Minimum Salary Exception

The minimum salary exception is something of a last resort for capped-out teams seeking to add players, as well as for players seeking NBA contracts, but it’s the most commonly used cap exception. It allows an over-the-cap team to sign a player to a one- or two-year minimum-salary deal, as the name suggests. Teams can use the exception multiple times, allowing clubs that have spent all of their other exceptions an avenue to add to their rosters. It also allows for the acquisition of minimum-salary players via trade, and players signed via the minimum salary exception don’t count as incoming salary for salary-matching purposes.

Players are entitled to varying minimum salaries based on how long they’ve been in the NBA. In 2014/15, a player with no prior NBA experience was eligible for a $507,336 minimum salary, while a player with 10 or more years of experience was eligible for $1,448,490. Over the course of the current collective bargaining agreement, the minimum salary will increase each season, as Larry Coon’s CBA FAQ outlines. For 2015/16, the breakdown is as follows:

Years of experienceminimum salary
0 — $525,093
1 — $845,059
2 — $947,276
3 — $981,348
4 — $1,015,421
5 — $1,100,602
6 — $1,185,784
7 — $1,270,964
8 — $1,356,146
9 — $1,362,897
10 or more — $1,499,187

The numbers demonstrate the wide disparity between the minimum salary for rookies and for long-tenured players. A minimum-salary veteran of 10 or more seasons will earn almost three times as much as a rookie making the minimum next season. The NBA doesn’t want clubs to shy away from signing qualified veterans, so the league reimburses teams for a portion of a minimum-salary player’s cost if he has two or more years of experience, as long as the contract is a one-year deal. For instance, when the Wizards re-signed 12-year veteran Drew Gooden to a one-year deal for 2014/15 using the minimum salary exception, the contract called for a salary of $1,499,187, but the team’s cap hit was just $947,276. The league reimburses the Wizards for the remaining $551,911.

Most salary cap exceptions can only be used once each season. When a team uses its full mid-level exception to sign one or more players, the club can no longer use that exception until the following season. Unlike the mid-level and other cap exceptions, the minimum salary exception can be used any number of times in a single season. The Nets, for example, used the minimum salary exception to sign five players who ended the 2014/15 season on the team’s roster.

The vast majority of 10-day contracts are for the minimum salary, and often the minimum salary exception is the only way for clubs to accommodate any 10-day deals. Teams used the minimum salary exception to sign 48 players to 10-day contracts during the 2014/15 season.

Many exceptions begin to prorate on January 10th, but the minimum salary exception prorates from the first day of the regular season. Teams often take advantage of this to sign players for cheap at the end of the season primarily so they can use them to help salaries match in a trade over the summer, since minimum-salary players do count as outgoing salary for matching purposes.

For example, the Kings signed David Stockton on the fourth day from the end of the 2014/15 regular season. The Kings used the minimum salary exception to sign Stockton to a two-year contract that covered the final four days of the 2014/15 season and all of 2015/16. The 2015/16 portion is non-guaranteed, so the only guaranteed money in the deal was Stockton’s prorated minimum salary, equal to 4/170ths of $507,336. Stockton faces an uphill battle to make the Kings opening-night roster in 2015/16, but if the Kings make a trade over the summer, they can include Stockton’s contract as part of the swap to make the salaries match, allowing the team that acquires Stockton to do the same in another trade or simply waive his non-guaranteed contract at no cost before the 2015/16 season begins. The Kings didn’t necessarily sign Stockton with the idea of trading him, but the minimum salary exception gives the team plenty of flexibility to do so.

Earlier versions of this post appeared on May 7th, 2012, April 28th, 2013 and June 10th, 2014.

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.

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