Hoops Rumors Glossary

The NBA’s rookie scale, which determines how much first-round picks earn during their first four NBA seasons, also dictates how much the qualifying offers will be worth for those players once they’re eligible for restricted free agency after year four. However, the value of those qualifying offers can fluctuate depending on whether or not a player has met the “starter criteria.”

Here’s how the starter criteria works:

A player who is eligible for restricted free agency is considered to have met the starter criteria if he plays at least 2,000 minutes or starts 41 games in the season before he reaches free agency.

A player can also meet the criteria if he averages either of those marks in the two seasons prior to his restricted free agency. Due to the fact that only 72 games were played in the 2020/21 season, these requirements have been slightly adjusted, but will return to normal next season.

A player’s ability or inability to meet the starter criteria impacts the value of the qualifying offer he receives as a restricted free agent, as follows:

• A top-14 pick who does not meet the starter criteria will receive a qualifying offer equal to the amount the 15th overall pick would receive if he signed for 120% of the rookie scale.
  • Note: For the summer of 2022, the value of this QO will be $7,228,448.
  • Example: Cavaliers guard Collin Sexton (2018’s No. 8 overall pick) won’t meet the starter criteria this season. As a result, he’ll be eligible for a QO worth $7,228,448 instead of $8,559,357.
    
• A player picked between 10th and 30th who meets the criteria will receive a qualifying offer equal to the amount the ninth overall pick would receive if he signed for 120% of the rookie scale.
  • Note: For the summer of 2022, the value of this QO will be $7,921,300.
  • Example: Hornets forward Miles Bridges (2018’s No. 12 overall pick) has met the starter criteria this season. As a result, he’ll be eligible for a QO worth $7,921,300 instead of $7,459,974.
• A second-round pick or undrafted player who meets the criteria will receive a qualifying offer equal to the amount the 21st overall pick would receive if he signed for 100% of the rookie scale.
  • Note: For the summer of 2022, the value of this QO will be $4,869,012.
    
  • Example: Thunder wing Luguentz Dort (an undrafted free agent) has met the starter criteria this season. As a result, he’ll be eligible for a QO worth $4,869,012 instead of $2,228,276 if Oklahoma City declines his team option to make him a restricted free agent.
    
• For all other RFAs, the standard criteria determine the amounts of their qualifying offers.

Extending a qualifying offer to a player who is eligible for restricted free agency officially makes that player an RFA, ensuring that his team has the right of first refusal if he signs an offer sheet with another club. It also gives the player the option of signing that one-year QO.

Generally, the value of a restricted free agent’s qualifying offer isn’t hugely important, since very few RFAs accept those offers outright. There are exceptions though.

In 2020, for instance, Kris Dunn met the starter criteria, which ensured that his qualifying offer would have been worth $7,091,457 instead of $4,642,800. The Bulls opted not to extend that $7MM+ QO, making him an unrestricted free agent, and he ended up signing a two-year, $10MM contract with Atlanta. If Dunn hadn’t met the starter criteria, it’s possible Chicago would’ve been more comfortable issuing a $4.6MM qualifying offer, which would’ve significantly changed the way Dunn’s free agency played out.

We’ll revisit the starter criteria at season’s end to see which of 2022’s potential restricted free agents will have their qualifying offers impacted by meeting – or failing to meet – the starter criteria.

So far, of this year’s RFAs-to-be, Bridges, Dort (team option), Deandre Ayton, Mohamed Bamba, and Jae’Sean Tate (team option) have met the starter criteria. There are a few players who could still get there, led by Anfernee Simons, who has made 26 starts and logged 1,555 minutes.

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 RealGM was used in the creation of this post. Earlier versions of this post were published in 2019 and 2020.

Once the NBA trade deadline passes, the league’s buyout season unofficially begins. What exactly are buyouts, and how do they work? Today’s Hoops Rumors glossary entry will examine those questions. Let’s dive in…

What is a buyout?

While the term “buyout” is often applied colloquially when any veteran is released after the trade deadline, it applies specifically to a player who gives up a portion of his salary to accommodate his release. Rather than waiving a player outright, a team will negotiate the terms of the player’s release. Then, once the player clears waivers, his guaranteed salary with his previous team will be reduced or eliminated altogether.

So far this season, we’ve seen Spurs guard Goran Dragic and Pacers big man Tristan Thompson agree to buyouts. Those two veterans each surrendered in the neighborhood of $800K to their respective teams in order to reach free agency.

What’s the motivation for a buyout?

The most common form of buyout involves a veteran player on a non-contending team being granted his release during the final year of his contract to join a playoff club down the stretch.

It typically happens after the trade deadline because by that point there’s no other way for a player to change teams. It’s even more frequent if the player was traded at the deadline for salary-matching purposes to a team that doesn’t view him as part of its plans.

Dragic and Thompson each fit this bill. The Spurs and Pacers probably aren’t going to make the playoffs this season and are more focused on developing their young players. Buyouts for those two veterans will give them a chance to join teams with loftier short-term aspirations.

For the player, the motivating factor is generally the desire to play for a winning team rather than a chance to earn more money. In their buyouts, Dragic and Thompson gave up roughly the amount of money they’ll make on new prorated minimum-salary contracts, so they likely won’t come out ahead financially — they’ll just get a chance to play in the postseason before returning to free agency in the summer.

As for the team, there’s little downside to letting a veteran go, since the player is usually in the final year of his contract and the club completing the buyout is rarely in contention for a playoff spot. Buying out that veteran can save the team some money, earn some goodwill with a player and an agent, and open up minutes for a younger player to take over.

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Throughout the offseason and preseason, NBA teams are permitted to carry 20 players, but that total must be cut down to 15 (plus a pair of 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 $50K 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 $50K on his standard contract — a larger guarantee would make him ineligible to join his club’s NBAGL affiliate for the rest of that league year.

Finally, not every NBA team has a G League affiliate, so there are two teams – the Suns and Trail Blazers – with no place to send affiliate players.

With the G League season set to get underway today, we’ll be publishing this year’s list of affiliate players soon. By our count, there are 90 of them across 28 teams this season, but we’re still confirming that info.

Earlier version of this post were published in 2015 and 2019 by Chuck Myron and Luke Adams.

The NBA’s salary cap is a “soft” cap, which is why most clubs’ team salary will easily surpass the $112,414,000 threshold at some point during the 2021/22 season, if it hasn’t already. Once a team uses up all of its cap room, it can use a series of “exceptions” – including the mid-level, bi-annual, and various forms of Bird rights – to exceed the cap.

Since the NBA’s Collective Bargaining Agreement doesn’t feature a “hard” cap by default, teams can construct rosters that not only exceed the cap but also blow past the luxury tax line ($136,606,000 in ’21/22). While it would be nearly impossible in practical terms, there’s technically no rule restricting a club from having a team salary worth double or triple the salary cap.

However, there are certain scenarios in which a team can become hard-capped. Those scenarios are as follows:

1. The team uses its bi-annual exception to sign a player.
2. The team uses more than the taxpayer portion of the mid-level exception to sign a player (or multiple players).
   • Note: In 2021/22, the taxpayer MLE is worth $5,890,000, compared to $9,536,000 for the full non-taxpayer MLE. The taxpayer MLE can be used to complete deals up to three years, while the non-taxpayer MLE can be used to complete deals up to four years.
     
3. The team acquires a player via sign-and-trade.

A team making any of those three roster moves must ensure that its team salary is below the “tax apron” when it finalizes the transaction and stays below the apron for the rest of the league year. The tax apron was set $6MM above the luxury tax line in 2017/18 (the first year of the current Collective Bargaining Agreement) and creeps up a little higher each season as long as the cap keeps increasing.

For the 2021/22 league year, the tax apron is set at $143,002,000. A hard-capped team can’t surpass that line under any circumstances.

In 2020/21, a total of 18 teams imposed a hard cap on themselves by acquiring a player via sign-and-trade, using the non-taxpayer mid-level exception, or using the bi-annual exception. For many of those teams, the restriction was barely noticeable — they remained far below the tax apron and never had to worry about whether a roster move might put them over the hard cap.

However, there were a handful of teams – including the Lakers, Clippers, and Bucks – who had to be conscious of the hard cap all year long and carried an empty 15-man roster spot for much of the season. Even an extra minimum-salary player would’ve compromised the ability of those teams to stay below the hard cap.

Once the 2020/21 league year ended last week and the ’21/22 league year began, the 18 teams that were hard-capped a year ago once again became free to surpass this year’s tax apron. So far, nine teams have imposed a hard cap for themselves at $143MM in 2021/22 as a result of recent roster moves.

Finally, it’s worth noting that even if a team starts a new league year above the tax apron, that doesn’t mean they can’t become hard-capped at some point later in the season. For example, the Warriors are currently well above the apron, but in the unlikely event that they made a few cost-cutting moves and then acquired a player via sign-and-trade, a hard cap would be imposed and they’d be ineligible to surpass the $143MM apron for the rest of the league year.

In other words, the hard cap applies from the moment a team completes one of the three transactions listed above, but isn’t applied retroactively.

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.

A previous version of this post was published in 2020.

Players eligible for restricted free agency don’t become restricted free agents by default. In order to make a player a restricted free agent, a team must extend a qualifying offer to him — a player who doesn’t receive one becomes an unrestricted free agent instead.

The qualifying offer, which is essentially just a one-year contract offer, varies in amount depending on a player’s service time and previous contract status.

If a player reaches free agency with three or fewer years of NBA service time under his belt, his qualifying offer is worth 125% of his prior salary, or his minimum salary plus $200K, whichever is greater.

For instance, after earning $1,663,861 this season, Pistons guard Hamidou Diallo projects to have a minimum salary worth $1,729,217 in 2021/22. Adding $200K to that figure works out to $1,929,217, whereas 125% of his prior salary is $2,079,826. His qualifying offer will be worth the higher amount ($2,079,826).

On the other hand, a player like Magic forward Ignas Brazdeikis signed a minimum-salary contract late in the season and had a cap hit of just $49,510. Calculating 125% of that amount works out to just $61,888, so his qualifying offer projects to be $1,869,178 — his minimum salary ($1,669,178) plus $200K. The exact value of Brazdeikis’ qualifying offer will depend on where exactly the ’20/21 salary cap ends up, since minimum salary increase or decrease at the same rate as the cap.

The qualifying offer for a former first-round pick coming off his rookie scale contract is determined by his draft position. The qualifying offer for a first overall pick is 130% of his fourth-year salary, while for a 30th overall pick it’s 150% of his previous salary — QOs for the rest of the first-rounders fall somewhere in between. The full first-round scale for the draft class of 2017, whose first-rounders will be hitting free agency this summer, can be found here, courtesy of RealGM.

Here are a pair of examples for this offseason: 2017’s second overall pick, Pelicans guard Lonzo Ball, is coming off a fourth-year salary of $11,003,782, so he must be extended a qualifying offer of $14,359,936 (a 30.5% increase) to become a restricted free agent. Meanwhile, the 28th overall pick, Thunder center Tony Bradley, will be eligible for a qualifying offer of $5,277,669, a 49.0% increase on this season’s $3,542,060 salary.

A wrinkle in the Collective Bargaining Agreement complicates matters for some RFAs-to-be, since a player’s previous usage can impact the amount of his qualifying offer. Certain players who meet – or fail to meet – the “starter criteria,” which we break down in a separate glossary entry, become eligible for higher or lower qualifying offers. Here’s how the starter criteria affects QOs:

• A top-14 pick who does not meet the starter criteria will receive a same qualifying offer equal to 120% of the amount applicable to the 15th overall pick.
  • Note: In 2021, the value of this QO will be $7,031,451.
• A player picked between 10th and 30th who meets the starter criteria will receive a qualifying offer equal to 120% of the amount applicable to the ninth overall pick.
  • Note: In 2021, the value of this QO will be $7,705,447.
• A second-round pick or undrafted player who meets the starter criteria will receive a qualifying offer equal to 100% of the amount applicable to the 21st overall pick.
  • Note: In 2021, the value of this QO will be $4,736,102.

Knicks guard Frank Ntilikina is one example of a player who falls into the first group, since he didn’t meet the starter criteria this year. The No. 8 overall pick in 2017, Poeltl will be eligible this offseason for a QO worth $7,031,451 instead of $8,326,027. Conversely, Cavaliers center Jarrett Allen (a former No. 22 overall pick) met the starter criteria and will be eligible for a QO worth $7,705,447 instead of $5,661,538.

[RELATED: Potential 2021 RFAs Whose Qualifying Offers Will Be Impacted By Starter Criteria]

A qualifying offer is designed to give a player’s team the right of first refusal. Because the qualifying offer acts as the first formal contract offer a free agent receives, his team then receives the option to match any offer sheet the player signs with another club.

A player can also accept his qualifying offer, if he so chooses. He then plays the following season on a one-year contract worth the amount of the QO, and becomes an unrestricted free agent at season’s end if he has at least four years of NBA experience. A player can go this route if he wants to hit unrestricted free agency as early as possible, or if he feels like the QO is the best offer he’ll receive. Accepting the qualifying offer also gives a player the right to veto trades for the season.

Only one restricted free agent, Bulls wing Denzel Valentine, accepted his qualifying offer during the 2020 offseason.

Finally, while the details outlined above apply to players on standard NBA contracts who are eligible for restricted free agency, a different set of rules applies to players coming off two-way contracts. For most of those players, the qualifying offer would be equivalent to a one-year, two-way salary, with $50K guaranteed.

A player who is coming off a two-year, two-way deal, has already been on two-way deals with his current team for at least two seasons, or has four years of NBA service would be eligible for a qualifying offer equivalent to a standard, minimum-salary NBA contract. The guarantee on that QO would have to match or exceed a two-way salary.

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. Earlier versions of this post were published in previous years.

The most common tool that over-the-cap teams use to sign free agents from other teams is the mid-level exception, but that’s not the only exception those clubs have to squeeze an extra player onto the payroll. The bi-annual exception is a way for a team to sign a player who may command more than the minimum salary, but less than the mid-level.

As its name suggests, the bi-annual exception can only be used every other season. Even if a team uses only a portion of the exception, it’s off-limits during the following league year.

During the 2020/21 league year, four teams – the Mavericks, Pistons, Grizzlies, and Raptors – were ineligible to use the bi-annual exception at all, since they used it in 2019/20.

Three teams used the BAE in ’20/21, with the Bucks signing Bobby Portis, the Nuggets signing Facundo Campazzo, and the Lakers signing Wesley Matthews. Those three clubs won’t have the exception at their disposal during the 2021/22 league year.

The bi-annual exception is available only to a limited number of clubs, even among those that didn’t use the exception during the previous season. Teams that create and use cap space forfeit the BAE, along with all but the smallest version of the mid-level (the room exception). Additionally, teams lose access to the bi-annual exception when they go over the “tax apron,” a figure approximately $6MM+ above the tax line. So, only teams over the cap and under the tax apron can use the BAE.

If a team uses all or part of the bi-annual exception, the tax apron becomes the club’s hard cap for that season. Teams that sign a player using the BAE can later go under the cap, but can’t go over the tax apron at any time during the season once the contract is signed.

[RELATED: NBA Teams With Hard Caps In 2020/21]

The bi-annual exception allowed for a starting salary of up to $3,623,000 in 2020/21. The starting salary for the BAE in 2021/22 projects to be worth $3,732,000.

Under the NBA’s previous Collective Bargaining Agreement, the value of each season’s bi-annual exception was determined in advance. However, under the current CBA, the value of the BAE in future league years is tied to salary cap increases or decreases. If the cap goes up by 5%, the value of the bi-annual exception will also increase by 5%.

A player who signs a contract using the bi-annual exception is eligible for a one- or two-year deal, with a 5% raise for the second season. For players who signed using the BAE in 2020/21, the maximum value of a two-year contract was $7,427,150.

Teams also have the option of splitting the bi-annual exception among multiple players, though that happens much less frequently than it does with the mid-level exception, since a split bi-annual deal may not even be worth more than a veteran’s minimum salary.

In a typical league year, the bi-annual exception starts to prorate on January 10, decreasing in value by 1/177th each day until the end of the regular season. Those numbers looked a little different in 2020/21 due to the revamped schedule, but should return to normal for ’21/22.

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 by Luke Adams and Chuck Myron.

The mid-level exception is the most common way for over-the-cap NBA teams to sign free agents from other clubs for more than the minimum salary. It ensures that each team heads into the offseason with a little spending flexibility, even if that franchise is deep into luxury-tax territory.

Each team is eligible to use a specific type of mid-level exception depending on its proximity to the salary cap. The most lucrative form of mid-level is available to teams that are over the cap but below the tax apron. Clubs deep into the tax, and even those under the cap, have access to lesser versions of the MLE. Here’s a breakdown of how all three forms of the exception are structured:

For over-the-cap teams:

• Commonly called either the full mid-level exception, the non-taxpayer’s mid-level exception or simply the mid-level exception.
• Contract can cover up to four seasons.
• First-year salary was worth $9,258,000 in 2020/21.
• First-year salary is projected to be worth $9,536,000 in 2021/22.
• Once used, the team cannot surpass the “tax apron” (approximately $6MM+ above tax line) for the remainder of the season.

For teams above the cap and the tax apron:

• Commonly called the taxpayer’s mid-level exception.
• Contract can cover up to three seasons.
• First-year salary was worth $5,718,000 in 2020/21.
• First-year salary is projected to be worth $5,890,000 in 2021/22.

For teams with cap room:

• Commonly called the room exception.
• Contract can cover no more than two seasons.
• First-year salary was worth $4,767,000 in 2020/21.
• First-year salary is projected to be worth $4,910,000 in 2021/22.

Each form of the mid-level allows for annual raises of up to 5% of the value of the first season’s salary. Last offseason, we broke down the maximum total salaries that players signed using the mid-level exception in ’20/21 could earn. Those numbers can be found right here.

Teams can use their entire mid-level exception to sign one player. Several clubs went this route in 2020/21, including the Celtics (Tristan Thompson), Clippers (Serge Ibaka), Lakers (Montrezl Harrell), Trail Blazers (Derrick Jones), Suns (Jae Crowder), and Jazz (Derrick Favors).

However, clubs are also allowed to split the mid-level among multiple players, and that’s a common course of action. For instance, the Kings used their MLE to complete four separate signings in 2020/21, devoting parts of it to Robert Woodard, Jahmi’us Ramsey, and Chimezie Metu (twice). Sacramento signed Metu using the mid-level, waived him, then used the MLE again to re-sign him later in the season.

Players drafted in the second round often sign contracts for part of the mid-level because it allows teams to give them contracts for more years and more money than the minimum salary exception provides. Woodard and Ramsey were both second-round picks in 2020 whom the Kings signed using the MLE.

Without the MLE, Sacramento would have been limited to two-year deals starting at $898,310 for those two rookies. The mid-level allowed the Kings to pay them more, sign them to longer deals, and to ensure they’ll have full Bird rights if they play out their contracts, rather than just the Early Bird rights they’d have after two years.

Some front offices prefer to leave all or part of the mid-level exception unused in the offseason so it’s still available near the end of the regular season. At that point, a contender could use its MLE to try to sign an impact veteran on the buyout market.

A non-contending club, on the other hand, could use its MLE to lock up an intriguing developmental player to a long-term contract, like the Heat did at the end of the 2018/19 campaign with Duncan Robinson and Kendrick Nunn. Both players, who signed in the season’s final week, would have reached restricted free agency in 2020 if Miami had used the minimum salary exception to sign them to two-year contracts instead of using the MLE to negotiate three-year deals.

Near the end of the 2020/21 season, the Thunder used a portion of their mid-level exception to sign Gabriel Deck to a four-year contract with a salary worth $3.87MM in ’20/21. That oversized first-year salary, made possible by the MLE, gave Oklahoma City the leverage to make the rest of the contract non-guaranteed.

Unlike the bi-annual exception, the mid-level exception can be used every season. So whether or not a team used its mid-level in 2020/21, each club will have the opportunity to use some form of the MLE when the 2021/22 league year begins.

Under the old Collective Bargaining Agreement, the mid-level exception increased annually at a modest, fixed rate. However, under the current CBA, the mid-level 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. We’ve estimated 2021/22’s MLE figures based on the NBA’s projection of a 3% salary cap increase — a more substantial cap increase would mean next season’s mid-level is worth a little more too.

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

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

The Cavaliers have a little less than $87MM in guaranteed money committed to player salaries for 2021/22, per Basketball Insiders. However, even though next season’s salary cap will come in at $112MM+, that doesn’t mean the team will begin the 2021 offseason with tens of millions in cap room to spend.

In fact, the Cavaliers technically won’t open the new league year with any cap space at all. Each of Cleveland’s own free agents will be assigned a free agent amount – or “cap hold” – until the player signs a new contract or the Cavaliers 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 instance, the cap hold for a Bird player with a salary above the league average is generally 150% of his previous salary, as noted above. But for someone like Clippers star Kawhi Leonard, who is earning $34,379,100 this season, 150% of his previous salary would be north of $51MM, well beyond the projected maximum salary threshold.

Leonard’s cap hold – assuming he turns down his 2021/22 player option – will be equivalent to the maximum salary for a player with 10+ years of NBA experience. If we assume a cap increase of 3%, that figure works out to about $39.3MM.

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 Wizards declined Moritz Wagner‘s 2021/22 fourth-year option last December. As a result, they wouldn’t have been able to offer him a starting salary this offseason worth more than $3,893,618, the amount of that option. That rule is in place so a team can’t circumvent the rookie scale and decline its option in an effort to give the player a higher salary.

The rule applies even if the player is traded — Washington, in fact, ended up sending Wagner to the Celtics in March, and the C’s would’ve faced the same limit if they’d wanted to re-sign him. Instead, Boston waived Wagner in April and he caught on with the Magic before season’s end. Because he’s no longer on the contract with the declined option, Orlando doesn’t face the same restriction and Wagner’s cap hold is now based on his minimum-salary contract.

If a team holds the rights to fewer than 12 players, cap holds worth the rookie minimum salary are assigned to fill out the roster. So, even if a front office chooses to renounce its rights to all of its free agents and doesn’t have any players under contract, the team wouldn’t be able to fully clear its cap. In 2020/21, an incomplete roster charge was worth $898,310, meaning a team with 12 of those charges would have had nearly $11MM on its cap even before adding any players.

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 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.

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. Photo courtesy of USA Today Sports Images.