Hoops Rumors Glossary

Hoops Rumors Glossary: Cap Holds

The Cavaliers have committed only about $75MM in guaranteed money to player salaries for 2016/17, but that doesn’t necessarily mean the team will open $17MM of room against the projected $92MM salary cap. In fact, it’s highly unlikely that the Cavs will have 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 its 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: 250% of previous salary if prior salary was below league average; 200% 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.

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. Cavs combo guard Matthew Dellavedova is eligible for restricted free agency for a second straight offseason this summer. He signed for the value of his qualifying offer last year, and his qualifying offer amount would be $1,434,095 this year. Still, his cap hold is larger, at $2,179,824, because the Cavs will have his Bird rights and his salary of $1,147,276 is well beneath the league average. If Cleveland wants to keep his Bird rights, it’ll have to carry a $2,179,824 cap hold this summer until it either re-signs Dellavedova or he signs elsewhere and the Cavs elect not to match.

The Cavs only have Early Bird rights on LeBron James, but assuming he opts out, as expected, he’ll have a cap hold of as much as $29,861,650, or 130% of this season’s salary. A chance exists that his hold will be slightly lower, because no cap hold can exceed the maximum salary for which a player can sign. So, if the maximum salary for a player with 10 or more years of experience, like James, comes in below that figure, his cap hold will simply be whatever the max is. The projected max for James, based on a $92MM cap, is slightly above $30MM. So, if that happens, the Cavs would get a “discount” of sorts on James’ cap hold, since it would only be $29,861,650, and James is roundly expected to sign for the max. Either way, it won’t much matter for Cleveland, since whatever James’ cap hold is, it’ll wipe out that $17MM worth of would-be cap space, anyway.

An unusual case exists for the Grizzlies and P.J. Hairston, whom they acquired via trade from the Hornets this season. Memphis has his Bird rights, but the Hornets declined the fourth year team option on his rookie scale contract before the season, so the Grizzlies can’t pay him more than what he would have made in the option year, which is $1,253,160. 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, and it applies even if the player is traded after the option is declined, as in the case of Hairston. So, rather than coming in at 250% of this year’s salary, as would be the case with most players coming off rookie scale contracts, Hairston’s cap hold will be the option amount: $1,253,160.

If a team holds the rights to fewer than 12 players, cap holds worth the rookie minimum salary ($543,471) are assigned to fill out the roster. So, if a front office chose to renounce its rights to all of its free agents and didn’t have anyone under contract, the team would have 12 holds worth $543,471 on the cap, reducing its total cap space by about $6.5MM.

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 instance, since Jerry Stackhouse never signed elsewhere after his contract with the Nets expired at the end of the 2012/13 season, and the Nets have never renounced him, Brooklyn still has a minimum salary hold for Stackhouse on its cap. It’s been so many years since the Nets have gone under the cap that there’s been no reason for them to renounce their rights to players who, like Stackhouse, are no longer in the NBA. 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. Still, Brooklyn seems likely to at last open cap room this summer, so the Nets will likely renounce the Stackhouse cap hold in July, long after he retired.

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.

Hoops Rumors Glossary: Hardship Provision

The ability for NBA teams to surpass the 15-man regular season roster limit has come into focus this week, with the Pelicans and Grizzlies applying for hardship provisions. Both teams are dealing with multiple injuries that have made it difficult for them to field competitive lineups, but the league provides relief, in certain circumstances.

The term “hardship” used to be a common part of the league’s vernacular in reference to players who entered the draft before exhausting their college eligibility, but it has a completely different meaning in regard to the size of NBA rosters. The NBA’s Constitution and By-Laws, in their definition of hardship, give the board of governors the power to approve special provisions counter to the NBA’s roster limits with a majority vote. It’s rare for the board of governors to get involved, but the rule also spells out circumstances in which injury and illness would allow teams to receive extra roster spots without board of governors approval, instead leaving the matter at the commissioner’s discretion. This is the more well-traveled route.

In these cases, a team must have three players who have missed at least three straight games because of injury or illness, plus a fourth player who is also unable to perform. The team can apply for the hardship, and it’s up to the commissioner’s office to determine, using an independent doctor if it so chooses, that all four of those players will continue to be unable to play for at least two weeks. If so, the commissioner can grant the hardship and the team can acquire an extra player.

The rules are vague about the mechanics of the hardship provision, but reports about the several instances in which teams have expanded their rosters beyond 15 players in the past couple of seasons have shed light on its parameters. Each provision lasts 10 days, regardless of whether it comes before or after January 5th, the first day each season that teams can sign players to 10-day contracts. Players who go into extra roster spots don’t necessarily have to be on 10-day contracts, and they may stick around past the expiration of the hardship as long as the team offloads someone else. That was the case when the Thunder waived Sebastian Telfair last season instead of hardship signee Ish Smith to reduce their roster to 15 players. Teams are also allowed to reapply for provisions as they expire, meaning they can carry a roster of more than 15 players for longer than 10 days if the league allows it. The NBA doesn’t limit the number of provisions a team may apply for at any one time, allowing teams to have as many players as they need, at the league’s discretion, though it’s rare for any roster to go beyond 16.

A sharply limited amount of time exists for teams to take action when the league grants a hardship. They have two days to acquire an extra player, giving front offices motivation to have deals lined up in advance. Still, complications sometimes arise. The Pacers scuttled their deal with Gal Mekel last season when a visa issue would have kept him from signing until a day after the Pacers were ready to put pen to paper. That extra day would have pushed the Pacers past the two-day window, so they signed A.J. Price instead.

The hardship isn’t the only mechanism by which a team can acquire an extra player. Lengthy suspensions also give teams the ability to do so, and that happened twice last season, when the Grizzlies signed Kalin Lucas and Hassan Whiteside to move to 16 men while Nick Calathes was serving a league suspension, and when the Sixers traded for Jared Cunningham, who was briefly their 16th man while Andrei Kirilenko was on a team suspension. The rules are slightly different for a league suspension, which requires that the player have served at least five games of the suspension before a team can add an extra player, and a team suspension, in which case the player has to have missed only three games. The ability to carry an extra man goes away once the suspended player returns.

The NBA takes a careful approach to granting teams permission to expand their rosters. Not every team with four or more injuries receives a hardship provision, since making an accurate prognosis about whether an injured player might return to action within a two-week window is a tricky enterprise. The Pelicans received a hardship and used it to sign Orlando Johnson this week, but it’s unclear whether the Grizzlies got one, given the confusion over the time at which they signed Briante Weber. Thursday’s release of Mario Chalmers suggests the league didn’t give the OK, or at least hasn’t yet, because his season-ending torn Achilles would otherwise count toward the number of injuries necessary for the provision. The league doesn’t “hand those things out like candy,” as the late Flip Saunders observed.

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 (or in this case, the NBA’s Constitution and By-Laws). Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Reports from Darnell Mayberry of The Oklahoman, Mike Bresnahan of the Los Angeles Times and Marc Stein of ESPN.com provided background information for this post.  An earlier version appeared on November 28th, 2014.

2016 NBA Trade Deadline Primer

The trade deadline is at 2pm Central on Thursday. Hoops Rumors has several resources to help you prepare for it and to follow along once players start moving. We’ll sum them up:

Hoops Rumors Glossary: 10-Day Contracts

Tuesday 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. More recently, C.J. Watson saw his first NBA action on a pair of 10-day contracts with the Warriors in 2008, and he’s since blossomed into a sought-after backup point guard. He signed a three-year, $15MM deal with the Magic this past offseason.

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 a pair of 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.

Andersen’s Heat teammate, former first-round pick Gerald Green, had been out of the league for three years when he made a splash during his pair of 10-day deals with the Nets in 2011/12. That earned him a contract for the rest of the season, and he parlayed 12.9 points and 48.1% shooting in 25.2 minutes per game for the Nets into a three-year, $10.5MM contract with the Pacers the following summer. He took a discount to sign with the Heat for one year at the minimum salary this past offseason, but his revamped defensive game and sizable role in the Heat’s rotation suggest that he’ll command much more in free agency this coming summer.

Still, the 10-day is usually a fleeting glimpse at NBA life for players on pro basketball’s fringe. Only a small fraction of last year’s 10-day signees remain in the league, as I noted last month. Hunter Atkins of The New York Times profiled the player whom Green replaced on the Nets roster, chronicling what turned out to be only a brief passage through the league for 10-day signee Andre EmmettLee Jenkins of Sports Illustrated took a similarly revealing look at the life of Zabian Dowdell as he tried to make the most of a 10-day with the Suns in 2010/11. Dowdell hasn’t played in the NBA since that season.

Teams 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. Ten-day deals are almost always for a prorated portion of the minimum salary, though they can be for more. A minimum-salary 10-day contract for a rookie this season is worth $30,888, or 10/170ths of the full-season rookie minimum salary. A one-year veteran would make $49,709. A minimum-salary 10-day deal with any veteran of two or more seasons would represent a cost of $55,722 to the team. Veterans of greater than two seasons would see more than that, 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 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 came into play in February 2015 with the Pistons and John Lucas III. Detroit signed him to a 10-day contract after its final game prior to the All-Star break, which the NBA lengthened last season. The Pistons played only three games in the 13 days that followed the signing, so Lucas was essentially on a 13-day deal. He received 13 days’ worth of prorated minimum salary, meaning the pact was worth more than a standard 10-day contract. The All-Star break will be just as long in 2016 it was in 2015, so the situation could repeat itself.

Teams may terminate 10-day contracts before they run to term, and that happened on multiple occasions last season, such as when the Sixers ended their 10-day contract with Tim Frazier a day early so they could claim Thomas Robinson off waivers. Players who see their 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, as the contracts are fully guaranteed for the 10 days.

Teams like the Rockets and Nets, who are perilously close to the hard cap and luxury tax threshold, respectively, may be wary of bringing anybody aboard via 10-day contract. Other teams may make liberal use of 10-day deals, in part because they’re relatively inexpensive. The Clippers, who paid the luxury tax and narrowly ducked their hard cap, handed out seven 10-day contracts last season, more than all but two other teams.

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.

Veterans whom NBA teams have recently released, like Tony Wroten, Russ Smith and Phil Pressey, figure to draw consideration for 10-day contracts, as should notable players who’ve gone unsigned this season, like Carlos Boozer and Glen Davis. D-League standouts like Elliot Williams, Sean Kilpatrick and Jimmer Fredette could all find paths to the NBA via 10-day contracts, and hopefuls from the D-League will make their cases to scouts at the five-day D-League showcase, which runs this week from Wednesday through Sunday.

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.

Versions of this post were initially published on January 5th, 2013, January 4th, 2014 and January 5th, 2015.

Hoops Rumors Glossary: Gilbert Arenas Provision

Gilbert Arenas hasn’t played in the NBA since 2012, but the Mavericks and especially the Lakers are liable to owe him a debt of gratitude this summer. Jordan Clarkson has been a revelation in the two seasons since the Lakers made him the 46th overall pick, and Dwight Powell, the player drafted immediately before him, has emerged as a promising part of the Dallas rotation this season, averaging 11.2 rebounds per 36 minutes. The problem for their respective teams is that they’re due for restricted free agency this summer and their teams only have Early Bird rights on them, meaning, unless they clear cap space, they’ll be unable to exceed the cap to re-sign them for more than the NBA’s average salary. The situation would ostensibly leave the Lakers and Mavs vulnerable to losing assets to another team, but that’s where Arenas comes in.

The NBA introduced the Gilbert Arenas provision in the 2005 collective bargaining agreement as a way to help teams to retain their young restricted free agents who aren’t coming off rookie scale contracts. The name of the rule stems from 2003, when the Warriors had only Early Bird rights on Arenas as he entered free agency and signed an offer sheet with the Wizards starting at about $8.5MM. Because Golden State 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 teams 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 or Early Bird rights 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 4.5% between years one and two, and 4.1% between years three and four, but a significant raise can be included between the second and third years of the offer. A team’s cap space and leaguewide maximum-salary limits dictate the average annual salary for the entire contract, since the average salary still has to fit under the cap and a player can’t make more than the max. Let’s use Clarkson as an example to see how the Arenas provision functions.

Clarkson under normal circumstances would be eligible for a maximum-salary deal that starts at a projected $20.4MM next season. Offer sheets in such a circumstance could cover four years with 4.5% raises, so the total value of the contract would be $87.108MM, based on that $20.4MM projection. However, the Arenas provision reduces the total value an offer sheet could cover to $56,893,260, again based on that $20.4MM max projection. Clarkson couldn’t make more than the mid-level in the first season and a 4.5% raise on the mid-level in the second season, and he’d be limited in year three — the year that the Arenas provision allows a massive raise — to no more than he could make in year three on a standard offer sheet. Here’s how the maximum Arenas provision offer sheet to Clarkson would break down:

  • Year 1 — $5,628,000
  • Year 2 — $5,881,260
  • Year 3 — $22,236,000
  • Year 4 — $23,148,000
  • Total — $56,893,260

A few additional restrictions apply on such offers, since teams have to promise the full value of the mid-level and a 4.5% raise for year two in order to give the massive jump in salary between years two and three. Such an offer has to be fully guaranteed, and no bonuses are allowed.

The Lakers, with Clarkson’s Early Bird rights, are limited to offering him a contract with a starting salary of no more than 4.5% greater than this season’s average salary. That means it would start at roughly $6MM. The raises couldn’t exceed 7.5%, and it could run only four seasons.

  • Year 1 — $6,000,000
  • Year 2 — $6,450,000
  • Year 3 — $6,900,000
  • Year 4 — $7,350,000
  • Total — $26,700,000

However, if the Lakers clear cap space, as they’ll likely be capable of doing this summer, they would be allowed to offer Clarkson a full maximum-salary deal that’s not subject to the Arenas provision rules. As with standard free agents, the incumbent team can offer an extra year and 7.5% raises. So, the Lakers could give Clarkson an offer like this, based on the $20.4MM max projection:

  • Year 1 — $20,400,000
  • Year 2 — $21,930,000
  • Year 3 — $23,460,000
  • Year 4 — $24,990,000
  • Year 5 — $26,520,000
  • Total — $117,300,000

Clarkson shouldn’t wait around for that sort of offer, since the Lakers have no incentive to give him a contract more than twice the value of what any other team could. It would behoove them to either offer him a deal in line with what another team could give or, as Eric Pincus of the Los Angeles Times argues, simply wait for him to sign an offer sheet with another team and match it. If the Lakers gave Clarkson a deal worth $56,893,260, the salaries — and the associated cap hits — would be spread out conventionally, with raises of no more than 7.5% from season to season. If the Lakers matched an offer sheet from another team, Clarkson’s salaries and cap hits would be back-loaded as in the first example above. That would perhaps be burdensome in years three or four, but having Clarkson at between $5MM and $6MM the next two seasons would represent a bargain that would give the Lakers added cap flexibility.

Because the first-year salary of the offer sheet doesn’t exceed the non-taxpayer mid-level exception, the Lakers could stay over the cap and use their mid-level exception to match it, even though that large a third-year raise wouldn’t typically be permitted when using the mid-level. If the Lakers chose not to match, the cap hits for Clarkson’s new team would be spread out in equal fourths of $56,893,260, even though he’d receive paychecks based on the back-loaded scale.

Of course, 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.
  • If the team used its mid-level exception on another player, it would be unable to match an offer sheet for a Non-Bird free agent. A team could use Early Bird rights to match if they have them, however.
  • If the player has 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. An earlier version of this post appeared on May 9th, 2012, written by Luke Adams.

NBA Teams Designate Affiliate Players

NBA teams cut as much as 25% of their rosters at the end of the preseason, but franchises that have D-League affiliates have a way to maintain ties to many of the players they release from the NBA roster. An NBA team can claim the D-League rights to up to four of the players it waives, as long as the players clear waivers, consent to join the D-League, and don’t already have their D-League rights owned by another team. These are known as affiliate players, as our Hoops Rumors Glossary entry details.

NBA teams allocated 46 affiliate players to the D-League at the beginning of the season last year, and this year, that number has risen to 56, according to the list the D-League announced today. These players are going directly to the D-League affiliate of the NBA team that cut them and weren’t eligible for the D-League draft that took place Saturday. Teams that designated fewer than the maximum four affiliate players retain the ability to snag the D-League rights of players they waive during the regular season, but for now, this is the complete list:

Boston Celtics (Maine Red Claws)

Cleveland Cavaliers (Canton Charge)

Dallas Mavericks (Texas Legends)

Detroit Pistons (Grand Rapids Drive)

Golden State Warriors (Santa Cruz Warriors)

Houston Rockets (Rio Grande Valley Vipers)

Indiana Pacers (Fort Wayne Mad Ants)

Los Angeles Lakers (Los Angeles D-Fenders)

Memphis Grizzlies (Iowa Energy)

Miami Heat (Sioux Falls Skyforce)

New York Knicks (Westchester Knicks)

Oklahoma City Thunder (Oklahoma City Blue)

Orlando Magic (Erie BayHawks)

Philadelphia 76ers (Delaware 87ers)

Phoenix Suns (Bakersfield Jam)

Sacramento Kings (Reno Bighorns)

San Antonio Spurs (Austin Spurs)

Toronto Raptors (Raptors 905)

Utah Jazz (Idaho Stampede)

Also, several players who were on NBA preseason rosters are on D-League rosters through means other than the affiliate player rule. Most of them played under D-League contracts at some point within the last two years, meaning their D-League teams have returning player rights to them. Others entered through last weekend’s D-League draft, while others saw their D-League rights conveyed via trade. Most of these players aren’t with the D-League affiliate of the NBA team they were with last month, with a few exceptions.

Roster information from Adam Johnson of D-League Digest, Chris Reichert of Upside & Motor and freelancer and Hoops Rumors contributor Mark Porcaro was used in the creation of this post.

Hoops Rumors Glossary: Affiliate Players

NBA teams are creating ever closer relationships with their D-League affiliates. All 19 D-League teams have one-to-one NBA affiliates for the 2015/16 season, and more one-to-one partnerships are on the way. NBA teams that have D-League affiliates can use a roster-building tool that often comes into play at the start of the season. These NBA franchises can select “affiliate players” and funnel them to their D-League teams.

An affiliate player is someone who was under contract with an NBA team, was released and cleared waivers, and whose NBA team unilaterally claimed his D-League rights. The last part is key. NBA teams can retain the D-League rights to as many as four players they release, thus keeping them out of the D-League draft (the 2015 D-League draft is scheduled for October 31st) or the waiver system that the D-League uses during the season to determine which of its teams get newly signed players. An NBA team can designate an affiliate player during the season, but usually, teams identify those players at the end of the preseason.

Players released from NBA teams are under no obligation to play in the D-League, regardless of whether their former teams want them to, and affiliate players can sign with any NBA team at any point even if they accept the affiliate player designation. When teams select affiliate players, they’re merely controlling which D-League team they’d play for if they consent to play in the D-League. That’s a limited power, but one that allows franchises to develop players using their own offensive and defensive systems and terminology and under the watchful eye of team-controlled coaches and staff.

The practice requires some patience. Only four of the 46 affiliate players designated at the start of the 2014/15 season are, as the 2015/16 regular season is set to begin, under NBA contract with the franchise that gave them the affiliate player tag. Langston Galloway is probably the most rousing success among them, having started 41 games for New York in 2014/15 after spending the first two months of the season as an affiliate player with the Westchester Knicks. Tyler Johnson of the Heat and James Michael McAdoo of the Warriors are safely on their respective NBA rosters after joining midway through last season, but Jabari Brown is sweating it out today as the Lakers decide whether he or Metta World Peace will be the team’s final preseason cut.

The Lakers wouldn’t have to apply the affiliate player tag to Brown if they cut him, since D-League teams can retain the rights to players who played for them any time within the past two years. That rule looms large. If an NBA team brings five players to training camp and one of them was an affiliate player for the same team the year before, the franchise can tag the four other camp cuts as affiliate players, keep the D-League returning player rights to the fifth guy, and have all of them play for its D-League affiliate. That rarely happens, however. More often, NBA teams bring a player or two to camp whose D-League rights are already owned by another team’s affiliate through that same returning player rule. For instance, the Hawks brought Earl Barron to camp in September and waived him Saturday. They can’t make him an affiliate player because the Suns beat them to it by a year. Phoenix had Barron in camp last fall and designated him as an affiliate player, and the Suns later signed him to the NBA roster on two 10-day contracts and a deal for the rest of the 2014/15 season.

NBA teams are also not allowed to designate anyone who spent less than half the preseason with them as an affiliate player if they also spent time in an NBA camp with a different team, except in one circumstance, as Adam Johnson of D-League Digest points out. Ryan Boatright spent the lion’s share of the preseason with the Nets, who waived him last week. The Pistons signed him shortly after he cleared waivers, then released him two days later. It’s just the sort of last-minute move that the NBA and the D-League had in mind when they stipulated that teams couldn’t sign players just for a few days solely to grab their D-League rights. However, the Pistons are allowed to name Boatright an affiliate player, as they’re reportedly poised to do, because the Nets don’t have a D-League affiliate of their own. Thus, some last-minute “catch-and-release” signings in late October do indeed take place because of the D-League.

Teams without one-to-one affiliates were still allowed to designate affiliate players under the shared affiliate system. That’s how the Pacers tagged C.J. Fair as an affiliate player last season. He spent the year with the Fort Wayne Mad Ants, who were the shared affiliate of 13 NBA teams for the 2014/15 season. The Pacers signed Fair for camp and released him again this year, but since the Mad Ants are now the one-to-one affiliate of the Pacers, Indiana already has his D-League rights.

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 Chris Reichert’s D-League FAQ for Upside & Motor were used in the creation of this post.

Hoops Rumors Glossary: Renegotiations

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. But, renegotiations are allowed to make the contract more lucrative, and they can happen as long as a specific set of circumstances are in place, as the Nuggets have proven this month.

Denver renegotiated its contract with Wilson Chandler as part of their deal on an extension. The move lifted Chandler’s salary for this coming season from close to $7.172MM to more than $10.449MM. Danilo Gallinari is reportedly set for a similar renegotiation simultaneous to an extension, taking his salary for 2015/16 from more than $11.559MM to about $14MM. Chandler was the first player to renegotiate his contract since the existing collective bargaining agreement went into place in 2011, and Gallinari is poised to become the second. It might be a while before we see the third. No player aside from Gallinari is eligible for a renegotiation, as former Nets executive Bobby Marks points out (Twitter link), and that speaks to just how stringent the restrictions on them are.

Only contracts that cover four or more seasons can be renegotiated, and rookie scale contracts, which run four seasons, can’t be renegotiated, either. Renegotiations can only occur after the third anniversary of a contract signing, extension or previous renegotiation, if the previous renegotiation lifted the salary in any season by 4.5% or more. 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. Renegotiations can’t happen as part of a trade, and if a player waives a portion of his trade kicker to facilitate a trade, as Roy Hibbert did earlier this month, he’s ineligible to renegotiate his contract for the next six months. Teams can renegotiate contracts once the July Moratorium ends, but not after the end of February.

A further set of rules restrict 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 7.5%. That’s also true of salary decreases, though if a renegotiation happens simultaneous to an extension, as was the case with Chandler and will likely be the case with Gallinari, 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. That won’t happen for either Chandler or Gallinari, each of whom is set to see more money in 2016/17 than in 2015/16. Also, only renegotiations that happen in conjunction with an extension may contain signing bonuses.

All of this helps make renegotiations as rare as they are. However, with the salary cap projected to surge beginning next season, and surge again for 2017/18, more teams will have cap room, one of the necessary elements for amending contracts. Conceivably, that’ll open more doors for renegotiations, as well as veteran extensions, which are also rare under the current collective bargaining agreement. Teams can entice players they want to keep with added salary this way, and prevent them from hitting the open market. The rules are subject to change if the union, the owners or both exercise their mutual option to end the labor agreement in 2017, but in the meantime, the power to renegotiate will continue as an obscure but sometimes useful tool for roster building.

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.

Hoops Rumors Glossary: July Moratorium

The NBA’s annual free agent frenzy begins each July 1st, but most of the deals that happen as July begins can’t become official until a little more than a week passes. The league office uses this period of time, known as the July Moratorium, to complete its audit, which establishes figures like the salary cap, luxury tax threshold and average salary. Free agents are allowed to negotiate with clubs during the moratorium, and they can agree to terms on new contracts, but they are unable to officially sign new deals until the moratorium ends.

The specific dates vary from season to season, but for 2015, the moratorium will last from July 1st to July 8th. As of July 9th, teams can resume business as usual. Still, it’s an odd time for the league to bar formal moves, as teams cut deals during the moratorium at a faster pace than at any other time during the year, even though they can’t file the paperwork. Most agreements made during the moratorium usually withstand the time that passes before they can be consummated, but the moratorium nonetheless leads to awkward situations in which teams can agree to landmark signings and trades but can’t say much about them until days later.

Usually, a deluge of formal announcements follows the end of the moratorium as teams get caught up, though that wasn’t the case in 2014. Much of the league hung on the free agency of LeBron James, until James finally gave word of his choice to rejoin the Cavaliers on July 11th, after the moratorium had already ended. An unusually languid July quickly descended into the usual chaotic deal-making for the next few days, though in this case, it was unencumbered by the moratorium.

Still, there was some business that teams had already accomplished by that point. A few types of signings and acquisitions are permitted during the moratorium. A first-round draft pick can sign a rookie scale contract with the team that drafted him. A second-round draft pick can accept a required tender, which is a one-year, non-guaranteed contract offer for the minimum salary that allows the team to retain its rights to the player. A restricted free agent can accept a qualifying offer from his team. A free agent can sign a minimum-salary contract for one or two seasons. Also, teams are able to claim players off waivers, providing they were waived during the final two days in June.

When the July moratorium ends, all free agents can officially sign contracts. Additionally, the new salary cap figures for the year take effect, and the seven-day period for using the amnesty clause begins.

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 initially published on May 16th, 2012, May 13th 2013 and June 18th, 2014.

Early Termination Options

Early termination options were a factor in 2014, when LeBron James, Carmelo Anthony, Chris Bosh and Dwyane Wade all exercised the early termination options in their contracts to hit free agency. In 2015, this sort of option is largely a vestige of rules from previous collective bargaining agreements. Thaddeus Young and Jared Dudley are the only players with early termination options for 2015/16, and only Deron Williams and Carmelo Anthony have contracts that include this type of option for any subsequent season.

Early termination options, or ETOs, are opportunities for players to free themselves from their contracts before they run to term, as the name suggests. They’re essentially player options, but with a few tweaks. They were originally designed to give players a second chance to escape from their deals, since player options can only cover one season. That’s why James, Bosh and Wade all had early termination options for 2014/15 and player options for 2015/16 as part of the contracts that they opted out of in 2014. All three signed under the previous collective bargaining agreement, just like Dudley and Young. The existing collective bargaining agreement prevents deals from running longer than five seasons, and since early termination options may only be included in five-year pacts, a contract can no longer contain both an ETO and a player option.

That ETOs are only allowed in five-year deals also means that most of the players who will hold ETOs from now on will be marquee names, since few others sign deals that cover five seasons. Going forward, ETOs will be exclusively for free agents who re-sign with their teams via Bird rights, since there’s no other way to obtain a five-year contract in the current collective bargaining agreement. That was the case with Anthony when he re-signed with the Knicks in 2014 and with Williams in 2012, when he was the most sought-after free agent on the market before re-upping with the Nets. Both signed their contracts under the current collective bargaining agreement rules.

Perhaps one of the most notorious ETOs belonged to Dwight Howard. Now, he doesn’t have an ETO in his contract with the Rockets, and he couldn’t have received one anyway, since he signed it under the existing collective bargaining agreement and changed teams as he did so. His previous contract contained one, but when the 2012 trade deadline came and rumors swirled about his future with the Magic, he formally agreed not to exercise it, thus giving up the chance to hit free agency that summer. It was an odd move, in part because players with ETOs don’t have to tell the league or their teams that they’re not going to use them. They can simply keep silent on the matter through the option deadline, which is June 29th unless the team and player negotiated an earlier date, and remain under contract. Players with ETOs only have to give notice by the option deadline if they’re using them to opt out. The opposite is true with player options; those who have player options and want to remain under contract have to say so by the option deadline. Otherwise, they become free agents.

ETOs allow teams and players slightly more room for negotiation than standard player options do, since the salary in a player option year can’t be any lower than in the previous season. There’s no such rule with an ETO, so players can have their contracts front loaded, with an ETO season at a reduced salary around as insurance against an injury or decline in play. If the player is still performing at a high level after four seasons, he can exercise the early termination option to hit free agency and seek another lucrative contract. Teams may also benefit from this rule, similarly using the cheaper fifth season as protection against a drop-off in the player’s production. Still, no existing contract with an ETO is structured this way.

A player who signs a deal with a trade kicker stands to benefit if the contract also includes an early termination option. A trade kicker is a bonus that a player receives when he’s traded, and it’s usually equal to a percentage of the money remaining on the deal. Standard player option seasons don’t count toward trade kickers, but seasons covered by ETOs do.

Another difference between player options and ETOs rarely comes into play. If a player opts out using a standard player option, he can still sign an extension before hitting free agency. That’s not the case with ETOs. However, most players make formal decisions on these options not long before becoming free agents, leaving little time to negotiate extensions. Veteran extensions usually aren’t beneficial to players under the current collective bargaining agreement anyway, so there’s little incentive to choose a player option over an ETO just to gain more flexibility in signing an extension.

ETOs probably won’t disappear completely from the NBA landscape, as the deals Williams and Anthony signed proved that there are still circumstances in which they’re desirable in the NBA’s current landscape. Yet unless rules change during the next labor negotiations, don’t expect to see too many of these options.

Here’s a look at the only early termination options in existence as of May 2015:

Thaddeus Young, Nets — $10,221,739 for 2015/16
Jared Dudley, Bucks — $4.25MM for 2015/16
Deron Williams, Nets — $22,331,135 for 2016/17
Carmelo Anthony, Knicks — $27,928,140 for 2018/19

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 and the Basketball Insiders Salary Pages were used in the creation of this post. 

An earlier version of this post appeared on March 11, 2014.