign Johnson and Waiters, but because their 2016/17 salaries were only about $4MM and $3MM, respectively, the club’s ability to offer raises using the Non-Bird exception was extremely limited — 120% of Johnson’s previous salary was just $4.8MM, which wouldn’t have been a competitive offer. In order to get up to the $14MM and $11MM respective starting salaries that Johnson and Waiters received on their new contracts, Miami had to use cap space.

Holding Non-Bird rights on their top free agents didn’t help the Heat, but there are cases in which the exception proves useful. Nene, for example, signed a three-year, $10.95MM deal with the Rockets this offseason using his Non-Bird rights. Nene had initially signed a one-year, $2,898,000 contract with Houston in 2016, so the Non-Bird exception allowed the team to give him 120% of that amount ($3,477,600) in the first year of his new contract, without having to dip into the mid-level or bi-annual 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. 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, and 2015 by Luke Adams and Chuck Myron.

Bird rights offer teams the chance to sign their own free agents without regard to the salary cap, but they don’t apply to every player. Other salary cap exceptions are available for teams to keep players who don’t qualify for Bird rights. One such exception is the Early Bird, which applies to players formally known as Early Qualifying Veteran Free Agents.

The Bird exception is for players who have spent three seasons with one club without changing teams as a free agent, but Early Bird rights are earned after just two such seasons. Virtually all of the same rules that apply to Bird rights apply to Early Bird rights, with the requirements condensed to two years rather than three. Players still see their Bird clocks restart by changing teams via free agency, being claimed in an expansion draft, or having their rights renounced.

The crucial difference between Bird rights and Early Bird rights involves the limitations on contract offers. Bird players can receive maximum-salary deals for up to five years, while the most a team can offer an Early Bird free agent without using cap space is 175% of his previous salary or 105% of the league-average salary in the previous season, whichever is greater. These offers are also capped at four years rather than five, and the new contracts must run for at least two years (with no second-year options).

Kevin Durant (Warriors), Patrick McCaw (Warriors), and Seth Curry (Mavericks) are among the notable free agents who will have Early Bird rights at the end of the 2017/18 season. In Durant’s case, the Warriors would be able to offer 175% of his current $25MM salary using Early Bird rights, though the team’s offer can’t exceed the maximum salary. Durant’s max salary projects to be just over $35MM, comfortably within the Early Bird limit. However, he would only be able to sign a four-year contract rather than a five-year deal, since he won’t have full Bird rights.

In some instances, teams can benefit from having Early Bird rights instead of full Bird rights if they’re trying to preserve cap space. The cap hold for an Early Bird player is 130% of his previous salary, significantly less than most Bird players, whose cap holds range from 150-300% of their previous salaries.

That helps the Mavericks, since the cap hold for Curry, who is earning just over $3MM this season, will only be about $4MM. If the Mavs reach an agreement to re-sign Curry next July, they could hold off on making it official, keeping his modest cap holds on the books until they use the rest of their cap room. Then they could go over the cap to finalize Curry’s deal using the Early Bird exception.

As for McCaw, he’ll be subject to a special wrinkle involving Early Bird rights, called the Gilbert Arenas Provision, which applies to players who’ve only been in the league for one or two years. We cover the Gilbert Arenas Provision in a separate glossary entry (that glossary entry will soon be updated to reflect changes made in the 2017 CBA, but most of the basic details remain the same).

Finally, one more distinction between Bird rights and Early Bird rights applies to waivers. Players who are claimed off waivers retain their Early Bird rights, just as they would if they were traded. Those who had Bird rights instead see those reduced to Early Bird rights if they’re claimed off waivers. This rule stems from a 2012 settlement between the league and the union in which J.J. Hickson was given a special exception and retained his full Bird rights for the summer of 2012 even though he had been claimed off waivers that March.

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 Bird exception, named after Larry Bird, is a rule included in the NBA’s Collective Bargaining Agreement that allows teams to go over the salary cap to re-sign their own players, as most NBA fans know. A player who qualifies for the Bird exception, formally referred to as a Qualifying Veteran Free Agent, is said to have “Bird rights.”

The most basic way for a player to earn Bird rights is to play for the same team for at least three seasons, either on a multiyear deal or separate one-year contracts. Still, there are other criteria. A player retains his Bird rights in the following scenarios:

1. He changes teams via trade. For instance, the Pelicans hold DeMarcus Cousins‘ Bird rights as he approaches 2018 free agency, despite just acquiring him in February. His Bird clock didn’t reset when he was traded from Sacramento to New Orleans.
2. He finishes a third season with a team after having only signed for a partial season with the club in the first year. Sean Kilpatrick signed his current contract with the Nets in March of 2016. It’s only a two-year deal, so Kilpatrick won’t qualify for full Bird rights this season, but that 2015/16 season counts as the first year on his Bird clock, even though he was only under contract with the club for about a month.
3. He signed for a full season in year one or two but the team waived him, he cleared waivers, and didn’t sign with another team before re-signing with the club and remaining under contract through a third season. For instance, the Sixers waived Gerald Henderson in June after he spent a single season in Philadelphia. If the club were to re-sign Henderson at some point this season, his Bird clock would move to a second year, rather than resetting.

A player sees the clock on his Bird rights reset to zero in the following scenarios:

1. He changes teams via free agency.
2. He is waived and is not claimed on waivers (except as in scenario No. 3 above).
3. His rights are renounced by his team. However, his Bird rights are restored if he re-signs with that team without having signed with another NBA team. Shabazz Muhammad (Timberwolves) and Udonis Haslem (Heat) were among the free agents who were renounced by their respective teams this past offseason before re-signing with those clubs. They’ve retained their Bird rights.
4. He is selected in an expansion draft.

If a player is waived and claimed off waivers, and he would have been in line for Bird rights at the end of the season, he would retain only Early Bird rights. Meanwhile, a player with Bird rights who re-signs with his previous team on a one-year contract (or a one-year deal with a second-year option) would lose his Bird rights if he’s traded. As such, he receives the ability to veto trades so he can avoid that scenario.

When a player earns Bird rights, he’s eligible to re-sign with his team on a maximum-salary contract for up to five years with 8% annual raises when he becomes a free agent, regardless of how much cap room the team has. The maximum salary will vary for each player depending on how long he has been in the league, but regardless of the amount, a team can exceed the salary cap to complete the deal.

A team with a Bird free agent is assigned a “free agent amount” or cap hold worth either 190% of his previous salary (for a player with a below-average salary) or 150% of his previous salary (for an above-average salary), up to the maximum salary amount. For players coming off rookie scale contracts, the amounts of those cap holds are 300% and 250%, respectively.

The Bulls, for instance, will have a cap hold worth about $9.6MM for Zach LaVine on their 2018/19 books — 300% of his $3.2MM salary for 2017/18. Chicago could renounce LaVine and clear an extra $9.6MM in cap space, but the Bulls would lose his Bird rights if they did that, which would force them to use either cap room or a different cap exception to re-sign him.

Instead, the Bulls will likely use LaVine’s Bird rights and his cap hold strategically, perhaps using their cap space on other free agents and/or trades while LaVine’s $9.6MM cap hold remains on the books. The Bulls could then circle back and use Bird rights to sign LaVine to a contract with a starting salary much higher than $9.6MM.

Ultimately, the Bird exception was designed to allow teams to keep their best players. The CBA ensures that teams are always able to re-sign them to contracts up to the maximum salary, assuming the player is interested in returning and his team is willing to go over 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.

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

The NBA’s Collective Bargaining Agreement didn’t undergo a significant overhaul during the latest round of negotiations between the league and the players’ union, but the NBA’s new two-way contract represents one major change. The two-way contract will allow clubs to retain the NBA rights for a couple extra players, bumping each team’s maximum roster size from 15 to 17, with those two new spots reserved for players on two-way contracts.

Up until now, teams have had the ability to assign certain players on their NBA rosters to the G League for assignments, but haven’t retained any NBA control over the rest of the players on their NBADL affiliates. Two-way contracts will change that, since they’re essentially G League contracts that allow a player’s NBA team to call him up for NBA assignments and prevent him from being poached by a rival NBA club.

Salary cap guru Larry Coon recently published a primer for two-way contracts over at ESPN.com, so with the help of his breakdown and the new CBA, we’ll present the key details on how these deals work. Let’s dive in…

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