As we outlined last summer when it was introduced as a new addition to the NBA’s Collective Bargaining Agreement, the second-round pick exception allows NBA teams to sign their second-round picks to standard contracts without requiring cap room or another exception (such as the mid-level) to do so.
Like the rookie scale exception, the second-round pick exception isn’t limited to a single use. It can be deployed as many times as needed in a given league year.
The second-round exception can be used to sign a player to either a three-year contract that includes a third-year team option or a four-year contract that features a fourth-year team option.
Teams made good use of the new exception right away last season. Of the 15 second-round picks in the 2023 draft who didn’t sign two-way contracts and who didn’t remain overseas for the year, 14 were signed using the second-round exception. The 15th, Tristan Vukcevic, didn’t sign until March, at which point the Wizards used a piece of the mid-level exception to give him a higher first-year salary than the second-round exception would’ve allowed for.
The values of the second-round pick exception change every year along with the NBA’s minimum salary scale, so with this year’s second-rounders starting to sign, it’s worth updating the numbers from the article we published a year ago to ensure they’re accurate for 2024/25.
Here are the details for ’24/25:
Three-year deal
- The first year can be worth up to the minimum salary for a player with one year of NBA experience.
- The second and third years are worth the second- and third-year minimum salaries for a rookie.
- The third year is a team option.
As our chart of minimum salaries shows, in 2024/25, the maximum three-year salary for a contract with this structure would be about $6.1MM. Here’s the year-by-year breakdown (option year in italics):
| Year | Salary |
|---|---|
| 2024/25 | $1,862,265 |
| 2025/26 | $1,955,377 |
| 2026/27 | $2,296,271 |
| Total | $6,113,913 |
While the second- and third-year salaries will remain static in any three-year contract signed using the second-round exception, the first season can be as low as the rookie minimum ($1,157,153). For instance, Heat second-rounder Pelle Larsson reportedly signed a contract that begins at that number, so the overall value of his deal is about $5.4MM.
Four-year deal
- The first year can be worth up to the minimum salary for a player with two years of NBA experience.
- The second year can be worth up to the second-year minimum salary for a player with one year of experience.
- The third and fourth years are worth the third- and fourth-year minimum salaries for a rookie.
- The fourth year is a team option.
In 2024/25, the maximum four-year salary for a contract with this structure would be over $9MM. Here’s what it looks like from year to year (option year in italics):
| Year | Salary |
|---|---|
| 2024/25 | $2,087,519 |
| 2025/26 | $2,191,897 |
| 2026/27 | $2,296,271 |
| 2027/28 | $2,486,995 |
| Total | $9,062,682 |
As with the first year of the three-year deal, the first two seasons of the four-year contract don’t necessarily have to start this high. They could be as low as $1,157,153 for year one and $1,955,377 for year two. That’s what Bronny James‘ contract with the Lakers will look like, for example, meaning his deal will be worth a total of about $7.9MM instead of $9MM+.
In any deal that uses this four-year contract structure, the salary increase between the first and second season can’t exceed 5% if the second season is above the minimum. For instance, a team wouldn’t be permitted to negotiate a contract that starts at the rookie minimum ($1,157,153) and jumps to $2,100,000 in year two.
Players who are signed using the second-round pick exception don’t count against a team’s cap between July 1 and July 30 of their first season.
That rule allows teams to preserve all the cap room they need until July 31 without having to worry about their second-rounders cutting into it, as well as positioning those players to sign their first NBA contracts before taking part in Summer League games.
In every NBA league year, rookie scale amounts are assigned to each first-round slot, from No. 1 through No. 30. Teams can sign their first-rounders to as little as 80% of that rookie scale amount, or up to 120% of that figure.