Hoops Rumors Glossary

Under the NBA’s old Collective Bargaining Agreement, which was in effect through the 2016/17 season, a player’s full cap hit was used for salary-matching purposes in trades, whether or not his salary was guaranteed. If a player had an $10MM salary with a partial guarantee of $1MM, his outgoing salary in a trade was the same as it would have been for a player who had a fully guaranteed $10MM contract.

That’s no longer the case, however. Now, only the guaranteed portion of a player’s contract counts for outgoing salary purposes in a trade, limiting the appeal of non-guaranteed salaries as trade chips.

This detail is crucial for determining how much salary a team can acquire in a trade — unless a team is under the cap, the amount of salary it sends out in a trade dictates how much salary it can take back. The amount of salary an over-the-cap team can acquire in a trade ranges from 125% to 175% of its outgoing salary, depending on exactly how much salary the team is sending out and whether or not the team is a taxpayer.

Under the old system, it might make sense for a cap-strapped club to trade a player with a guaranteed salary for a player earning an equivalent non-guaranteed salary — the cap-strapped club could then waive that newly-acquired player to cut costs. That’s no longer a viable strategy.

Complicating matters further is the fact that a team can’t simply circumvent the new rules by trading a player before a league year ends on June 30, then having his new team waive him once his new non-guaranteed cap hit goes into effect on July 1. After the end of the regular season, a player’s outgoing salary for trade purposes is the lesser of his current-year salary and the guaranteed portion of his salary for the following season.

Here’s a practical example: Chris Paul‘s deal with the Suns featured a fully guaranteed salary of $28.4MM in 2022/23, with only $15.8MM of $30.8MM guaranteed for ’23/24. Between the end of the Suns’ season and June 28 – which is when Paul’s full ’23/24 salary will become guaranteed – his outgoing salary for matching purposes is just $15.8MM, but his incoming salary for his new team would be $30.8MM.

Paul is far from the only player who could be affected by these trade rules this summer. Nets forward Royce O’Neale, Jazz big man Kelly Olynyk, Clippers guard Eric Gordon, Lakers center Mohamed Bamba, and Magic wing Gary Harris are among the many players who have partially guaranteed or non-guaranteed salaries for 2023/24 and won’t make great trade candidates unless those guarantees are increased.

Last offseason, when the Hawks agreed to send Danilo Gallinari to the Spurs in their trade for Dejounte Murray, Gallinari’s cap charges were $20.5MM for 2021/22 and $21.5MM for ’22/23, which should have been more than enough to account for Murray’s incoming salary ($15.4MM for ’21/22; $16.6MM in ’22/23). But Gallinari’s 2022/23 salary was only partially guaranteed for $5MM, which wouldn’t have been satisfactory to match Murray’s full cap hit, so Atlanta and San Antonio had to increase that partial guarantee in order to make the deal legal.

To paint a complete picture of exactly how these new rules work, let’s assume that a free agent signs a two-year, $24MM contract during the summer of 2023. His cap hit in each year is $12MM, but the first season of the contract is partially guaranteed for $3MM, while the second year is fully non-guaranteed. Here’s how it would count, for trade purposes, as outgoing salary:

1. From the date of the signing until the one-quarter mark of the 2023/24 season:
   • $3MM
   • Note: Due to other CBA rules, the player wouldn’t become trade-eligible until at least December 15, 2023 anyway.
2. From the one-quarter mark of the 2023/24 regular season until salaries become guaranteed on January 10, 2023:
   • A prorated amount of the salary based on the player’s earnings to date.
   • Note: The player would earn 1/174th of his $12MM salary per day; so 60 days into the season, his outgoing salary in a trade would be $4,137,931 (60/174ths of $12MM).
3. From January 10, 2024 until the 2024 trade deadline:
   • $12MM
4. From the day after the team’s 2023/24 season ends until the start of the 2024/25 regular season:
   • $0
5. From the start of the 2024/25 regular season until salaries become guaranteed on January 10, 2025:
   • A prorated amount of salary based on earnings to date.
   • Note: The player would once again earn 1/174th of his $12MM salary per day; so 10 days into the season, his outgoing salary in a trade would be $689,655 (10/174ths of $12MM).
     
6. From January 10, 2025 until the 2025 trade deadline:
   • $12MM

This change to the NBA’s trade rules hasn’t stopped teams from tacking on non-guaranteed years to the end of certain players’ contracts, since those non-guaranteed salaries still provide flexibility. However, we’re not seeing teams construct contracts with non-guaranteed cap hits solely for trade purposes like we sometimes used to.

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.

As Larry Coon explains in his invaluable CBA FAQ, the term “base year compensation” technically no longer shows up in the NBA’s Collective Bargaining Agreement, and hasn’t since 2011. A relic of past agreements, the base year compensation rule was intended to prevent teams from signing free agents to new contracts that were specifically intended to facilitate salary-matching in trades.

While the base year compensation rules have mostly been adjusted and/or removed from the CBA in recent years, there’s still one situation where they apply. Teams have to take them into account when completing sign-and-trade deals.

The BYC rules apply to a player who meets all of the following criteria in a sign-and-trade:

• He is a Bird or Early Bird free agent.
• His new salary is worth more than the minimum.
• He receives a raise greater than 20%.
• His team is at or above the cap immediately after the signing.

If the player meets those criteria and is included in a sign-and-trade deal, his outgoing salary for matching purposes is considered to be his previous salary or 50% of his new salary, whichever is greater. For the team he is being signed-and-traded to, his incoming figure for matching purposes is his full new salary.

Here are a couple specific examples to help make things a little clearer:

Let’s say the Nets want to sign-and-trade Cameron Johnson this offseason. He’s a Bird free agent, his new salary will be well above the minimum, and Brooklyn projects to be an over-the-cap team. Having made $5,887,899 in 2018/19, Johnson figures to receive a raise significantly higher than 20% — his next deal could easily start at or above $20MM. So he meets the BYC criteria.

In a scenario where he signs a deal with a $22MM starting salary as part of a sign-and-trade, Johnson’s salary for matching purposes from the Nets’ perspective would be $11MM, which is 50% of his new salary (that amount is greater than his previous salary). From his new team’s perspective, Johnson’s incoming figure would be his actual salary, $22MM.

James Harden is another top free agent who would meet the BYC criteria if he’s signed-and-traded by the Sixers this offseason. If he gets a maximum salary contract – projected to be worth $46.9MM for a player with his NBA experience – Harden’s outgoing salary for matching purposes would be $33MM, the amount he made in 2022/23 — that figure would be higher than 50% of his new salary.

Often, a team acquiring a player via sign-and-trade doesn’t have the cap room to sign the player outright, or else there would be little incentive to negotiate a sign-and-trade. That means salary-matching is required, which can be complicated by base year compensation rules.

In the scenario outlined above, the Nets wouldn’t be able to take back more than $16MM in salary in exchange for Johnson due to the league’s matching rules. That number would dip to $13.85MM if Brooklyn’s team salary is above the tax apron.

However, in order to take on $22MM in incoming salary, Brooklyn’s hypothetical trade partner – assuming they’re over the cap – would have to send out at least $17MM in order to account for those salary-matching rules themselves.

The gap between the salary-matching figures from the two teams’ perspectives complicates sign-and-trade talks, requiring both clubs to include additional pieces to make the deal work. A third team could even be necessary to make the numbers line up.

One recent example of two teams navigating base year compensation rules to complete a sign-and-trade occurred last September, when the Cavaliers sent Collin Sexton to the Jazz as part of the Donovan Mitchell blockbuster. Sexton’s first-year salary was $16.5MM, which was the amount Utah had to account for when matching salaries. But from Cleveland’s perspective, Sexton’s outgoing salary was just $8.25MM, half of that amount, since he met the BYC criteria.

In packaging Sexton with Lauri Markkanen and Ochai Agbaji, the Cavs’ outgoing salary for matching purposes was $28.6MM, which was enough to accommodate Mitchell’s $30.9MM salary. From Utah’s perspective, the three incoming players were worth $36.9MM in incoming salary when taking into account Sexton’s full cap hit. But the Jazz were permitted to take back up to approximately $38.7MM (125% of Mitchell’s salary, plus $100K), so the deal worked for both sides.

The base year compensation concept doesn’t surface all that often, due to the specific criteria that must be met. However, it looms large over sign-and-trade attempts involving free agents who receive significant raises, reducing the likelihood of teams finding a deal that can be legally completed.

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 salary information from Basketball Insiders was used in the creation of this post.

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

The Mavericks have a little less than $104MM in guaranteed money committed to player salaries for 2023/24. However, even though next season’s salary cap is expected to come in at $134MM, Dallas won’t begin the 2023 offseason with $30MM+ in cap room to spend.

In fact, the Mavericks technically won’t open the new league year with any cap space at all. Each of Dallas’ own free agents will be assigned a free agent amount – or “cap hold” – until the player signs a new contract or the Mavericks renounce his rights.

The general purpose of a cap hold is to prevent teams from using room under the cap to sign free agents before using Bird rights to re-sign their own free agents. If a team wants to take advantage of its cap space, it can renounce the rights to its own free agents, eliminating those cap holds. However, doing so means the team will no longer hold any form of Bird rights for those players — if the team wants to re-sign those free agents, it would have to use its cap room or another kind of cap exception.

The following criteria are used for determining the amount of a free agent’s cap hold:

• First-round pick coming off rookie contract: 300% of the player’s previous salary if prior salary was below league average; 250% of previous salary if prior salary was above league average.
• Bird player: 190% of previous salary (if below league average) or 150% (if above average).
• Early Bird player: 130% of previous salary.
• Non-Bird player: 120% of previous salary.
• Minimum-salary player: Two-year veteran’s minimum salary, unless the free agent only has one year of experience, in which case it’s the one-year veteran’s minimum.
• Two-way player: One-year veteran’s minimum salary.

A cap hold for a restricted free agent can vary based on his contract status. A restricted free agent’s cap hold is either his free agent amount as determined by the criteria mentioned above or the amount of his qualifying offer, whichever is greater.

No cap hold can exceed the maximum salary for which a player can sign. For example, the cap hold for a Bird player with a salary above the league average is generally 150% of his previous salary, as noted above. But for someone like Mavericks star Kyrie Irving, whose cap charge was $39,204,557 this season, 150% of his previous salary would be nearly $59MM, well beyond his projected maximum salary.

Instead, Irving’s cap hold will be equivalent to the maximum salary for a player with 10+ years of NBA experience. If we assume a cap of $134MM, that figure works out to $46.9MM.

One unusual case involves players on rookie contracts whose third- or fourth-year options are declined. The amount of their declined option becomes their cap hold, and if the player’s team wants to re-sign him, his starting salary can’t exceed that amount.

For instance, the Jazz declined Udoka Azubuike‘s 2023/24 fourth-year option last fall. As a result, Utah won’t be able to offer Azubuike a starting salary this offseason worth more than $3,923,484, the amount of that option. That figure will also be his cap hold.

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. It applies even if the player is traded after his option is declined, but only to the club the player is part of at season’s end. Any team besides the Jazz could offer Azubuike a starting salary greater than $3,923,484 this offseason.

If a team holds the rights to fewer than 12 players, cap holds worth the rookie minimum salary are assigned to fill out the roster. So, even if a front office chooses to renounce its rights to all of its free agents and doesn’t have any players under contract, the team wouldn’t be able to fully clear its cap. An incomplete roster charge in 2023/24 projects to be worth $1,102,929, meaning a team without any guaranteed salary or any other cap holds would have closer to $121MM in cap room than $134MM due to its 12 rookie minimum holds.

A player who has been selected in the draft but has not yet officially signed his rookie contract only has a cap hold if he was a first-round selection. A cap hold for a first-round pick is equivalent to 120% of his rookie scale amount, based on his draft position. An unsigned second-round pick doesn’t have a cap hold.

Cap holds aren’t removed from a team’s books until the player signs a new contract or has his rights renounced by the club. For example, the Warriors are still carrying cap holds on their books for retired players like David West and Matt Barnes, who never signed new contracts since playing for Golden State.

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. If and when the Warriors want to maximize their cap room, they’ll renounce West and Barnes, but they’ve remained over the cap – and haven’t needed to remove those holds – since those players became free agents in 2017.

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

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

There are many NBA players technically on maximum salary contracts, but most of those players didn’t earn identical salaries this season, making the league’s “maximum salary” something of a misnomer. While each NBA player has a maximum salary that he can earn in a given season, that number varies from player to player, with a handful of factors playing a part in determining the exact figure.

The primary factor in determining a player’s maximum salary is his years of service. If a player has been in the NBA for no more than six years, he can earn up to 25% of the salary cap in the first year of his deal. Players with seven to nine years of experience can earn up to 30%, while veterans with 10 or more years in the NBA are eligible for up to 35% of the cap. In 2022/23, the salary cap is $123,655,000, meaning the maximum salaries are as follows:

The figures above explain why Zach LaVine, who signed a maximum salary contract with the Bulls last July following his eighth NBA season, earned a salary of $37,096,500 this season. But they don’t explain why Suns star Devin Booker, who is also in that 7-9 year window and is on a max contract of his own, made just $33,833,400.

The reason Booker’s maximum salary is a few million shy of LaVine’s is that those league-wide maximum salary figures only apply to the first year of a multiyear contract.

When a player signs a maximum contract, he can receive annual raises of up to either 8% or 5%, depending on whether he signs with his previous team or a new team. So by the third, fourth, or fifth year of his contract, he could be earning significantly more or less than his updated max for that season, depending on the rate the salary cap has been increasing and whether or not he has moved into a new “years of service” group.

Booker signed his first maximum salary contract extension in 2018 and it went into effect in 2019/20, when he had fewer than six years of NBA experience. Although he has received annual 8% raises since then, those raises haven’t been enough to keep up with the annual cap growth and with his move into the 7-9 year window. As a result, he earned about $3.26MM less than his actual max in 2022/23, despite being on a “max contract.”

Booker signed a new contract extension last summer that will go into effect in 2024/25, at which point he’ll receive a major pay bump and surpass LaVine’s annual earnings.

Here are a couple more ways a player’s usual maximum salary can fluctuate:

• A free agent’s maximum salary is always at least 105% of his previous salary. For example, Warriors star Stephen Curry is earning $48,070,014 this season. He’s under contract for three more years, but if he were eligible for free agency this offseason, he’d be eligible to receive a starting salary of up to $50,473,515 (105% of this year’s salary), even though that figure will easily exceed 35% of the 2023/24 cap.
• In certain situations, players eligible for new contracts can earn the maximum salary for the level above the one they’d typically fall into. A player receiving a designated rookie extension can earn up to 30% of the cap instead of 25% if he meets certain criteria. A veteran can become eligible to earn up to 35% of the cap instead of 30% if he meets the same criteria, which are related to MVP, Defensive Player of the Year, or All-NBA honors.

A player who signs a maximum salary contract can receive a trade kicker as part of his deal, but he can’t cash in on that bonus for any amount beyond his maximum salary in a given league year. For instance, Bradley Beal‘s max salary contract with the Wizards features a 15% trade kicker, but if he had been traded this season, he wouldn’t have been eligible to receive that bonus, since he was already earning his maximum salary of $43,279,250.

Similarly, a maximum salary player whose team finishes the season below the minimum salary floor isn’t eligible to receive a share when the team distributes that money to its players, since his max salary for that year can’t be exceeded.

The current figures for maximum salaries in 2023/24 are as follows, based on the NBA’s projection of a $134MM salary cap:

These figures will apply to players who previously signed maximum salary extensions that will go into effect in ’23/24, including Ja Morant, Zion Williamson, Darius Garland, and Nikola Jokic.

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 previously published by Luke Adams and Chuck Myron.

For NBA teams looking to open up cap room, simply waiving a player isn’t as effective as it is in the NFL, where salaries are often non-guaranteed and most or all of a player’s cap charge can frequently be wiped from a team’s books. Still, the NBA’s Collective Bargaining Agreement does feature a rule that allows teams to spread a player’s cap hit over multiple seasons. This is called the stretch provision.

The stretch provision ensures that any player waived with at least $250K in guaranteed salary remaining on his contract will have the payment schedule of that money spread across multiple years. That schedule is determined as follows:

• If a player is waived between July 1 and August 31, his remaining salary is paid over twice the number of years remaining on his contract, plus one.
• If a player is waived between September 1 and June 30, his current-year salary is paid on its normal schedule, with any subsequent years spread over twice the number of remaining years, plus one.
• If a player in the final year of his contract is waived between September 1 and June 30, the stretch provision does not apply.

While the new payment schedule for a waived player is non-negotiable, teams get to decide whether or not to apply the stretch provision to that player’s cap charges as well. A team can stick to the original schedule for cap hit purposes, if it so chooses.

Rather than singling out a specific active player, we’ll use a hypothetical contract to create a clearer picture of what these rules look like. Let’s say there’s a player earning $19MM this season, $20MM in 2023/24, and $21MM in ’24/25 who has become a candidate to be waived.

Here’s what that contract would look like if it were waived without applying the stretch provision to the cap hits; if it were stretched before August 31; or if it were stretched after August 31:

Because this hypothetical player wasn’t waived and stretched before August 31, 2022, his salary for the current year can no longer be stretched. Stretching his contract last July or August would have resulted in cap hits of about $8.57MM spread across seven seasons (through 2028/29 and including ’22/23).

As this chart shows, it typically makes sense to waive and stretch a player’s contract in July or August if the team is looking to generate immediate cap flexibility for the current season and isn’t as concerned about the impact in future seasons. If this hypothetical player were stretched in July 2023, his team would trim nearly $12MM off its ’23/24 cap, but would remain on the hook for payments through 2028.

We saw a couple real-life examples of this philosophy at play last summer, when the Trail Blazers waived and stretched Eric Bledsoe and Didi Louzada and the Pacers waived and stretched Nik Stauskas, Juwan Morgan, and Malik Fitts.

Portland was looking to reduce its team salary for the current year in order to sneak below the luxury tax line, while Indiana wanted to carve out a little extra cap room in order to sign Deandre Ayton to a maximum-salary offer sheet.

In each of those cases, the club sought immediate cap relief. That wasn’t the case for the Spurs, who waived Danilo Gallinari last July and decided not to apply the stretch provision to his $13MM cap charge for 2022/23, since they had no specific use for that extra cap room. It made more sense for San Antonio to take the hit this season and keep Gallinari’s money off their future cap sheets.

There are a couple more key rules related to the stretch provision worth noting.

First, while the stretch provision regulates when money is paid out, it doesn’t prevent teams and players from negotiating a reduced salary as part of a buyout agreement.

For example, let’s say a player who has an $18MM expiring contract for 2023/24 agrees this July to give up $3MM in a buyout. As a result of that buyout agreement, his team could stretch his remaining salary and end up with cap hits of $5MM for three seasons (through ’25/26) rather than $6MM.

Second, non-guaranteed money isn’t subject to the stretch provision, since a team isn’t obligated to pay the non-guaranteed portion of a contract once it waives a player.

This rule can come in handy when a club decides to waive a player who has one or two non-guaranteed years tacked onto the end of his contract. For instance, when the Blazers waived Louzada last August, he had three years left on his deal, but only his 2022/23 salary of $1,876,222 was guaranteed — the $4,023,212 owed to him for the two seasons beyond this one was fully non-guaranteed.

That means that when they waived Louzada, the Blazers only owed him just $1,876,222 but were able to stretch that figure across seven seasons (twice the three years remaining on his contract, plus one). As a result, Portland will carry tiny $268,032 cap charges for Louzada on its books through the 2028/29 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.

Earlier version of this post were published in 2013 and 2017.

The NBA’s draft lottery, which takes place annually between the end of the regular season and the draft, is the league’s way of determining the draft order and disincentivizing second-half tanking. The lottery gives each of the 14 non-playoff teams – or whichever clubs hold those teams’ first-round picks – a chance to land one of the top four selections in the draft.

Although the top four picks of each draft are up for grabs via the lottery, the remaining order is determined by record, worst to best. The league’s worst team isn’t guaranteed a top-four spot in the draft, but is tied for the best chance to land the first overall pick and will receive the fifth overall selection at worst.

The first four picks are determined by a draw of ping-pong balls numbered 1 through 14. Four balls are drawn, resulting in a total of 1,001 possible outcomes. 1,000 of those outcomes are assigned to the 14-non playoff teams — for instance, if balls numbered 4, 7, 8, and 13 were chosen, that combination would belong to one of the 14 lottery teams. The 1,001st combination remains unassigned, and a re-draw would occur if it were ever selected.

The team whose combination is drawn first receives the number one overall pick, and the process is repeated to determine picks two, three, and four. The 14 teams involved in the draft lottery are all assigned a specific number of combinations, as follows (worst to best):

1. 140 combinations, 14.0% chance of receiving the first overall pick
2. 140 combinations, 14.0%
3. 140 combinations, 14.0%
4. 125 combinations, 12.5%
5. 105 combinations, 10.5%
6. 90 combinations, 9.0%
7. 75 combinations, 7.5%
8. 60 combinations, 6.0%
9. 45 combinations, 4.5%
10. 30 combinations, 3.0%
11. 20 combinations, 2.0%
12. 15 combinations, 1.5%
13. 10 combinations, 1.0%
14. 5 combinations, 0.5%

If two lottery teams finish the season with identical records, each team receives an equal chance at a top-four pick by averaging the total amount of outcomes for their two positions. For instance, if two teams tie for the league’s fourth-worst record, each club would receive 115 combinations and an 11.5% chance at the first overall pick — an average of the 125 and 105 combinations that the fourth- and fifth-worst teams receive.

If the average amount of combinations for two positions isn’t a whole number, a coin flip determines which team receives the extra combination. For example, if two clubs tied for the league’s third-worst record, the team that wins the coin flip would receive 133 of 1,000 chances at the first overall pick, while the loser would receive 132. The coin flip also determines which team will draft higher in the event that neither club earns a top-four pick.

The table below displays the odds for each lottery team, rounded to one decimal place. Seeds are listed in the left column, while the picks are noted along the top row. For our purposes, the first seed is the NBA’s worst team.

The NBA’s lottery format was changed in 2019, with that year’s draft representing the first one that used the new system. Previously, only the top three spots were determined via the lottery and the odds were weighted more heavily in favor of the league’s worst teams.

Beginning in 2021, the NBA’s lottery underwent another small change when the league introduced the play-in tournament. The lottery now includes the 10 teams that miss out on the playoffs and the play-in tournament, plus the four clubs that are eliminated in the play-in portion of the postseason.

That means a team can finish the regular season ranked seventh or eighth in its conference, but if that club is eliminated in the play-in tournament, it will be in the lottery. Conversely, a team that finishes ninth or 10th in its conference during the regular season and then wins a pair of play-in games to earn a playoff spot will be a non-lottery team.

Once the 14 lottery teams are determined, their lottery odds are still dictated by their regular season records, so the play-in losers won’t necessarily be the 11-14 “seeds” in the lottery. For example, in 2022, the 34-48 Spurs ended up with better lottery odds than the 37-45 Knicks or 35-47 Wizards, even though San Antonio participated in the Western Conference play-in tournament while New York and Washington didn’t qualify for the East’s play-in.

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 Tankathon.com and Wikipedia was used in the creation of this post. Earlier versions of this post were published in past years.

Relying on the trade machine at ESPN.com is probably the simplest way for NBA fans to verify whether or not a trade will work under league rules, but it’s a worthwhile exercise to examine and understand the primary tool in the NBA’s Collective Bargaining Agreement that determines a trade’s viability — the traded player exception.

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

There are two different types of traded player exceptions used in NBA deals. One applies to simultaneous trades, while the other applies to non-simultaneous deals.

In a simultaneous trade, a team can send out one or more players and can acquire more salary than it gives up. In a non-simultaneous trade, only a single player can be dealt, and the team has a year to take back the equivalent of that player’s salary, plus $100K.

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

Simultaneous:

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

1. 175% of the outgoing salary (plus $100K), for any amount up to $6,533,333.
2. The outgoing salary plus $5MM, for any amount between $6,533,333 and $19,600,000.
3. 125% of the outgoing salary (plus $100K), for any amount above $19,600,000.

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

Last July, the Kings traded Justin Holiday and Maurice Harkless to the Hawks in exchange for Kevin Huerter.

Holiday is earning $6,292,440 in 2022/23, so if Sacramento had traded him on his own, the team could have taken back $11,111,770 (175% of his salary, plus $100K). However, that wouldn’t have been enough to cover Huerter’s salary of $14,508,929.

By adding Harkless and his $4,564,980 cap hit to their trade package, the Kings sent out a total of $10,857,420. The second rule listed above applies to that figure, meaning Sacramento was able to take back the outgoing amount plus an extra $5MM, for $15,857,420 in total — that was enough to cover Huerter’s salary, making the trade legal.

For taxpaying teams, the traded player exception rules for a simultaneous trade 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, no matter how much – or how little – outgoing salary is involved.

This rule was applied last August, when the Lakers sent Talen Horton-Tucker and Stanley Johnson to the Jazz in exchange for Patrick Beverley.

Because Horton-Tucker’s 2022/23 cap hit is $10,260,000, the Lakers would have been able to take back up to $12,925,000 in salary by trading him on his own. That’s 125% of his salary, plus $100K. But Beverley is earning $13,000,000 this season, so Los Angeles had to add a little more salary to its package to make the deal legal.

Johnson’s minimum-salary cap hit of $2,351,521 easily got the Lakers there — adding that figure to Horton-Tucker’s contract resulted in $12,611,521 of outgoing salary, so L.A. could have taken back as much as $15,864,401. Again, that’s 125% of the outgoing amount, plus $100K.

In simultaneous transactions, the traded player exception is used to instantly complete the deal, leaving no lingering loose ends. This form of the traded player exception isn’t what we’re talking about if we say a team “has a trade exception” available to use. Those outstanding trade exceptions come as a result of non-simultaneous deals.

Non-simultaneous:

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 one or more players whose combined salaries amount to no more than the traded player’s salary (plus $100K).

For instance, when the Jazz sent Royce O’Neale to the Nets in exchange for a first-round pick last offseason, that was a non-simultaneous trade from Utah’s perspective, allowing the team to create a traded player exception worth O’Neale’s salary ($8,800,000).

The Jazz subsequently had a year to use that exception to acquire one or more players whose salaries total up to $8,900,000 (O’Neale’s salary, plus $100K). They’ve already made excellent use of it, absorbing Jarred Vanderbilt, Leandro Bolmaro, and Saben Lee into the exception, leaving just $202K left over. Trade exceptions expire after a year if they haven’t been used in full.

The Nets, meanwhile, were able to acquire O’Neale without sending out any salary despite being a taxpaying team because of a previous non-simultaneous trade they’d made involving James Harden, which had left them with a trade exception worth more than $11MM.

Putting the two together:

When evaluating an NBA trade, it’s worth remembering that two teams can view the deal entirely differently and that they’re allowed to divide a single trade into multiple parts to maximize their flexibility. 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 recent real-life example, examining the eight-player September trade between the Rockets and Thunder.

From the Rockets’ perspective, the trade broke down as follows:

• Traded David Nwaba ($5,022,000) for Maurice Harkless ($4,564,980) and Ty Jerome ($4,220,057).
  • This trade is a simultaneous one for the Rockets, who were a non-taxpaying team, making them eligible to take back up to 175% of Nwaba’s salary, plus $100K. That figure works out to $8,888,500; Harkless and Jerome combine to earn $8,785,037, making them a snug fit.
• Traded Trey Burke ($3,423,750) and Sterling Brown ($3,000,000) for Derrick Favors ($10,183,800).
  • This is another simultaneous trade for the Rockets, who didn’t have an outgoing player earning enough on his own to match Favors’ $10MM+ cap hit. Adding Burke’s salary to Brown’s results in a total of $6,423,750, allowing Houston to take back up to $11,341,563 (175% of the outgoing salary, plus $100K). Favors’ salary fits.
• Traded Marquese Chriss ($2,193,920) for Theo Maledon ($1,900,000).
  • This segment of the deal actually represents a non-simultaneous trade for the Rockets, since they’re only trading one player and they’re taking back less salary than they’re sending out. That allows them to create a traded player exception worth $293,920, the difference between Chriss’ salary and Maledon’s. That amount is too small for Houston to realistically find a use for it, but it’s still technically a trade exception the team will have at its disposal until next fall.

Here’s how it looked from the Thunder’s perspective:

• Traded Maurice Harkless ($4,564,980) for David Nwaba ($5,022,000) and Sterling Brown ($3,000,000).
  • In a simultaneous trade of Harkless, the non-taxpaying Thunder were permitted to take back $8,088,715, which is 175% of his salary, plus $100K. That’s an ideal match for Nwaba and Brown, who are earning a combined $8,022,000.
• Traded Theo Maledon ($1,900,000) for Trey Burke ($3,423,750).
  • This doesn’t look on the surface like a match, given that Burke’s salary is nearly double Maledon’s. But 175% of Maledon’s salary is $3,325,000. Add another $100K and you get $3,425,000, which covers Burke’s cap hit in a simultaneous trade by a grand total of $1,250.
• Acquired Marquese Chriss ($2,193,920) using the minimum salary exception.
  • Players who are earning the minimum salary on a one-year or two-year contract can be taken in using the minimum salary exception, with no outgoing salary required. That was the case for Chriss, who was in the second season of a two-year, minimum-salary contract.
• Generated traded player exceptions worth $10,183,800 and $4,220,057.
  • Because the Thunder needed only two outgoing salaries to account for all four incoming players, that leaves Derrick Favors and Ty Jerome as essentially being traded for “nothing.” As a result, Oklahoma City was able to create trade exceptions worth each of their outgoing salaries, treating the trades of Favors and Jerome as non-simultaneous.

More notes on traded player exceptions:

• A team’s outgoing salary for matching purposes is the guaranteed salary rather than the total salary. For example, a player with a $2MM partial guarantee on a $10MM salary would only count for $2MM for salary-matching purposes for the team trading him (the team acquiring him would still have to account for him as $10MM in incoming salary). Between the end of a team’s season and June 30, the outgoing salary for a traded player is the lesser of his full current-season salary and his guaranteed salary for the next season. We have more details on this rule in a separate glossary entry.
• When determining whether a team is over the cap or the luxury tax line for traded player exception purposes, the team’s total salary after the trade is the deciding factor.
• Trade exceptions created in non-simultaneous trades can’t be combined with one another, with other exceptions, or with a player’s salary; they can’t be used to sign a free agent (except in a sign-and-trade); and they can’t be traded outright to another team.
• The salary in a sign-and-trade can sometimes be subject to base year compensation rules. In that case, the player’s outgoing salary for trade purposes is either his previous salary or 50% of his new salary, whichever is greater. For instance, when the Cavaliers signed-and-traded Collin Sexton to the Jazz in the Donovan Mitchell blockbuster, Sexton’s incoming salary from Utah’s perspective was $16,500,000, but his outgoing salary from Cleveland’s perspective was just $8,250,000.
• Teams that are under the cap before a trade and go over the cap as a result of the trade can’t create a trade exception as a result of that deal.
• For salary-matching purposes, future draft picks or the draft rights to an unsigned player aren’t taken into consideration.

The traded player exception is one of the CBA’s more complicated tools and can make it challenging for over-the-cap teams to navigate the trade market. It’s undoubtedly simpler to use an online 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.

Earlier versions of this post were published in 2012, 2018, 2020, and 2021.

During the early part of an NBA season, a team that wants to sign a player to a short-term contract generally does so by agreeing to a non-guaranteed deal, giving the club the flexibility to waive him without paying his full-season salary. But non-guaranteed contracts are only an option until January 7 — any standard, rest-of-season deal signed after that date must be guaranteed for the season.

Around the same time the league-wide salary guarantee date arrives, the NBA gives teams the ability to sign players to 10-day contracts, which essentially replace non-guaranteed deals during the second half of the season.

Ten-day contracts can be signed each year beginning on January 5 and are exactly what they sound like — contracts that cover 10 days (including the day they’re signed). A player who signs a 10-day deal on January 5 would remain eligible to play for his team through January 14, but not on January 15, unless he signs a new contract.

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

The NBA has tweaked this rule in recent years to allow three or more 10-day contracts with the same team for players who are signed via the hardship provision. Last season, for instance, Drew Eubanks ended up signing five 10-day deals with the Trail Blazers. A team qualifies for a hardship exception when it meets certain criteria — those criteria have evolved in recent years to cover COVID-19 cases, but historically involved the club having at least four injured players.

While a team signing a player to a standard 10-day contract must have an open spot on its 15-man roster to accommodate the signing, a player signed via the hardship provision doesn’t count against that 15-man limit.

Even though they can technically be worth more, 10-day deals are almost always worth a prorated portion of the player’s minimum salary. A minimum-salary 10-day contract for a rookie this season will be worth $58,493, or 10/174ths of the full-season rookie minimum salary. A one-year veteran would earn $94,136. A minimum-salary 10-day deal for any veteran of two or more seasons would represent a cost of $105,522 to the team.

Veterans with more than two years of NBA experience would earn more than $105,522 on a 10-day contract, but the league would pay the extra freight. However, teams gain no financial advantage if they eschew 10-day contracts with more experienced players to sign rookies or one-year veterans to 10-day deals in an effort to reduce their tax penalty — those deals count the same as the ones for two-year veterans when the league calculates a team’s salary for tax purposes.

Teams would have to pay slightly more if they sign a player to a 10-day contract and they have fewer than three games on their schedule over that 10-day period. In those cases, the length of the 10-day contract is extended so that it covers three games for the team.

It’s rare that any team would have such a light schedule, since most play at least three games a week, but the rule generally comes into play for contracts signed just before the All-Star break. If the Knicks were to sign a player to a 10-day contract on February 13 this season, for instance, his contract would actually cover 12 days, since New York plays games on Feb. 13, Feb. 15, and then not again until Feb. 24.

Here are a few more rules related to 10-day contracts:

• A team may terminate a 10-day contract before it runs to term if it wants to use the roster spot to accommodate a waiver claim, signing, or trade acquisition.
• Players whose 10-day contracts are terminated early don’t go on waivers, so they become free agents immediately. Still, those players receive their full 10-day salaries — the contracts are fully guaranteed for the 10 days.
• A team with a full 15-man roster is permitted to have up to three active players on 10-day contracts.
• A 10-day deal must be a standard NBA contract. In other words, a team can’t sign a player to a two-way, 10-day contract.

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

Earlier versions of this post were published in 2013, 2014, 2015, 2016, and 2017 by Luke Adams and Chuck Myron.

When an NBA team is over the salary cap and wants to make a trade, certain rules in the Collective Bargaining Agreement dictate how much salary the team is permitted to take back. We’ve outlined these rules in detail in our glossary entry on the traded player exception. Essentially, in most cases, an over-the-cap team must send out nearly as much salary as it acquires for the trade to be legal.

In some scenarios, salary aggregation is required in order to legally match the incoming player’s cap hit. Aggregation is the act of combining multiple players’ salaries in order to reach that legal outgoing limit.

For example, if Team A wants to acquire a player earning $30MM from Team B, sending out a player earning $20MM would fall short of the minimum requirement, since Team A can only bring back up to 125% of the outgoing amount (plus $100K). Trading a $20MM player would allow the team to acquire up to $25.1MM in salary.

However, by adding a second player earning $4MM to its package, Team A would reach the minimum outgoing threshold by “aggregating” its two traded players, resulting in a total of $24MM in outgoing salary — that’s just barely enough to bring back a $30MM player.

Only player salaries can be aggregated. Trade exceptions cannot be aggregated with one another or with players. That means a team with a $10MM trade exception can’t aggregate that exception with a $20MM player (or a $20MM trade exception) to acquire a $30MM player.

Crucially, sending out two players together in a trade doesn’t necessarily mean they have to be aggregated.

For instance, if Team A sends out one player earning $25MM and another earning $5MM in exchange for its incoming $30MM player, there’s no need to aggregate the two outgoing salaries. Since $25MM is an amount sufficient to take back $30MM, the $5MM player can essentially be traded for “nothing,” creating a $5MM trade exception that could be used at a later date.

Because trade exceptions can only be created in “non-simultaneous” trades and salary aggregation can only be completed in a “simultaneous” trade, trade exceptions can’t be generated in scenarios in which salaries are aggregated. In the hypothetical trade above, swapping the $25MM player for the $30MM player represents a simultaneous trade, while sending out the $5MM player represents a non-simultaneous trade, resulting in the trade exception.

Here’s another example to illustrate that point, using the same $30MM incoming player: If Team A decides to salary-match by sending out one player earning $20MM and a second earning $15MM, that team can’t generate a trade exception worth the excess amount ($5MM), because the two outgoing salaries must be aggregated, resulting in a simultaneous trade.

One good recent example of salary aggregation came when the Celtics acquired Malcolm Brogdon from Indiana over the summer. In order to take on Brogdon’s $22.6MM salary, Boston needed to send out $18MM, but the team didn’t have one player earning that amount it wanted to trade to make the deal legal.

In order to get to $18MM, the Celtics began by building a package around Daniel Theis ($8,694,369) and Aaron Nesmith ($3,804,360). Still $5,501,271 short of the required minimum, Boston also gave partial guarantees to Nik Stauskas ($2,106,932), Juwan Morgan ($1,728,689), and Malik Fitts ($1,665,650), aggregating all five players’ salaries to match Brogdon’s figure.

The NBA’s trade rules state that when a team acquires a player using salary-matching or a trade exception (rather than cap room), it cannot aggregate that player’s salary in a second trade for two months. That makes December 9 an important date on this season’s trade calendar, since February 9 is the 2023 trade deadline. Any player acquired after today won’t be eligible to have his trade aggregated prior to the deadline.

As outlined above, that doesn’t mean that a player acquired after today can’t be traded again before the deadline along with other players — it simply means his salary can’t be aggregated as part of the deal.

For instance, when the Thunder acquired Maurice Harkless from Atlanta on September 27 using a trade exception, he became ineligible to be aggregated in a second deal until November 27. However, Oklahoma City traded him to Houston along with three other players on September 30.

That move was possible because Harkless’ salary didn’t need to be aggregated with Derrick Favors‘, Ty Jerome‘s, and/or Theo Maledon‘s in order to make that second trade legal for Oklahoma City. From the Thunder’s perspective, the eight-player trade broke down into multiple smaller parts, with Harkless essentially being traded “by himself” despite being part of a package.

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.