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Hoops Rumors Glossary: Cap Holds

The Spurs have committed only about $34.2MM in guaranteed money to player salaries for 2014/15, but that doesn’t mean the team will have more than $30MM to spend on free agents against the projected $67.1MM salary cap. Each of San Antonio’s own free agents will be assigned a free agent amount or “cap hold” until the player signs a new contract or the Spurs renounce his rights.

The following criteria are used for determining the amount of a free agent’s cap hold:

  • First-round pick coming off rookie contract: 250% of previous salary if prior salary was below league average; 200% of previous salary if prior salary was above league average
  • Bird player: 190% of previous salary (if below average) or 150% (if above average)
  • Early Bird player: 130% of previous salary
  • Non-Bird player: 120% of previous salary
  • Minimum-salary player: Two-year veteran’s minimum salary, unless the free agent only has one year of experience, in which case it’s the one-year veteran’s minimum.

A cap hold for a restricted free agent can vary based on his contract status. A restricted free agent’s cap hold is either his free agent amount as determined by the criteria mentioned above, or the amount of his qualifying offer, whichever is greater. Kawhi Leonard, Aron Baynes and Cory Joseph are the Spurs who are set for restricted free agency this summer. Leonard and Joseph are former first-round picks coming to the end of their rookie scale contracts, and their salaries this year are below the league average. (The average salary isn’t known until the season is complete, but the average has come between $5MM and $6MM the past several years, and neither Leonard nor Joseph makes as much as $3MM this year.) Their qualifying offers aren’t greater than 250% of their salaries, so their cap holds are about $7.235MM for Leonard and about $5.085MM for Joseph. Baynes, who makes $2.077MM, is a Bird free agent, and his qualifying offer isn’t more than 190% of his salary, so his cap hold will be a little more than $3.946MM.

Still, for a player like Leonard in line for a significant raise, the cap hold actually gives his team a greater measure of flexibility than a lucrative new contract would, since the hold is based on his previous salary and not what he’ll be making next. That’s reportedly why the Spurs turned away Leonard’s extension push, as San Antonio sought to preserve its ability to offer the max to other top-level free agents, like Marc Gasol and LaMarcus Aldridge.

No cap hold can exceed the maximum salary for which a player can sign. That’s why Aldridge’s cap hold will be less than 150% of his salary for the Blazers this season even though the Blazers hold his Bird rights. The maximum salary for a player with Aldridge’s experience is projected to come in at about $18.96MM, not much more than his current salary of $16.256MM.

The Clippers have an even more unusual case in Austin Rivers, who was traded twice this season. The Clips have his Bird rights, but the Pelicans declined the fourth year team option on his rookie scale contract before the season, so the Clippers can’t pay him more than what he would have made in the option year. That rule is in place so a team can’t circumvent the rookie scale and decline its option so it can give the player a higher salary, and it applies even if the player is traded after the option is declined, as in the case of Rivers.

If a team holds the rights to fewer than 12 players, cap holds worth the minimum rookie salary ($525,093) are assigned to fill out the roster. So, if a team chose to renounce its rights to all of its free agents and didn’t have anyone under contract, the team would have 12 holds worth $525,093 on the cap, reducing its total cap space by about $6.3MM.

Cap holds aren’t removed from a team’s books until the player signs a new contract or has his rights renounced by the club. For instance, since Roshown McLeod never signed elsewhere after reaching free agency after the 2001/02 season, and the Celtics have never renounced him, Boston still has a minimum salary hold for McLeod on its cap. It’s been so many years since the Celtics have gone under the cap that there’s been no reason for them to renounce their rights to players who retired long ago. Keeping those cap holds allows the Celtics some degree of cushion to help them remain above the cap and take advantage of the mid-level exception and trade exceptions, among other advantages afforded cap teams.

The general purpose of a cap hold is to prevent teams from using room under the cap to sign free agents before using Bird rights to re-sign their own free agents. If a team wants to take advantage of its cap space, it can renounce its rights to its free agents, eliminating those cap holds. However, doing so means the team will no longer hold any form of Bird rights for those players — if the team wants to re-sign those free agents, it would have to use its cap room or another kind of cap exception.

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 the Basketball Insiders salary pages were used in the creation of this post.

Versions of this post were initially published on May 1st, 2012 and May 1st, 2014.

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