Hoops Rumors Glossary

Most “exceptions” available to an NBA team in a given league year – such as the mid-level, bi-annual, or minimum-salary exception – give that club some additional spending flexibility to continue adding players once its team salary has reached or exceeded the cap.

The hardship exception doesn’t fall into that category — it’s not related to the salary cap. Instead of granting a team extra spending power, a hardship exception gives the team the ability to temporarily carry one or more extra players on its standard roster.

A team qualifies for a hardship exception when it meets all of the following criteria:

1. It has at least four players unavailable due to injury or illness.
2. All four of those players have missed at least three consecutive games.
3. All four of those players are expected to remain sidelined for at least two more weeks.

If a team meets those criteria, the NBA will grant a hardship exception, which gives the club the ability to sign a free agent to a 10-day contract even if its 15-man roster is already full.

Typically, the annual period for 10-day signings doesn’t open until January 5, but a team that qualifies for a hardship exception can sign a player to a 10-day contract prior to that date. When the player’s 10-day contract expires, he can be re-signed to another 10-day deal as long as the team still meets the criteria for a hardship exception.

The rules for standard 10-day contracts prohibit a player from signing more than two 10-day deals with the same team in a given season. That limit also applies to players signing 10-day contracts via hardship rules.

A team can qualify for multiple hardship exceptions simultaneously if it has more than four players who meet the hardship criteria. For instance, a team with five injured players who have missed three or more games and will remain out for at least two more weeks could be granted two extra roster spots via the hardship provision. A team with six players who fit that bill could be granted three extra roster spots, and so on.

The Grizzlies were the first team this season to request and receive a hardship exception, and since they had five injured players who met the hardship criteria (Steven Adams, Brandon Clarke, Luke Kennard, Marcus Smart, and Jake LaRavia), they were granted two additional roster spots. They used their hardship exceptions to sign Jaylen Nowell and Shaquille Harrison to 10-day deals and have since re-signed Nowell.

Here are a few more rules related to the hardship exception:

• Only players unavailable due to injury or illness can be counted toward a team’s sidelined players for hardship purposes. A player who is unavailable for other reasons (e.g. a personal absence, a suspension, etc.) would not qualify.
  • Note: For instance, if the Grizzlies only had three injured players, they wouldn’t be able to count suspended guard Ja Morant as a fourth unavailable player in order to qualify for a hardship exception. However, they were able to move him to the suspended list five games into his ban, temporarily opening up an extra roster spot that way.
• If one of the four injured players is ready to return earlier than anticipated and a team that used a hardship exception no longer meets the criteria, that team must reduce its roster count to 15 players. In this scenario, most clubs would simply terminate the 10-day contract signed by their hardship addition, but a team could also keep that player and waive someone else instead.
• If a player signs a hardship contract with fewer than 10 days left in the season, its expiry date is considered to be the last day of the regular season. The team wouldn’t hold any form of Bird rights on that player.
• Only a team with a full 15-man roster can qualify for a hardship 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. Information from Larry Coon’s Salary Cap FAQ and ESPN’s Bobby Marks was used in the creation of this post.

Derrick Rose‘s name doesn’t technically show up at all in the NBA’s Collective Bargaining Agreement. However, like Gilbert Arenas, the veteran NBA guard has become an informal namesake of one of the CBA’s rules.

The Rose rule allows a player who is finishing his rookie scale contract to sign a maximum-salary contract that exceeds the typical limit for a player with fewer than seven years of NBA experience. The rule, which was created after Rose won a Most Valuable Player award while playing on his rookie contract, allows young stars to qualify for a maximum salary worth 30% of the salary cap instead of 25%.

Although we colloquially refer to this rule as the Rose rule, it’s technically known in the CBA as the “higher max criteria” for “fifth year eligible” players, since a player has to meet certain performance benchmarks to qualify for the higher maximum salary in his fifth NBA season. A player becomes eligible for the 30% max entering his fifth season when at least one of the following is true:

• The player was named to an All-NBA team in the most recent season, or in two of the past three seasons.
• The player was named Defensive Player of the Year in the most recent season, or in two of the past three seasons.
• The player was named Most Valuable Player in any of the past three seasons.

A player signing a rookie scale extension can receive the higher Rose rule max as long as his extension covers at least four new years. A player signing a free agent contract can also be eligible for the Rose rule max if he’s coming off his four-year rookie contract — or if he’s a former second-round pick or undrafted free agent with four years of experience, and he’s re-signing with his current team.

This latter scenario almost never arises, since it’s extremely rare for a player who wasn’t drafted in the first round to develop into an All-NBA player within four years. There are rare scenarios in which it might happen — Nikola Jokic, for instance, was a second-round pick who made the All-NBA team in his fourth season. But he had already signed a second contract by that point, having re-upped with the Nuggets as a restricted free agent following his third season.

Of course, just because a player is eligible for a Rose rule extension, that doesn’t mean a team has to offer a starting salary worth the full 30% max. That’s still a matter of negotiation between the player and team, and a starting salary between 25-30% is possible.

Teams and players who agree to a rookie scale extension can also negotiate conditional maximum starting salaries that hinge on the player’s performance in his fourth season, before his extension begins.

For example, a team and player could agree to the following terms:

• The player’s starting salary will be worth 25% of the cap if he doesn’t make an All-NBA Team in his fourth season.
• The player’s starting salary will be worth 27% of the cap if he’s named to the All-NBA Third Team.
• The player’s starting salary will be worth 28% of the cap if he’s named to the All-NBA Second Team.
• The player’s starting salary will be worth 30% of the cap if he’s named to the All-NBA First Team.

Several players have agreed to this form of Rose rule extension since the rule was implemented in 2017. Devin Booker, Ben Simmons, and Pascal Siakam were among the players whose starting salaries on their rookie scale contracts could have ranged from between 27-30% depending on which All-NBA team they made.

Siakam was voted to the All-NBA Second Team the spring before his rookie scale extension went into effect, securing a starting salary worth 28% of the cap, based on the terms of his Rose rule deal. Simmons’ contract also began at 28% of the cap after he made an All-NBA Third Team that same year. Booker missed out on All-NBA honors ahead of his fourth season, however, so he received a standard 25% max deal.

In recent years, the significant majority of rookie scale extensions that include Rose rule language have been more of a yes or no proposition — a player qualifies for the 30% max with an All-NBA spot, regardless of which team he makes.

That’s reportedly the case for Anthony Edwards, Tyrese Haliburton, and LaMelo Ball, who signed maximum-salary rookie scale extensions this past offseason and would receive a bump to the 30% max by making an All-NBA team in 2024.

While a player can, in some cases, meet the Rose rule performance criteria after he signs his contract, he must meet the criteria before the contract begins. So if Edwards were to miss out on an All-NBA spot in 2024, then earned one in 2025, it would be too late for him to qualify for a Rose rule deal — his maximum-salary contract would start at 25% of the cap in 2024/25 and increase by 8% annually from there.

It’s worth noting that NBA’s previous Collective Bargaining Agreement also included the “designated rookie” rule, which was separate from the Rose rule but often applied to Rose rule deals. The designated rookie rule allowed teams to sign players to rookie scale extensions that spanned five new years instead of four. Teams weren’t permitted to carry more than two designated rookies at a time, including no more than one who was acquired via trade.

However, the latest CBA eliminated the designated rookie rule, allowing all rookie scale extensions to cover up to five new years and placing no restrictions on how many of those players those teams are permitted to carry or acquire. The Rose rule is now the only one governing deviations from the norm for rookie scale extensions.

Finally, a player with between seven and nine years of experience can qualify for a maximum salary worth 35% of the cap instead of 30% by meeting similar criteria, but that’s related to the designated veteran rule rather than the Rose rule. We cover that subject in a separate glossary entry.

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 variations of this post were published in 2013 and 2018 by Chuck Myron and Luke Adams.

The NBA’s salary cap primarily serves as a way to restrict the amount a team can invest in player salaries in a given year. However, because the league has a soft cap rather than a hard cap, there’s technically no specific figure that clubs are prohibited from exceeding once they go over the cap to re-sign players. As long as a team doesn’t use certain exceptions or acquire a player via sign-and-trade, that team doesn’t face a hard cap.

There is, however, a specific threshold on the lower end that teams must meet in each NBA season. The league’s minimum salary floor requires a club to spend at least 90% of the salary cap on player salaries. For instance, with the 2023/24 cap set at $136,021,000, the salary floor for this season is $122,418,000.

For the purposes of calculating whether a team has reached the minimum salary threshold, cap holds and international buyouts aren’t considered, but players who suffered career-ending injuries or illnesses are included in the count, even if they’ve since been removed from the club’s cap.

Under the NBA’s previous Collective Bargaining Agreement, the penalties levied against a team whose salary was below the minimum floor at the end of the season weren’t very harsh — the franchise was simply required to make up the shortfall by paying the difference to its players.

However, the new Collective Bargaining Agreement has made those penalties for teams below the minimum salary floor significantly more punitive. Here are the changes introduced in the latest CBA:

• A team is now required to reach the minimum salary floor by the start of the regular season, rather than the end of the regular season.
• A team whose salary is below the minimum floor at the start of the 2023/24 regular season will only be entitled to 50% of its end-of-season share of the NBA’s luxury tax payouts. Beginning in 2024/25, a team whose salary is below the minimum floor at the start of the regular season won’t receive a share of the end-of-season luxury tax payouts.
• A team whose salary is below the minimum floor at the start of the season will have a cap hold added to its salary in order to reach the minimum floor. For instance, a team with a $117,418,000 salary on opening night in 2023/24 would have a $5MM cap hold added to its salary to reach the $122,418,000 floor and would be unable to immediately access that $5MM of cap room.
• A team that begins the season below the floor cannot reduce the shortfall amount it will owe at the end of the season by spending on player salaries during the season. For example, a team that starts the season $5MM below the floor would owe no less than $5MM at the end of the season. The shortfall amount that club owes could increase if its team salary dips further than $5MM below the floor by the end of the season.

As noted above, the previous CBA called for a team that finished the season below the floor to pay the shortfall to its own players. Under the new agreement, however, that shortfall money is sent to the NBA, which then redirects it to all players. That shortfall money will generally be disbursed to each player in the league in proportion to his salary for that season.

Based on these changes, it’s easy to understand why all 30 of the NBA’s teams have already surpassed the minimum salary floor in 2023/24 and it’s probably safe to assume that trend will continue in future seasons.

After all, essentially every incentive a team has to remain below the floor by the time the regular season begins has been eliminated. A team in that boat wouldn’t be able to access all of its cap room, would forfeit an end-of-season tax payment, and wouldn’t even be able to award its shortfall amount exclusively to its own players.

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. Information from ESPN’s Bobby Marks and Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in 2018, 2020, and 2021.

Throughout the offseason and preseason, NBA teams are permitted to carry up to 21 players, but that total must be cut down to 15 (plus three two-way players) in advance of opening night. However, up to four players waived by a team prior to the season can be designated as “affiliate players” and assigned to that team’s G League squad.

The players have a say in this decision. If they’d prefer to sign with a team overseas, or if they get an opportunity with another NBA club, they’re under no obligation to become affiliate players. But if the player’s NBA team has designated him as an affiliate player and he signs a G League contract, he is automatically assigned to that team’s NBAGL roster.

Since most NBA and international teams aren’t looking to bring in extra players by the time the NBA regular season begins, the opportunity to continue playing in the same system appeals to many of those preseason cuts — especially since many of them will be in line for bonuses worth up to $75K after having signed Exhibit 10 contracts. Plus, they’ll continue to be NBA free agents while they play in the G League.

A player whose returning rights are held by a G League team can’t become an affiliate player for another club, which is why undrafted rookies typically make up a substantial portion of the annual league-wide list of affiliate players.

Additionally, an affiliate player must have signed with his team during the current league year, which explains why we often see players signed and quickly waived in the days and weeks leading up to the regular season.

An affiliate player also can’t have received a partial guarantee worth more than $75K on his standard or two-way contract — a larger guarantee would make him ineligible to join his club’s NBAGL affiliate for the rest of that league year.

Finally, while 29 NBA teams will have a G League affiliate in 2023/24, the Suns still don’t have one, meaning they have no place to send affiliate players and therefore aren’t permitted to designate any.

Hoops Rumors typically publishes the annual list of affiliate players around the start of the G League season, so if you’re interested in it, you can keep an eye out for it in November.

This is a Hoops Rumors glossary entry. Earlier versions of this post were published in 2015, 2019, and 2021 by Chuck Myron and Luke Adams.

The poison pill provision isn’t technically a term defined in the NBA’s Collective Bargaining Agreement. However, the concept of a “poison pill” has colloquially come to refer to a pair of NBA concepts.

The first of those concepts relates to the Gilbert Arenas Provision, which we’ve explained in a separate glossary entry. When a team uses the Arenas provision to sign a restricted free agent with one or two years of NBA experience to an offer sheet, that team can include a massive third-year raise that’s often referred to as a “poison pill,” since it makes it more difficult for the original team to match the offer.

The second meaning of the “poison poll” is the one that has become more common – and more frequently relevant – in recent years. It relates to players who have recently signed rookie scale extensions.

The “poison pill provision” applies when 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 gap between a player’s current and future salaries.

For salary-matching purposes, if a player is traded between the time his rookie contract is extended and the following July 1 (when that extension takes effect), the player’s incoming value for the receiving team is the average of his current-year salary and the annual salary in each year of his extension.

His current team, on the other hand, simply treats his current-year salary as the outgoing figure for matching purposes.

Let’s use Knicks guard Immanuel Quickley as an example. Quickley is an extension candidate and could also be a trade candidate if the right opportunity arises for New York. He’s set to earn $4,171,548 in 2023/24, the final year of his rookie scale contract.

Any extension Quickley signs before the season begins would be significantly more lucrative than his current-year salary. To illustrate our point, let’s assume he and the Knicks agree to a four-year, $110MM rookie scale extension that would begin in ’24/25.

If the Knicks decide after signing Quickley to that extension that they want to trade him, the poison pill provision would complicate their efforts.

From New York’s perspective, Quickley’s current-year cap hit ($4,171,548) would represent his outgoing salary for matching purposes. However, any team acquiring Quickley would have to view his incoming value as $22,834,310 — that’s the annual average of the five years and $114,171,548 he has left when accounting for both his current contract and his (hypothetical) new extension.

As we explain in our glossary entry on the traded player exception, NBA rules dictate that over-the-cap teams must send and receive approximately the same amount of salary in any trade. So applying the poison pill provision to a player like Quickley and creating a difference of nearly $19MM between how two trade partners account for him would make salary-matching far more difficult than usual.

The poison pill provision is one key reason why the Knicks are unlikely to extend Quickley unless they’re fairly certain they won’t use him in a blockbuster deal before the 2024 trade deadline. Without an extension in place, his current-year salary of $4,171,548 would be both his outgoing and incoming cap hit for matching purposes.

Of course, extending Quickley now would make him easier to trade in the 2024 offseason than if he were a restricted free agent. For instance, signing Tyler Herro to a rookie scale extension prior to the 2022/23 season made it extremely difficult for the Heat to trade him during the season, but makes him a prime candidate to be included in a Damian Lillard trade now — that may not have been the case if Miami had let him reach restricted free agency.

Trades involving a player who recently signed a rookie scale extension are already pretty infrequent. After all, those players are generally young, and a player who signed an extension is promising enough to have warranted a long-term investment. Those aren’t players that teams often trade. The poison poll provision further disincentivizes a deal involving one of those recently extended players by complicating salary-matching rules, making those trades that much more rare.

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

Earlier versions of this post were published in previous years.

An NBA team that want to re-sign a player before he reaches free agency can do so, but only at certain times and if his contract meets specific criteria.

Rookie scale extensions, which can be completed for former first-round picks between the third and fourth years of their rookie scale contracts, were the NBA’s most common form of extension in the past. But the league relaxed its criteria for veteran extensions in its 2017 Collective Bargaining Agreement and loosened them further in the 2023 CBA, resulting in a significant increase in those deals in recent years. They’ve now overtaken rookie scale extensions as the league’s most frequently signed extensions.

[RELATED: 2023/24 NBA Contract Extension Tracker]

A veteran extension is any contract extension that tacks additional years onto a contract that wasn’t a rookie scale deal. Even if the player is still on his first NBA contract, he can technically receive a “veteran” extension if he was initially signed as a second-round pick or an undrafted free agent rather than via the league’s rookie scale for first-rounders.

Here’s a full breakdown of how players become eligible to sign veteran extensions, and the limits that come along with them:

When can a player sign a veteran contract extension?

A team that wants to sign a player to a veteran extension wouldn’t be able to simply complete that extension one year after the initial contract was signed. The team must wait a specified period of time before the player becomes extension-eligible, as follows:

• If the player initially signed a three- or four-year contract: Second anniversary of signing date.
  • Note: The second anniversary date also applies if the player previously signed an extension that lengthened his contract to three or four total seasons.
• If the player initially signed a five- or six-year contract: Third anniversary of signing date.
  • Note: The third anniversary date also applies if the player previously signed an extension that lengthened his contract to five or six total seasons.
• If the player previously renegotiated his contract and increased his salary by more than 10%: Third anniversary of renegotiation date.

A contract that only covers one or two seasons is ineligible to be extended.

The anniversary dates for signings have been complicated in recent years by the COVID-19 pandemic that forced the NBA to adjust its usual calendar during the 2019/20, ’20/21 and ’21/22 league years. For instance, the 2020 free agency period was delayed until November 21 instead of beginning on July 1.

Anthony Davis signed a five-year free agent contract on December 3, 2020, which would normally make him ineligible to be extended until December 3, 2023. However, the NBA adjusted that three-year waiting period to better reflect certain stages of the offseason rather than adhering to specific dates on the calendar. As a result, Davis was able to sign a new extension with the Lakers this year on August 4.

Going forward, the usual two- and three-year waiting periods will once again apply. For instance, after signing a three-year extension that lengthened his contract to five total seasons, Davis will become extension-eligible again on August 4, 2026.

It’s worth noting that an extension signed between October 2 and the start of the regular season is considered – for the purpose of determining its anniversary – to have been signed on October 1.

How many years can a player receive on a veteran extension?

A veteran extension can be for up to five years, including the year(s) remaining on the previous contract. The current league year always counts as one of those five years, even if an extension is agreed to as late as June 30.

For instance, when Bogdan Bogdanovic signed an extension in March with the Hawks, he was in the final year of previous contract, which ran through 2022/23. He added four extra years via the extension, maxing out at five years overall.

If a player signs a “designated” veteran extension, he can receive up to six total years, as we cover in a separate glossary entry. Devin Booker, Karl-Anthony Towns, and Nikola Jokic all took this route during the 2022 offseason after meeting the super-max criteria; Jaylen Brown has been the lone super-max recipient in the 2023 offseason.

How much money can a player receive on a veteran extension?

The first-year salary in a veteran extension can be worth up to 140% of the salary in the final year of the player’s previous contract or 140% of the NBA’s estimated average salary, whichever is greater. Annual raises are limited to 8% of the first-year extension salary.

When Dejounte Murray signed an extension with the Hawks this offseason, he added four extra years to the one year and $17,714,000 (base salary) remaining on his previous deal. Because that $17.7MM cap hit greatly exceeds the league’s estimated average salary, Murray was eligible to earn up to 140% of his final-year salary in the first year of his extension. As such, his new contract begins next season with a base salary of $24,799,600, with 8% annual raises from there.

In 2023/24, the NBA’s estimated average salary is $11,958,000, so a player earning less than that amount would be eligible to receive an extension worth up to 140% of that figure. That would work out to a starting salary of $16,741,200 and a four-year total of about $75MM.

A contract extension can’t exceed the maximum salary that a player is eligible to earn, so there are some instances in which a player won’t be able to get a full 40% raise on a new extension.

For instance, Davis’ new three-year extension should technically award him up to a 40% raise on his $43,219,440 salary in 2024/25. However, that would work out to a $60,507,216 salary in 2025/26 — even if the salary cap increases by the maximum allowable 10% in each of the next two summers, Davis’ maximum salary in ’25/26 would be $57,604,894 (35% of the cap). So he won’t receive a full 40% raise on his new deal.

Because a player’s own personal maximum salary on an extension is always at least 5% of his salary in the previous season, there are scenarios in which a player could exceed the league-wide maximum salary. But given the rate at which the cap has increased in recent years, there aren’t any practical examples of that at this point.

Designated veteran extensions and renegotiated contracts have slightly different rules for salaries and raises than standard veteran extensions. You can read about those differences in our glossary entries on those subjects.

Can a player sign a veteran extension as part of a trade?

The NBA’s Collective Bargaining Agreement does allow for extend-and-trade transactions, but the rules governing them are more limiting than for standard veteran extensions.

A player eligible for an extension can sign one in conjunction with a trade, but he would be limited to three overall years and a starting salary worth 105% of the final-year salary on his previous deal. Subsequent annual raises are limited to 5% as well.

A player who receives an extension that exceeds those extend-and-trade limits becomes ineligible to be traded for six months. Conversely, a player who is involved in a trade becomes ineligible to sign an extension for six months if the extension would exceed the extend-and-trade limits.

Kristaps Porzingis‘s two-year extension with the Celtics is an example of a recent extension that didn’t exceed the extend-and-trade limits — he took a pay cut from $36,016,200 to $29,268,293 and the deal lengthened his contract to three total years. Because that extension fell within the extend-and-trade parameters, Porzingis was permitted to sign it less than a month after being traded.

Conversely, since Davis’ new extension lengthens his total contract to five years and will feature raises exceeding 5%, he’ll be ineligible to be traded until February 4, six months after he signed the deal.

These extend-and-trade restrictions will be modified beginning at the start of the 2024/25 league year. At that time, the extend-and-trade limits will increase from three total years and a starting salary up to 105% of the player’s previous salary to four total years and a starting salary up to 120% of the player’s previous salary (or 120% of the estimated average salary, for players earning below the average). The maximum 5% annual raise will remain in place.

Players who renegotiate their current-year salary as part of an extension can’t be traded for six months. This applies to players like Domantas Sabonis and Jordan Clarkson this summer.

An extension-eligible player can’t be extended-and-traded between the end of the season and June 30 if there’s a chance he could become a free agent that July. That rule applies to both veterans on expiring contracts and veterans with team or player options that have yet to be exercised.

For instance, prior to being traded to Boston, Porzingis wouldn’t have been eligible to sign an extension with the Wizards until he had exercised his player option for 2023/24.

What are the other rules related to veteran extensions?

There are many more minor rules and guidelines related to veteran extensions, including several involving bonuses and option years. A full breakdown can be found in Larry Coon’s CBA FAQ, but here are some of the notable ones most likely to come into play:

• A contract with an option can be extended if the player opts in or the team picks up the option.
• A contract with an option can also be extended if the option is declined, as long as the extension adds at least two new years to the deal and the first-year salary isn’t worth less than the option would have been. The only exception to this rule involves an early termination option — a contract with an ETO can’t be extended if the ETO is exercised, ending the contract early. This is why Davis waived his ETO when he signed his extension with the Lakers earlier this month.
• A newly signed extension can contain a player or team option, but not an early termination option.
• If a contract contains incentive bonuses, a veteran extension must contain the same bonuses. The bonus amounts can be increased or decreased by up to 8%, but they must still be part of the deal. An extension also can’t contain bonuses that weren’t part of the original contract.
• If a contract includes an unearned trade bonus, it doesn’t necessarily have to be applied to the extension. If the team and player elect not to carry over the trade bonus to the extension and the player is dealt before the extension takes effect, the application of the bonus would ignore the extension.

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 CBA FAQ was used in the creation of this post.

Previous versions of this post were published in 2019 and 2022.

A new addition in the NBA’s 2017 Collective Bargaining Agreement, the two-way contract is a tool that allows a team to carry extra players beyond the 15 on its standard regular season roster. Players on two-way contracts are eligible to spend up to the entire season in the G League or up to a certain number of games at the NBA level, and can be transferred back and forth between the NBA and NBAGL throughout the season.

The rules for two-way contracts have undergone some major changes since the concept was introduced back in 2017, with the COVID-19 pandemic contributing to some of those tweaks. The league loosened certain restrictions and allowed two-way players to be more available to teams that needed extra bodies during the pandemic — many of those changes have stuck and were ratified in the 2023 CBA.

Given those changes, our glossary entry on the two-way contract is due for an update, so let’s dive in and answer some frequently asked questions about the two-way deal…

Who is eligible to sign a two-way contract?

A player with fewer than four years of NBA experience can sign a two-way contract with a team. Because a player is credited with a year of service on the last day of a league year (ie. June 30), a player with three years of experience is eligible to sign a two-way contract at any time during his fourth NBA season. For instance, a player who is waived halfway through his fourth NBA season is still deemed to have three years of service and could sign a rest-of-season two-way contract.

As part of the 2023 CBA, the league and the players’ union agreed to implement what is informally known as the “Harry Giles rule.” Giles has been on an NBA roster for four seasons, but missed the entirety of his 2017/18 rookie year due to an injury, so he has only actually played in an NBA regular season game in three separate seasons.

The new rule will allow Giles – and any other player who has four years of NBA service but missed one or more of those seasons due to an injury – to sign a two-way contract, assuming the player meets the following criteria:

1. He has four years of NBA experience (ie. a player with five years of experience who missed two full seasons due to injuries would not be eligible).
2. He didn’t appear in any regular season or playoff games during his injury year.
3. During his injury year, he was on a team’s roster for the entire regular season.
4. He is signing a one-year two-way contract.

Dylan Windler is another example of a player who qualified for a two-way contract in 2023/24, having met the above criteria during his first four NBA seasons. That’s why he was permitted to sign a two-way deal with the Knicks.

How many years can a two-way contract cover?

A two-way contract can be for either one or two years, and can’t include a team or player option.

Although two-way contracts can be for up to two years, a player who has three years of NBA experience can’t sign such a deal, since he’d have four years of service after the first season. As such, two-way contracts for players with three years of experience are limited to one year.

A player also can’t spend more than three total seasons on two-way contracts with the same team. For example, a player who signed two-way deals with a club during his first two NBA seasons couldn’t then agree to a two-year two-way contract with the same team.

How much are players paid on a two-way contract?

The default salary for a full one-year, two-way contract is half of the rookie minimum salary. For example, since the 2023/24 rookie minimum is $1,119,563, the two-way salary is $559,782. No performance bonuses can be included in a two-way agreement.

That two-way salary becomes prorated if a player signs his contract after the regular season has began. Since the 2023/24 regular season is 174 days long, if a player were to sign a two-way deal with 120 days left in the season, his salary would be $386,057 — that’s 120/174ths of $559,782.

A two-way deal signed before the regular season begins can be partially guaranteed for up to the maximum Exhibit 10 bonus amount for that year. In 2023/24, that amount – also known as the maximum two-way protection amount – is $75K.

A team and player can negotiate to have up to half of his two-way salary become guaranteed at the start of the regular season. If the two sides agree to those terms, the player would receive half his two-way salary assuming he’s not waived on or before the first day of the regular season. Each player’s full two-way salary would become guaranteed if he remains under contract through January 7, and each two-way deal signed after that date is immediately guaranteed.

How do two-way contracts work for the teams signing them?

While a player who signs a G League contract to play for a team’s NBAGL affiliate remains an NBA free agent and can be signed away by any other team, a club that signs a player to a two-way deal has the player’s exclusive rights for the life of the contract. He can’t be poached by a rival team.

A team gets up to three roster slots for two-way contracts, and doesn’t need to use salary cap room or a cap exception to finalize those deals. They don’t count against a club’s salary cap.

However, there are some limitations facing teams when they sign two-way contracts. For one, if a club wants to sign a player on an overseas roster to a two-way contract, the NBA team is not allowed to pay that player’s international buyout. Additionally, NBA teams can’t sign players to two-way contracts after March 4 of each season.

How many games can a player on a two-way contract play for his NBA team?

If a player is on a two-way contract, he can be active for no more than 50 regular season games, or a prorated portion of 50 games, if he signs after the regular season begins.

For the purposes of determining the maximum active games for a two-way player who signs after the start of the regular season, the number of days left in the season are divided by the total number of days in the season, then multiplied by 50 and rounded to the nearest whole number.

A team isn’t permitted to have a two-way player active for more than 90 “under-15” games in a season. An “under-15” is any game in which the team is carrying fewer than 15 players on standard contracts, and a team is credited with an “under-15” game toward the 90-game limit for each two-way player who is active.

For instance, if a team with 14 players on standard contracts had all three of its two-way players active for its first 30 games of the season, it would reach its 90-game limit. In order to free up those two-way players to be active for 20 more games apiece, the club would have to sign a 15th player to a standard contract.

If a team wants to keep its two-way player on the NBA roster for more than 50 regular season games, it has to convert the player’s two-way deal into a standard NBA contract, after which he’d no longer count as a two-way player.

Additionally, a player on a two-way contract must have his deal converted to a standard NBA contract in order to participate in the postseason. A player on a two-way deal isn’t playoff-eligible.

How do two-way conversions work?

There are two types of two-way conversions:

1. A player being converted from an Exhibit 10 contract to a two-way contract

A player on an Exhibit 10 contract can only be converted to a two-way deal up until the day before the regular season begins.

The player must have an Exhibit 10 clause in his contract in order to be converted to a two-way deal. A player on a non-guaranteed training camp contract that only includes Exhibit 9 (not Exhibit 10) language cannot be directly be converted to a two-way deal and would be have to be waived and then re-signed if the team wants to make him a two-way player.

A player can be waived from a standard contract and re-signed to a two-way deal as long as he meets the service time criteria and isn’t already owed more than the two-way protection amount ($75K in 2023/24) from his team.

For example, although Dalano Banton only has two years of NBA experience, the Celtics wouldn’t be able to waive him and re-sign him to a two-way contract because his deal with the team includes a $200K partial guarantee.

2. A player being converted from a two-way contract to a standard contract

A player on a two-way contract can be converted without his consent. In that scenario, he would receive the minimum salary for the remaining term of his contract. A player on a one-year two-way contract would get a one-year, minimum-salary standard contract, while a player with two years left on his two-way deal would get a two-year, minimum-salary standard contract.

Alternately, the team and player could negotiate new terms that include more than one or two years and/or more than the minimum salary. In this scenario, the club would have to use either cap room or a cap exception to accommodate the terms of the deal. For instance, when the Pelicans negotiated a standard contract with two-way player E.J. Liddell earlier this offseason, they used a portion of their mid-level exception to give him three years.

In a situation where a two-way contract is converted to a regular NBA deal, the typical 15-man roster rules would apply to that player. He could be assigned back to the G League, but he’d continue to earn an NBA salary, since he’d no longer be a two-way player.

Can players on two-way contracts be traded?

Players on two-way contracts can be included in trades. However, they can’t be dealt within 30 days of being signed, and their salaries don’t generate trade exceptions for NBA teams.

In actuality, trades involving players on two-way contracts hardly ever occur. It has only happened twice to date. Johnathan Motley was traded from the Mavericks to the Clippers in 2018 and Julian Washburn was traded from the Grizzlies to the Warriors in 2019.

How does free agency work for a player whose two-way contract is expiring?

Nearly every player completing a two-way contract is eligible for restricted free agency. If his team issues him a qualifying offer by 5:00 pm Eastern time on June 29, he becomes a restricted free agent; if his team declines to issue a qualifying offer by that deadline, he becomes an unrestricted free agent.

The qualifying offer for a player coming off a one-year two-way contract is equivalent to another one-year two-way contract, with a partial guarantee worth the maximum two-way protection amount ($75K in 2023/24).

However, the qualifying offer looks a little different for a player who has spent the last two seasons on the same two-way contract; who has spent the last two years on two-way deals with the same team; or who is no longer eligible for a two-way contract because he has four years of NBA experience.

The qualifying offer in that case would be for the player’s standard veteran minimum (based on his years of experience) and would be partially guaranteed for the standard/two-way QO protection amount ($90K in 2023/24).

The maximum two-way protection amount ($75K) and the standard/two-way QO protection amount ($90K) will increase at the same rate as the salary cap in 2024/25 and beyond. So if the cap rises by 10%, those figures will also rise by 10%.

A two-way player who is issued a qualifying offer has the same options as a standard restricted free agent. He can sign a standard offer sheet with another team, negotiate a new deal with his current team, or simply accept his QO.

An offer sheet with a rival suitor would have to be a standard deal, not another two-way contract. The same rules that would apply to a standard RFA’s offer sheet apply to one for a two-way player — for instance, it must cover at least two years, and players with only one or two years of experience are subject to the Gilbert Arenas provision.

A two-way player is ineligible to receive a qualifying offer only if he’s a former first-round pick whose third- or fourth-year rookie scale team option was declined.

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 information from ESPN’s Bobby Marks was used in the creation of this post.

A previous version of this article was published in 2017.

When NBA teams are in the process of filling out their training camp rosters, the most common form of deal signed by players around the league is the Exhibit 10 contract. An Exhibit 10 contract can be converted into a two-way deal or puts a player in line to earn a bonus if he’s waived and then joins his team’s G League affiliate.

Many of those non-guaranteed training camps also include an Exhibit 9 clause in addition to – or in place of – Exhibit 10 language.

An Exhibit 9 clause protects an NBA team in the event that a player suffers a significant injury in training camp.

If a player on a standard non-guaranteed contract without an Exhibit 9 clause suffered such an injury, his club would be required to pay him his salary until he’s healthy enough to play or until the end of that season, whichever comes first. For example, a player on a non-guaranteed rookie minimum deal who sustained a season-ending ACL tear would be owed his full $1,119,563 salary.

If the injured player’s contract includes Exhibit 9 language, however, his team could waive him and only be on the hook for a one-time payment of $15K. That amount has increased from $6K in the NBA’s previous Collective Bargaining Agreement.

An Exhibit 9 contract, which is non-guaranteed and doesn’t count against the salary cap until the start of the regular season, can only be a one-year, minimum-salary deal. A team can carry up to six players on Exhibit 9 deals, but can’t sign a player to such a contract unless it has at least 14 players already under contract (not including two-way deals).

In most cases, if a team plans to have a player on a non-guaranteed contract participate in training camp and/or the preseason, his contract will include an Exhibit 9 clause in order to limit the club’s liability.

Earlier this offseason, for example, the Rockets wanted to begin signing their training camp invitees, but only had 13 players on standard contracts. Houston signed Joshua Obiesie to an Exhibit 10 pact, making him their 14th man and meeting the roster minimum required to begin completing Exhibit 9 deals. Because the Rockets don’t have injury protection for Obiesie, they reportedly have no intention of having him take part in camp.

The Heat took a similar approach, signing Brandon McCoy as their 14th man to an Exhibit 10 contract that didn’t include an Exhibit 9 clause. With 14 players on standard contracts, Miami subsequently signed several players to Exhibit 9 deals, waiving McCoy in the process — he won’t be on the Heat’s camp roster.

An Exhibit 9 contract that also includes Exhibit 10 language can be converted into a two-way deal. In that scenario, the Exhibit 9 clause would become null and void, so the team would no longer have injury protection.

In the event that a player with Exhibit 9 language in his contract makes his team’s regular season roster, his deal would be converted to a standard non-guaranteed contract. The Exhibit 9 protection wouldn’t carry over into the regular season.

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 article was published in 2014.

The rules governing the number of players an NBA team can carry on its roster vary depending on the time of year.

Between the start of the regular season and the last day of a team’s season, a club isn’t allowed to carry more than 15 players on its roster, except in rare instances. Generally, when a club with 15 players on its roster acquires a new player, it must waive someone to clear a spot. In the offseason though, teams are permitted to carry up to 21 players on their rosters.

The regular season limit applies to players on standard contracts, while the offseason limit applies to players on any form of contract.

During both the regular season and offseason, a team is permitted to carry up to three players on two-way contracts, which are a non-standard form of deal that allows a player to be transferred back and forth between the NBA and G League.

In the regular season, two-way players don’t count toward the 15-man limit, meaning teams can essentially have 18 players under contract at a time. However, two-way players do count toward the 21-man limit in the offseason. If a club is carrying 21 players on standard NBA contracts in August, it can’t sign a player to a two-way deal without waiving someone.

[RELATED: 2023/24 NBA Roster Counts]

In some cases, a team ravaged by injuries will receive one or more extra spots on its regular season roster via the hardship provision. The NBA can grant a hardship exception – which allows the club to sign a player to a 10-day contract without requiring a roster spot – when a team has at least four players who have missed three consecutive games and who are expected to remain sidelined for at least the next two weeks due to injury or illness.

A team qualifies for a single hardship exception when it has four players who meet that criteria, but it can become eligible for additional hardship exceptions if it has a fifth or sixth injured/ill player. For example, if a club has six players who have missed at least three consecutive games due to injury and are expected to remain out for two more weeks, it could be granted three hardship exceptions, allowing the club to temporarily carry three extra players beyond its usual 15 (not counting two-ways).

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

Generally speaking, the fewest number of players an NBA team can have on its roster during the regular season is 14, not counting two-way players. However, a team is permitted to dip to 12 or 13 players for a limited period. That club can’t carry fewer than 14 players on standard contracts for more than two weeks at a time or more than 28 total days during a regular season.

The rules for in-game roster minimums and maximums are as follows:

• A team can have between 12 or 15 players listed as active for a game.
• A team can carry as few as 11 active players for up to two weeks at a time or up to 28 total days during a regular season.
• A team must have at least eight players dressed for a game (at least three or four players beyond those eight must technically be listed as active).

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

Earlier versions of this post were published in 2012 and 2013 by Luke Adams.

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 helps ensure that virtually every team heads into the offseason with a little spending flexibility.

Teams are eligible to use specific types of mid-level exceptions depending on their proximity to the salary cap. The most lucrative form of mid-level is available to teams that are over the cap but below the first tax apron. Clubs above the first apron, and even those operating under the cap, have access to lesser versions of the MLE.

Here’s a breakdown of how the various forms of the exception are structured:

For teams over the cap and below the first tax apron:

• Commonly called either the full mid-level exception or the non-taxpayer mid-level exception.
• Contract can cover up to four seasons.
• First-year salary is worth $12,405,000 in 2023/24; maximum four-year value is $53,341,500.
• Once used, the team cannot surpass the first tax apron (approximately $7MM above the tax line in 2023/24) for the remainder of the season.
• Beginning in 2024/25, this form of mid-level exception can be used to acquire a non-free-agent via trade or waiver claim, as long as his contract fits into the exception (in terms of years and dollars). Only the player’s current-year salary must fit into the MLE.

For teams operating under the cap:

• Commonly called the room exception.
• Contract can cover no more than three seasons.
• First-year salary is worth $7,723,000 in 2023/24; maximum three-year value is $24,327,450.
• Beginning in 2024/25, this form of mid-level exception can be used to acquire a non-free-agent via trade or waiver claim, as long as his contract fits into the exception (in terms of years and dollars). Only the player’s current-year salary must fit into the room exception.

For teams over the cap and the first tax apron, but below the second apron:

• Commonly called the taxpayer mid-level exception.
• Contract can cover up to two seasons.
• First-year salary is worth $5,000,000 in 2023/24; maximum two-year value is $10,250,000.
• Once used, the team cannot surpass the second tax apron ($17.5MM above the tax line in 2023/24) for the remainder of the season.

For teams over the cap and both tax aprons:

• No mid-level exception is available.

Each form of the mid-level allows for annual raises of up to 5% of the value of the first season’s salary.

Teams can use their entire mid-level exception to sign one player. However, only one club has taken this route so far in 2023/24, with the Raptors signing Dennis Schröder to a multiyear contract that’s worth $12,405,000 in year one.

Teams are also allowed to split the mid-level among multiple players, and that has become an increasingly common course of action. For instance, the Mavericks have used their MLE to sign Seth Curry ($4MM) and Dante Exum ($3MM) so far in ’23/24 and still have more than $5MM remaining.

In the past, players drafted in the second round often signed contracts using a portion of the mid-level because the exception allows teams to offer more years and more money than the minimum salary exception provides. However, the new second-round pick exception has all but eliminated the need for teams to use the MLE on second-round picks.

Still, if a team wants to sign an undrafted free agent to a longer-term contract or convert a two-way player to a multiyear deal, the mid-level can come in handy. The Pelicans used their MLE this summer to move E.J. Liddell from his two-way deal to a three-year contract that begins at the minimum ($1,801,769).

Some front offices prefer to leave all or part of their mid-level exception unused in the offseason so it’s still available during the second half of the regular season. At that point, a contender could dangle its MLE in an effort to outbid rivals for top players on the buyout market. A non-contending club, on the other hand, could use its MLE 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 any of its mid-level in 2023/24, each club below the second tax apron in ’24/25 will have the opportunity to use some form of the MLE.

The amount of each form of mid-level exception increases – or decreases – at the same rate as the salary cap, ensuring that its value relative to cap room remains about the same from year to year. So if the salary cap rises by 10%, the mid-level values would rise by the same amount.

Here are a few more notes related to the mid-level exception:

• A contract signed using a mid-level exception can include bonuses as long as the player’s maximum potential compensation doesn’t exceed the maximum value of the exception. For example, in 2023/24, a team can’t sign a player to a contract using the non-taxpayer mid-level exception that has a base salary of $12,405,000 and another $1MM in incentives. But a contract with a base salary of $11,405,000 and $1MM in incentives is permitted.
• A team is only allowed to use one form of mid-level exception in a given season. For instance, an over-the-cap club that uses a portion of its non-taxpayer mid-level exception before shedding salary and dipping below the cap would not then be permitted to use the room exception.
• On the day after the trade deadline, the value of a team’s unused mid-level exception begins to prorate downward. The exact amount of proration depends on how much of the MLE was unused as of January 10 and how many total days there are in the regular season. For example, if a team had $3MM of its mid-level left on January 10 and there are 174 days in that season, the MLE would decrease in value by $17,241 per day (1/174th of $3MM).

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 previous years.