Hoops Rumors Originals

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.