Hoops Rumors Glossary

During NBA regular seasons, teams aren't permitted 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, however, teams are permitted to carry up to 20 players on their rosters. One club taking advantage of that extra flexibility this summer is the Houston Rockets — even after Houston hit the 20-man limit, it continued to pursue free agents. When the Rockets signed Carlos Delfino, they waived Josh Harrellson to remain at 20 players, and later waived Sean Williams to clear a roster spot for Scott Machado.

Many of the Rockets' players are on non-guaranteed deals, making it likely that those guys will simply be waived before the regular season begins so that the team can reduce its roster to the in-season limit of 15 players. However, Houston (or any other team) is allowed to carry more than 15 guaranteed contracts until the season starts, if it so chooses.

According to Doug Smith of the Toronto Star, for instance, the Raptors' deals with Jamaal Magloire and Dominic McGuire will both be at least partially guaranteed. Toronto already had 14 players on guaranteed contracts, meaning the Raptors will likely head into training camp carrying 16 players with some form of guarantee. So even if non-guaranteed camp invitee Chris Wright doesn't earn a roster spot, the Raps will have to either trade a player or eat some salary to reduce their roster to 15 players by opening night.

Before the season begins, teams like the Rockets and Raptors, who are carrying more than 15 players, will be required to make cuts. However, other clubs may have to worry about meeting the roster minimum, rather than getting below the maximum.

The 76ers are one of a handful of clubs that are only carrying 13 players, which is the fewest an NBA can have on its roster. Philadelphia's 13th man, Maalik Wayns, is on a non-guaranteed contract, but is currently in great position to make the team — the Sixers couldn't cut him without adding someone else.

A few more notes on NBA roster sizes:

• In the lockout-shortened 2011/12 season, NBA teams were allowed to have 13 active players, rather than 12 active players with at least one on the inactive list. This change is expected to become permanent starting in 2012/13.
• Teams are permitted to carry just 11 active players or zero inactive players for no more than two weeks at a time. A team can also temporarily place up to four players on its inactive list (for a total roster of 16 players) with league approval in the event of a hardship.
• Players assigned to a D-League affiliate are automatically placed on their NBA team's inactive list.

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.

If you're wondering why you never hear about NBA rookies holding out for more money, or signing for massive salaries, your answer can be found within the Collective Bargaining Agreement. A first-round NBA draft pick is only eligible to sign a rookie scale contract, which limits a rookie's leverage and means his draft slot will dictate how much he gets paid.

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While many of us may prefer to simply rely on ESPN.com's Trade Machine to figure out whether or not a trade will work under NBA rules, it's worth examining the primary CBA detail that ESPN's tool uses to determine a trade's viability — the traded player exception. 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 multiple 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 up to that player's salary amount, plus $100K. Let's look into each scenario in greater detail….

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….

• 150% of the outgoing salary (plus $100K), for any amount up to $9.8MM.
• The outgoing salary plus $5MM, for any amount between $9.8MM and $19.6MM.
• 125% of the outgoing salary (plus $100K), for any amount above $19.6MM.

Here's an example of the above rules in effect from this season's trade deadline:

The Blazers traded Gerald Wallace ($9.5MM) to the Nets for multiple players. Because the outgoing salary amounted to less than $9.8MM, Portland could have taken back up to $14.35MM in the deal — 150% (plus $100K) of Wallace's salary. The Blazers received Mehmet Okur ($10.89MM) and Shawne Williams ($3MM), whose salaries totaled $13.89MM, which fit in below the $14.35MM mark.

If Wallace's salary had been $10MM, the Blazers could have received up to $15MM in return (Wallace's salary plus $5MM). If his salary had been $20MM, Portland could have received up to $25.1MM in return (125% of Wallace's salary, plus $100K).

For taxpaying teams, the rules are simpler, albeit more restrictive: A taxpaying club can send out one or more players and take back 125% of the outgoing salary, plus $100K. For instance, when the Lakers traded Derek Fisher and his $3.4MM salary to Houston, they would have been allowed to take back up to $4.35MM.

In simultaneous transactions, the traded player exception is used to instantly complete the deal. There are no lingering loose ends in simultaneous trades. Our list of outstanding traded player exceptions comes as a result of non-simultaneous deals.

In non-simultaneous deals, a team can trade away a single player without immediately taking salary back in return. The team then has up to one year in which it can acquire multiple players whose salaries amount to no more than the traded player's salary (plus $100K).

For instance, when the Lakers traded Lamar Odom and his $8.9MM salary to the Mavericks in December for a first-round pick, it created a traded player exception worth $8.9MM. The Lakers have until next December to acquire one or more players whose salaries total up to $9MM ($8.9MM + $100K). If Los Angeles doesn't use the full trade exception within a year, it expires.

When evaluating an NBA trade, it's worth noting that the two teams can view the deal entirely differently. For example, one team could consider a trade simultaneous, while the other team breaks the transaction down into two separate trades, one simultaneous and one non-simultaneous. Let's take a look at a real-life example from this year's trade deadline: the Bucks' trade of Andrew Bogut and Stephen Jackson to the Warriors for Monta Ellis, Ekpe Udoh, and Kwame Brown.

From the Bucks' perspective, the trade broke down as follows:

• Bogut ($12MM) for Ellis ($11MM) and Udoh ($3.29MM). As a nontaxpayer, the Bucks could have absorbed up to $17MM (100% of Bogut's salary + $5MM) in a simultaneous deal for Bogut, so Ellis' and Udoh's $14.29MM fits comfortably.
• Jackson ($9.26MM) for Brown ($6.75MM). This segment of the deal is non-simultaneous, meaning the Bucks received a traded player exception for the difference between the two salaries ($2,506,500). They'll have until next March to use it.

And here's how it looked from the Warriors' perspective:

• Ellis ($11MM) for Bogut ($12MM). The Warriors could have taken back up to $16MM for Ellis (100% of his $11MM salary + $5MM), so they can easily absorb Bogut's $12MM salary.
• Brown ($6.75MM) for Jackson ($9.26MM). In this case, the Warriors could take up to 150% of Brown's salary, plus $100K, which would have been nearly $10.23MM, more than enough to absorb Jackson's $9.26MM figure.
• Udoh is left over and is essentially going to the Bucks for nothing, from Golden State's perspective. So the Warriors received a traded player exception worth Udoh's salary ($3,294,960), which they'll have until next March to use.

For salary-matching purposes, draft picks and players on minimum-salary contracts aren't taken into consideration. For instance, if a non-taxpaying team was sending out $5MM in a simultaneous deal, it could take back $7.6MM (150% of $5MM, plus $100K), and receive one or more minimum-salary players or draft picks in the deal.

The traded player exception is one of the CBA's trickier details, and makes it challenging for over-the-cap teams to navigate the trade market. It's undoubtedly simpler to use ESPN's Trade Machine to determine whether a deal is legal, but examining the rules and figuring out exactly how a blockbuster trade breaks down can provide rewarding insight into an NBA club's management of its 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.

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 namesake 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 league eventually instituted a rule that prohibited teams from trading out of the first round for consecutive future seasons.

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The poison pill provision is a rule that arises if a team extends a player's rookie scale contract, then trades him before the extension officially takes effect. It's a rare situation, but it features its own set of rules, since extensions following rookie contracts often create a large discrepancy between a player's current and future salary.

For salary purposes, if a player is traded between extending his rookie contract and the extension taking effect, the player's trade value for the receiving team is the average of his current salary and the annual salary in each year of his extension.

For instance, let's pretend the Timberwolves wanted to trade Kevin Love on draft night — an unlikely scenario, of course, but Love's an example of a player who extended his rookie scale contract earlier this year. Love's 2011/12 salary was about $4.61MM, while his four-year extension will be worth the maximum salary. The max salary figures for Love currently look like this:

Love's $62.11MM total divided by five years gives him an average annual salary of about $12.42MM. So if the T-Wolves were to trade him, the outgoing salary for their purposes would be his current salary ($4.61MM), but for the receiving team, it would be $12.42MM.

Trades in which the poison pill provision arises are extremely rare. Generally, young players who have just received extensions from their teams aren't trade candidates, and even if they are, the difference in incoming and outgoing salaries make it difficult to work out a deal. But if you see what appears to be some odd salary-matching in a trade involving a recently-extended player, now you know why.

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.

The July moratorium is a period at the start of each NBA season during which teams aren't permitted to make trades or sign free agents. The specific dates vary from season to season, but for 2012, the moratorium will last from July 1st to July 10th. As of July 11th, teams can resume business as usual.

Each new NBA season officially begins on July 1st, which is also the day that free agents are freed from their previous contracts. However, before players can sign with new teams, the NBA must 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 can agree to terms on new contracts, but they are unable to officially sign a new deal until the moratorium ends.

There are a number of types of signings that are permitted during the July moratorium, as follows:

• A first-round draft pick can sign a standard rookie scale contract with the team that drafted him.
• A second-round draft pick can accept the required tender, which is a one-year contract offer that allows a team to retain its rights to a drafted 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.

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 amnesty period 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.

The amnesty provision provides a team an opportunity to clear a bad contract from its books for salary cap and luxury tax purposes. Although a team still has to pay the remainder of the amnestied player's salary, as it would for any released player, the player's salary no longer counts against the team's cap (except for minimum payroll purposes) when the amnesty clause is used.

The amnesty provision can be used on any player, as long as the following rules are observed:

• A team can only amnesty one player — not one player per season. For instance, since the Knicks used their amnesty clause on Chauncey Billups last December, they can't use it on Amare Stoudemire or any other player going forward.
• The amnesty provision can only be used on a player who signed his contract prior to July 1st, 2011. If a contract was signed, extended, or renegotiated after that date, the player cannot be amnestied. For instance, the Nuggets couldn't amnesty Arron Afflalo, Wilson Chandler, or Danilo Gallinari at any point, since all three players signed new contracts this season.
• A team can only use its amnesty provision on a player who was on the roster on July 1st, 2011. If a player was traded after that date, he cannot be amnestied. For instance, the Spurs can't amnesty Stephen Jackson, since they acquired him in March from the Warriors.
• The amnesty clause can only be used during the seven days following the July moratorium. If a team doesn't amnesty a player during that week, it won't get another chance to do so until the following July.
• A team that has yet to use its amnesty clause can do so in any of the next four years. The 2015/16 season is the last year that a player can be amnestied, under the current CBA.

Amnestied players are placed on waivers, but the waiver rules are slightly different than usual. A team can still place a full waiver claim on an amnestied player, if it doesn't mind being on the hook for the rest of the player's contract. However, a team also has the option to submit a partial waiver claim, in what essentially amounts to an auction for the player's services. If no team places a full claim, the team with the highest partial claim is awarded the player. If two teams bid the same amount, the club with the worse record wins out.

When a team lands a player with a partial claim, it must pay the player the amount of the bid, spread out evenly among the remaining years on the contract, along with 100% of any non-guaranteed salary in the contract. For instance, when Travis Outlaw was amnestied by the Nets with four years and $28MM remaining on his contract, the Kings submitted a $12MM bid. Sacramento will now pay Outlaw $3MM ($12MM spread over four years) for each of the next four seasons, while the Nets pay the remaining annual $4MM, which doesn't count against their cap.

The minimum amount a team can submit for a partial waiver claim is whichever of the following amounts is greater:

• The sum of the player's minimum salary for all remaining years of his contract, except for non-guaranteed years.
• The sum of the player's non-guaranteed salary in partially guaranteed years.

In the case of Outlaw, because he had no partially guaranteed years on his deal, the minimum bid for him would have been about $5.3MM — the sum of his minimum salary for the next four years. Any team submitting a partial claim for an amnestied player must have the necessary cap space to fit the annual amount of its bid. For example, the Kings needed $3MM in cap space when they made their $12MM claim for Outlaw.

If an amnestied player is not claimed on waivers, he becomes a free agent, able to sign with any team except the one that released him. A club is ineligible to re-sign or re-acquire its amnestied player for the remainder of his contract (including ETO years, but not team- or player-option years).

In 2011, seven teams (the Cavaliers, Knicks, Magic, Nets, Pacers, Trail Blazers, and Warriors) used their amnesty provisions. You can find more information on the players those clubs amnestied here.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA's Collective Bargaining Agreement. Larry Coon's Salary Cap FAQ was used in the creation of this post.

The NBA introduced the Gilbert Arenas provision in the 2005 Collective Bargaining Agreement as a way to help teams to keep their young restricted free agents who aren't coming off rookie scale contracts. It was named after Gilbert Arenas, an Early Bird free agent for the Warriors in 2003, who 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 mid-level exception, which allows the player's original team to use its MLE to match it. Otherwise, a team without the necessary cap space or exceptions would be powerless to keep its player, like the Warriors were with Arenas.

A rival offer sheet can still have an average annual salary that exceeds the non-taxpayer MLE, 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 dictates the average annual salary limit for the entire contract, since the average salary still has to fit under the cap. Let's take a look at a practical example to see the Arenas provision in action.

Jeremy Lin will be a restricted free agent this summer, coming off his second season in the league. The Knicks will own Lin's Non-Bird rights, but the Non-Bird exception certainly won't be enough to match rival offers. Let's say a team with $7MM in cap space wanted to make Lin a four-year offer using all of its cap room. Due to the Arenas provision, an offer sheet could only start at $5MM rather than $7MM, but the overall amount of the offer could total $28MM over four years — the deal would just have to be backloaded, as follows:

Because the first-year salary of the offer sheet doesn't exceed the non-taxpayer mid-level exception, the Knicks can use their MLE to match it, even though that big a third-year raise wouldn't typically be permitted when using the mid-level. If the Knicks chose to match the offer, their cap hit for the next four years would equal the actual salaries above; if they chose not to match, the cap hit for Lin's new team would be $7MM annually.

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 ($3MM) available, it would be unable to match an offer sheet for a Non-Bird free agent if the starting salary exceeded the taxpayer MLE 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.
• 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.

In addition to Lin, Landry Fields will also be eligible for restricted free agency this summer, following his second season. If both Knicks guards sign backloaded offer sheets with rival teams, the Arenas provision would allow New York to match and keep both; the team would have to use its mid-level exception on Lin and the Early Bird exception for Fields. But doing so could be dangerous. Lin's and Fields' third-year raises would go into effect in 2014/15, a year in which the Knicks will already owe a combined $62MM+ to Carmelo Anthony, Amare Stoudemire, and Tyson Chandler.

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.

When superstars like Deron Williams or Dwight Howard approach free agency, they are often referred to as "maximum-salary players" — players that will likely earn the maximum contract offers permitted under the CBA. Because NBA teams are limited by a salary cap, clubs can only offer a single player a certain percentage of the cap. However, the maximum salary varies from player to player.

If a player has been in the NBA for six years or less, he can earn up to 25% of the salary cap. Players with seven to nine years of experience can earn up to 30%, while veterans with 10+ years in the NBA are eligible for up to 35% of the cap.

When determining the actual amounts of maximum salaries for a given season, a different cap calculation is used — so while 25% of 2011/12's $58.044MM salary cap would be $14,511,000, the actual maximum salary for players with zero to six years of experience in 2011/12 was just $12,922,194. For 30% players, the maximum was $15,506,632, and for veterans of 10 or more years, the max was $18,091,071. These figures will fluctuate from year to year, depending on the projected Basketball Related Income for a given season.

There are a number of exceptions to the maximum salary, as follows:

• The maximum salary only applies to the first year of a multiyear contract. For example, if Deron Williams were to sign a maximum-salary deal this summer, he would be subject to the maximum salary for the first season, with either 7.5% or 4.5% raises, depending on where he signs. So by the third or fourth year of his contract, he could be earning significantly more than the max salary.
• A free agent's maximum salary is always at least 105% of his previous salary. For instance, Kevin Garnett's 2011/12 salary was $21,247,044. For 2012/13, he is eligible to earn a maximum of $22,309, 396 — 105% of his prior salary.
• A first-round pick coming off his four-year rookie scale contract is eligible for a maximum-salary contract extension worth 30% of the cap (rather than 25%) if he meets one of the following criteria: (1) Wins a Most Valuable Player award; (2) Voted an All-Star Game starter at least twice; (3) Named to an All-NBA team at least twice.

Let's take a deeper look at Williams' case as he approaches free agency. The All-Star point guard is coming off a $16,359,805 salary in 2011/12, which exceeds the maximum for a player with his NBA experience. He has a player option for next season worth $17,779,458 that he doesn't intend to exercise, which will make him a free agent. Since he's already making more than the maximum, Williams will be eligible for a new max of up to 105% of his prior salary — $17,177,795.

If Williams were to re-sign with the Nets, who hold his Bird rights, he could earn 7.5% annual raises over a five-year deal that started at $17,177,795 in its first year. Signing with another team, such as the Mavericks, would mean 4.5% annual raises and a four-year maximum. So the largest contract Williams could earn from the Nets would be worth about $98.77MM over five years, whereas a maximum-salary deal from another team would be worth about $73.35MM over four years.

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 Storyteller's Contracts were used in the creation of this post.