Hoops Rumors

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):

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):

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.