Bi-Annual Exception

The most common method over-the-cap teams use to sign free agents from other teams is the mid-level exception, but it's not the only tool those clubs can use to squeeze an extra player onto the payroll. The bi-annual exception is a way to sign a player who commands more than the minimum salary and less than the mid-level.

As its name suggests, the bi-annual exception can only be used every other year. Even if a team uses only a portion of the exception, it becomes unavailable the following year.

The bi-annual exception is available only to a select few clubs. Teams whose player salaries and cap exceptions add up to less than the salary cap lose their bi-annual exception as well as their full mid-level exception and any trade exceptions. They must use their cap room to sign players. Additionally, teams lose access to the bi-annual exception when they go more than $4MM over the tax threshold, exceeding what's known as the tax apron. So, only teams over the cap but under the tax apron can use the bi-annual exception.

Additionally, if a team uses all or part of the bi-annual exception, it triggers a hard cap for that season. Clubs that sign a player with using the exception can't go over the tax apron at any time during the season in which the contract is signed.

The value of the bi-annual exception rises from $1.957MM in 2012/13 to $2.016MM for 2013/14, and will continue to go up by 3% each year during the current collective bargaining agreement. The contract can be for either one or two seasons, with a raise of 4.5% for the second season. The Clippers used the full bi-annual exception last summer to give Grant Hill a two-year deal worth a total of $4,002,065. Teams also have the option of splitting the exception among multiple players. The Spurs signed Nando De Colo to a two-year deal for a total of $2.863MM, but never used the remaining amount on the exception. The bi-annual exception becomes pro-rated starting on January 10th, so it's rarely used for late-season signees.

The Bulls, who gave Marco Belinelli a one-year contract for the full value of the bi-annual exception, were the only team besides the Clippers and Spurs to use it in 2012/13. So, those three clubs can't use the bi-annual in 2013/14, but any other team with a payroll above the cap and below the tax apron may.

Luke Adams contributed to this post, which was initially published on April 23rd, 2012.

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 was used in the creation of this post.

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