Hoops Rumors Originals

When an NBA team cuts a player, he doesn’t immediately become a free agent. Instead, the player is placed on waivers, which serves as a sort of temporary holding ground as the other 29 teams decide if they want to try to add him to their roster.

A player remains on waivers for at least 48 hours after he is formally cut by his team. During that time, a team can place a waiver claim in an attempt to acquire the player. If two or more clubs place a claim, the team with the worst record takes priority (before December 1, records from the previous season determine waiver order).

If a team claims a player off waivers, it assumes his current contract and is on the hook for the remainder of his salary. The claiming team also pays a $1,000 fee to the NBA office. If no claims are placed on the player, he clears waivers at 4:00 pm Central time two days after his release (or three days later, if he was cut after 4:00 pm CT) and becomes an unrestricted free agent.

While the waiver format is simple enough, not every team will have the salary cap flexibility to make a claim for any waived player it wants. There are only a handful of instances in which a club is able to claim a player off waivers:

• The team is far enough under the salary cap to fit the player’s entire salary.
• The team has a traded player exception worth at least the player’s salary.
• The team has a disabled player exception worth at least the player’s salary, and he’s in the last year of his contract.
• The player’s contract is for one or two seasons and he’s paid the minimum salary.
• The player is on a two-way contract.

Since most NBA teams go over the cap and sizable TPEs and DPEs are somewhat rare, the majority of players who are claimed off waivers are either on minimum-salary contracts or two-way deals. Claiming those players simply requires an open roster slot.

More often than not though, waived players go unclaimed. In that case, the player’s original team remains on the hook for the rest of his salary.

Unless the player is in the final year of his contract and is waived after August 31, his club has the option of “stretching” his remaining cap hit(s) over multiple years using the stretch provision, which we explain in a separate glossary entry. A team that waives a player and uses the stretch provision on him cannot re-acquire that player until after his contract would have originally expired.

In the case of any player without a fully guaranteed contract, the non-guaranteed portion of a player’s salary is removed from a club’s cap immediately once the player is waived.

When a player is “bought out” by his club, he’s placed on waivers as part of the agreement. He and his team agree to adjust the guaranteed portion of his contract, reducing the amount owed to the player by the team, assuming he clears waivers.

Here are several more notes related to waiver rules:

• Players can be waived and claimed off waivers during the July moratorium.
• A player waived after March 1 is ineligible for the postseason if he signs with a new team.
• A player on an expiring contract (or a contract that could become expiring as a result of an option decision) can’t be waived between the end of the regular season and the start of the next league year. He also can’t be waived at the end of the regular season if he won’t clear waivers before the date of each team’s final regular season game.
• A player claimed off waivers can’t be traded for 30 days. If he’s claimed during the offseason, he can’t be traded until the 30th day of the regular season.
• If a player is traded and then is waived by his new team, he can’t re-sign with his former club until one year after the trade or until the July 1 after his original contract would have expired, whichever is earlier.
  • Note: If a player is traded twice before being waived, he’s allowed to re-sign with the team that first traded him.
• A player who has Early Bird or full Bird rights retains Early Bird rights if he’s claimed off waivers.
• If a team makes a successful waiver claim, it doesn’t lose its spot in the waiver order — the 30th-ranked team at the end of a season remains atop the waiver priority list until December 1 of that year, even if that team makes multiple offseason claims.
• A team with a full roster can submit a waiver claim and wouldn’t have to clear a spot on its roster for a claimed player until it’s determined that the claim is successful.

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, and 2020.

Most salary cap workarounds, such as the mid-level exception, can be used every year — or at least every other year, as in the case of the bi-annual exception. However the disabled player exception is only available under certain circumstances. Like other salary cap exceptions though, the DPE allows a team to sign a player without using cap space.

If a player is seriously injured, his team can apply for the disabled player exception to replace him. In order for the exception to be granted, an NBA-designated physician must determine that the player is “substantially more likely than not” to be sidelined through at least June 15 of that league year.

If granted, the disabled player exception allows a club to sign a replacement player for 50% of the injured player’s salary or for the amount of the non-taxpayer’s mid-level exception, whichever is lesser.

For instance, if a team is granted a disabled player exception for a player earning $10MM, the exception would be worth $5MM. But if the injured player is earning $30MM, the DPE would be worth the equivalent of the mid-level exception (this season, that’s $10,490,000).

A team must formally apply for a disabled player exception and it requires the approval of the league. The cutoff to apply for a DPE each season is January 15. If a team has a player go down with a season-ending injury after that date, it cannot obtain a DPE to replace him. A team must also use the exception by March 10 of the current season or it will expire.

Unlike mid-level, bi-annual, or trade exceptions, the disabled player exception can only be used on a single player, rather than spread out across multiple players. However, a team can use it in a variety of ways — the DPE can be used to sign a free agent, to claim a player off waivers, or to acquire a player in a trade.

If a team uses its disabled player exception to take on salary in a trade, it can acquire a player making up to 100% of the DPE amount, plus $100K. For example, a $5,000,000 DPE could be used to trade for a player making $5,100,000.

A free agent signed using the DPE can only be offered a rest-of-season deal, while a player acquired via trade using the DPE must be in the final year of his contract. A player claimed off waivers must also be in the final year of his contract, and his salary must fit into the team’s DPE. Essentially, the purpose of the exception is to give the team some flexibility to replace a player following a season-ending injury, but not beyond the current season.

The team must have room on its roster to sign the replacement player — the disabled player exception doesn’t allow the club to carry an extra man.

In the event that a team is granted a disabled player exception, uses it to acquire a player, and then has its injured player return ahead of schedule (ie. before the end of the season), the team is allowed to carry both players.

However, if a team has an unused disabled player exception and then trades its injured player, the team would lose the exception. The same is true if the injured player returns to action before the DPE has expired or been used.

Most disabled player exceptions ultimately go unused, but some come in handy in trades. For example, after being granted a DPE in the wake of Chet Holmgren‘s season-ending foot injury earlier this year, the Thunder used that exception to acquire Maurice Harkless from Atlanta in a deal where Vit Krejci‘s outgoing salary wasn’t sufficient for matching purposes.

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

Earlier versions of this post were published in 2012 and 2017.

It’s common practice in the National Football League for a team to renegotiate its contract with a player, but we hear far less about the concept in the NBA. So can an NBA team actually renegotiate a contract with one of its players?

The answer is almost always no, and it’s a firm no if the follow-up question is whether the sides can renegotiate the value of the contract downward. Unlike NFL teams, an NBA club can’t create extra cap flexibility by renegotiating a contract to push present-day cap hits into future years.

However, renegotiations are allowed to make an NBA contract more lucrative, and they can happen as long as a specific set of circumstances are in place:

• Only contracts that cover four or more seasons can be renegotiated, though that rule doesn’t apply to rookie scale deals — even though they run for four years, they can’t be renegotiated.
• Renegotiations can only occur after the third anniversary of a contract signing, an extension, or a previous renegotiation (assuming the previous renegotiation increased the salary in any season by 5% or more).
• Perhaps most importantly, teams can’t renegotiate any contracts if they’re over the cap, and they can only increase the player’s salary in the current season by the amount of cap room that they have (or to the player’s maximum salary).

The raises for any seasons that follow the first renegotiated season in a contract are limited to 8%. That’s also true of salary decreases, though if a renegotiation happens at the same time as an extension, the player’s salary can decrease by as much as 40% from the last season of the existing contract to the first season of the extension.

Here are a few other rules related to contract renegotiations:

• Teams can’t renegotiate contracts between March 1 and June 30, so the last day of February is always the deadline to complete renegotiations in a given league year.
• Renegotiations can’t occur as part of a trade, and if a player waives some or all of his trade kicker to facilitate a trade, he’s ineligible to renegotiate his contract for the next six months.
• In order for a signing bonus to be included in a renegotiation, the contract must be extended as well.
• Two-way contracts can’t be renegotiated.

Renegotiating a contract to include a significant raise for the current season can be a clever way of incentivizing a long-term extension for a player who would otherwise reach free agency. However, an extensive set of rules limits the appeal of that sort of deal, and teams generally require substantial cap room to pull it off, so contract renegotiations are rare.

The last NBA contract to be renegotiated was Robert Covington‘s with the Sixers in November 2017. At the time, Covington was earning a minimum salary of approximately $1.6MM and the 76ers had just over $15MM in cap room available.

Since Covington had outperformed that contract and Philadelphia wanted to lock him up long-term, the team used its remaining cap room to renegotiate his deal, giving him a raise to nearly $16.7MM for the 2017/18 season, then tacking on four more years, the first of which was worth just over $10MM, representing a 40% dip.

Because two NBA teams – San Antonio and Indiana – currently have substantial cap room available, the renegotiation tactic is worth keeping in the back of our minds this season.

Unfortunately for the Spurs, the team’s top extension candidates – Jakob Poeltl and Tre Jones – signed three-year contracts during the 2020 offseason. That makes them ineligible for a renegotiation, since only contracts covering four or more seasons can be renegotiated.

The Pacers, on the other hand, have one renegotiation candidate in Myles Turner, who signed a four-year rookie scale extension in 2018. Turner has an $18MM cap hit this season, so veteran extension rules would typically restrict the Pacers from offering more than a 20% raise, which would work out to a $21.6MM starting salary in 2023/24.

However, by renegotiating his contract, the Pacers could get more creative if they want to try to extend Turner, offering him a big raise on this year’s $18MM salary — in theory, they could double that figure and still have a chunk of cap room (approximately $10MM) left over. Doing so would reduce the trade opportunities the Pacers’ cap room affords them at the trade deadline, but they’ll need to spend that money somehow in order to reach this season’s salary floor.

Additionally, because a renegotiation in conjunction with an extension allows for a 40% dip in the first year of the extension, the Pacers could still start an extension offer for Turner at $21.6MM even after increasing his current-year salary to $36MM. It’s not as if a big salary bump for this season would force them to keep increasing that cap number in future years — a Turner extension could theoretically look the same beyond this season as it would without a renegotiation.

Keith Smith of Spotrac explores the concept of a possible Turner renegotiation and extension in more detail.

Turner may prefer to test the free agent market next summer; perhaps the Pacers would prefer to trade him before this season’s deadline. But if there’s any mutual interest in a long-term deal, the two sides would be wise to explore the renegotiate-and-extend route, since this could represent a rare instance where it makes sense to take that path.

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 2015 and 2017.