While the term "designated player" may evoke thoughts of baseball's designated hitter rule, there really aren't any similarities. In the NBA, a designated player isn't chosen game by game. Instead, when a team makes someone its designated player, the move can have broad, long-lasting consequences.
A designated player is a former first-round draft pick who receives a five-year extension to his rookie-scale contract. Teams are allowed to sign players to rookie-scale extensions of up to four years as often as they want, but they can only sign one player to a five-year rookie scale extension for as long as that extension is in effect. So, the Wizards, who signed John Wall to a five-year extension in July, can't sign anyone else to a rookie-scale extension of more than four years until the summer of 2019, when Wall's deal expires. The five-year deal makes Wall the team's designated player. That means the Wizards will be limited when they negotiate with Bradley Beal or any other player on the team's roster who can become eligible for a rookie-scale extension before Wall's deal is up.
There are ways the Wizards could get around this, of course. They could trade or release Wall, since he'd cease to be the Wizards' designated player if he's no longer on their roster. That's unlikely to happen. A much more plausible scenario involves the Wizards simply letting Beal hit restricted free agency in 2016, and signing him to a five-year deal then.
Wall signed for the max, and the designated player rule requires that contracts be for the max in at least the first season. The salaries can decrease by as much as 7.5% of the first-year salary each season, providing some measure of flexibility in the total value of the deal. The Bucks and Larry Sanders are closing in on a four-year, $44MM extension, a below-max deal overall. If they wanted to add a fifth year to the arrangement, front load the deal and bring the total value to $58,230,313, they could do so, triggering the designated player rule for Sanders. When I examined the prospects for a Sanders extension, I figured his agent would ask for a fifth year, particularly since the Bucks don't have any former first-round picks on their roster who figure to warrant such a long-term deal when they become extension-eligible. It looks like Sanders won't get that fifth year, perhaps because the Bucks want to retain flexibility in case they find other worthy talent in the next two drafts.
Teams that have designated players do have the option of trading for another team's designated player. So, the Wizards, in theory, could trade for Blake Griffin, the designated player of the Clippers, at some point during the life of their respective extensions. The Wizards couldn't, however, trade for both Griffin and another designated player, such as James Harden. The notion that Washington or any club could put together such a superteam is a little far-fetched, but the stipulation that no team may trade for more than one designated player is in place nonetheless.
The designated player rule doesn't apply to veteran extensions, and it doesn't apply to second-round picks or undrafted players. So, if the Rockets want to sign Chandler Parsons to a five-year extension when he becomes eligible next summer, they can do so without making him their designated player, since Parsons was a second-round pick. Nikola Pekovic's new five-year deal with the Wolves doesn't make him the team's designated player for two reasons: he signed it once his original contract expired, so it's not an extension, and that original contract was for only three seasons, which made him ineligible for an extension anyway.
Not every team has to have a designated player, and few teams do, in part because the designated player rule came into being only recently, when the new collective bargaining agreement went into effect in 2011. Here's the complete of designated players:
- Russell Westbrook, Thunder (expires 2017)*
- Derrick Rose, Bulls (expires 2017)
- James Harden, Rockets (expires 2018)
- Blake Griffin, Clippers (expires 2018)
- John Wall, Wizards (expires 2019)
*— Kevin Durant also signed a five-year extension, but he did so before the new CBA took effect, so he was exempt from the designated player rule, allowing the Thunder to sign Westbrook to his five-year deal.
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.