Qualifying Offers

May 3 2012 at 2:12pm CDT By Luke Adams

Players eligible for restricted free agency don't become restricted free agents by default. In order to make a player a restricted free agent, a team must extend a qualifying offer to him. The qualifying offer, which is essentially just a one-year contract offer, varies in amount depending on a player's service time and previous contract status.

If a player has played three seasons or less in the NBA, his qualifying offer will be worth 125% of his prior salary, or his minimum salary plus $200K, whichever is greater. For instance, after making $762,195 this season, Jeremy Lin will receive a qualifying offer worth $1,054,389 for next year — calculated by adding $200,000 to his minimum salary for next season ($854,389). Omer Asik's 2011/12 salary, meanwhile, was $1,857,500, so his qualifying offer will be worth 125% of that figure, or $2,321,875.

The qualifying offer for a player coming off his rookie scale contract is determined by his draft position. The qualifying offer for a first overall pick is 130% of his fourth-year salary, while the QO for a 30th overall pick is 150% of his previous salary. The full first-round scale for 2011/12 can be found here, courtesy of RealGM.

A pair of examples for this season, based on RealGM's chart: 2008 second overall pick Michael Beasley, coming off a fourth-year salary of $6,262,347, must be extended a qualifying offer of $8,172,363 (a 30.5% increase) to become a restricted free agent. 21st overall pick Ryan Anderson would receive a qualifying offer of $3,234,470, a 44.1% increase on this season's $2,244,601 salary.

A wrinkle in the new Collective Bargaining Agreement complicates matters — beginning next season, a player's previous performance will affect the amount of his qualifying offer. The new CBA identifies the "starter criteria" as starting 41 games or playing 2000 minutes per season, and rewards players for meeting those criteria. Depending on whether or not a player averages 41 starts or 2000 minutes over the two seasons prior to his free agency, his qualifying offer will be affected as follows:

  • A first-round pick who meets the starter criteria will receive the same qualifying offer as the ninth overall pick.
  • A second-round pick or undrafted player who meets the criteria will receive the same qualifying offer as the 21st overall pick.
  • A top-14 pick who does not meet the starter critera will receive the same qualifying offer as the 15th overall pick.

Let's take a closer rook at these rule changes using a few potential restricted free agents for the summer of 2013.

Tyler Hansbrough was a top-14 pick for the Pacers (13th overall), but based on his current production is unlikely to meet the starter criteria for the two years prior to his free agency. As such, he'd receive the same qualifying offer that the 15th overall pick (Austin Daye) would — $4,135,391, rather than $4,225,423.

On the other hand, Pacers point guard Darren Collison, drafted 21st in 2009, appears set to meet the starter criteria heading into next summer. To reward him for his production, his qualifying offer would be $4,531,459, the same as ninth overall pick DeMar DeRozan will receive, rather than the typical $3,342,175 for a 21st overall pick.

Isaiah Thomas isn't expected to become a restricted free agent until the summer of 2014, but let's assume he meets the starter criteria over the next two seasons. Under the old system, he'd receive a modest qualifying offer of about $1.12MM, but the new CBA means he'd receive the same QO as the 21st overall pick, which would be $3MM+.

A qualifying offer is designed to give a player's team the right of first refusal. Because the qualifying offer acts as the first formal contract offer a free agent receives, his team then receives the option to match any offer sheet the player signs with another club.

A player can also accept his qualifying offer, if he so chooses. He then plays the following season on a one-year contract worth the amount of the QO, and becomes an unrestricted free agent at season's end. A player can go this route if he wants to hit unrestricted free agency as early as possible, or if he feels like the QO is the best offer he'll receive. Accepting the qualifying offer also gives a player the right to veto trades for the season.

Nick Young is one example of a player who accepted his qualifying offer this past offseason, and will become an unrestricted free agent this summer as a result. When the Wizards traded Young to the Clippers in March, the deal required Young's approval, since he was playing the year on his qualifying offer.

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 Storyteller's Contracts were used in the creation of this post.

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