Overview Of Salary Cap Exceptions

February 2 2012 at 5:01pm CDT By Luke Adams

There are a number of ways that teams without salary cap space are able to add players. These players' salaries still count against the team's cap figure and are taken into account for tax purposes. However, teams can use these exceptions in lieu of available cap room to acquire players.

When we discuss trades and free agency at Hoops Rumors, we'll often refer to these salary cap exceptions. In case you're wondering what we mean when we mention a "mini mid-level exception" or a "bi-annual exception," we've compiled a brief glossary for reference. The NBA's salary cap exceptions under the latest Collective Bargaining Agreement are listed below:

  • Bird Exception: If a player has been on the same team for three years (not necessarily full seasons), his team can re-sign him for up to the player's maximum salary. A player who changes teams via trade retains his Bird rights, but he loses them if he signs with a new team as a free agent. A Bird player can sign for up to five years with maximum annual raises of 7.5%.
  • Early Bird Exception: If a player has been on the same team for two years (not necessarily full seasons), his team can re-sign him for up to 175% of his previous salary or the average player salary, whichever is greater. Early Bird contracts must be for at least two seasons (no more than four), with maximum annual raises of 7.5%.
  • Non-Bird Exception: If a player has earned neither Bird or Early Bird rights, his team can re-sign him for 120% of his previous salary, 120% of the applicable minimum salary, or, if he's a restricted free agent, the amount of his qualifying offer. A non-Bird player can sign for up to four years with maximum annual raises of 4.5%.
  • Mid-Level Exception: A non-taxpaying team can offer a player a contract for up to four years, starting at $5MM with maximum annual raises of 4.5%. This exception can be used on one or multiple players, and the max first-year salary will grow by 3% annually starting in 2013/14.
  • Taxpayer Mid-Level Exception: A taxpaying team can offer a player a contract for up to three years, starting at $3MM with maximum annual raises of 4.5%. This exception can be used on one or multiple players, and the max first-year salary will grow by 3% annually starting in 2012/13.
  • Bi-Annual Exception: A non-taxpaying team can offer a player a contract for up to two years, starting at $1.9MM with a maximum raise of 4.5%. This exception can be used on one or multiple players, and the max first-year salary will grow by 3% annually starting in 2012/13. As its name suggests, this exception, which isn't available to taxpaying teams, can only be used every other year.
  • Mini Mid-Level Exception: If a team uses room under the cap to sign players, it forfeits its mid-level and bi-annual exceptions. In that case, the team receives this exception, which isn't available to teams above the cap. After using its cap room, a team can offer a player a contract for up to two years, starting at $2.5MM with a maximum raise of 4.5%. This exception can be used on one or multiple players, and the max first-year salary will grow by 3% annually starting in 2012/13.
  • Minimum Salary Exception: A team can offer a player a contract for up to two years worth the applicable minimum salary. A team can also use this exception to trade for minimum-salary players. There is no limit to the number of players a team can acquire using this exception.
  • Rookie Exception: A team can sign its first-round draft picks for up to 120% of the rookie salary scale amount.
  • Disabled Player Exception: If a player suffers an injury that will sideline him for the season, a team can be granted this exception by the league. It can be used to sign a replacement player for one year, and is worth 50% of the disabled player's salary or the amount of the non-taxpayer mid-level exception, whichever is lesser. This exception, which must be applied for between July 1st and January 15th, can also be used to acquire a player via trade, and is forfeited if not used within 45 days.
  • Traded Player Exception: A non-taxpaying team can replace a traded player simultaneously (in the same transaction) with one or more players whose total salaries amount to no more than 150% of the traded player's salary or the traded player's salary plus $5MM, whichever is lesser. A taxpaying team can replace a traded player simultaneously with one or more players whose total salaries amount to no more than 125% of the traded player's salary. Alternately, both non-taxpaying and taxpaying teams can replace a traded player non-simultaneously (within one year) with one or more players whose total salaries amount to no more than 100% of the traded player's salary. In each case, this exception, which cannot be used to sign a free agent, includes an additional $100,000 of wiggle room.

For further clarification on salary cap exceptions, please visit Larry Coon's invaluable NBA Salary Cap FAQ or check out more detailed explanations in our glossary.

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