The most common tool over-the-cap teams use to sign free agents from other teams is the mid-level exception, but that’s not the only exception those clubs have to squeeze an extra player onto the payroll. The bi-annual exception is a way for a team to sign a player who may command more than the minimum salary, but less than the mid-level.
As its name suggests, the bi-annual exception can only be used every other season. Even if a team uses only a portion of the exception, it’s off-limits during the following league year.
The bi-annual exception is available only to a limited number of clubs, even among those that didn’t use the exception during the previous season. Teams that create and use cap space forfeit the BAE, along with all but the smallest version of the mid-level (the room exception). Additionally, teams lose access to the bi-annual exception when they go more than $6MM 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 BAE.
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 using the BAE can later go under the cap, but can’t go over the tax apron at any time during the season once the contract is signed.
The bi-annual exception allows for a starting salary of up to $3.29MM in 2017/18. Under the NBA’s previous Collective Bargaining Agreement, the value of each season’s bi-annual exception was determined in advance. However, under the 2017 CBA, the value of the BAE in future league years will be tied to salary cap increases. If the cap goes up by 5%, the value of the bi-annual exception will also increase by 5%.
A player who signs a contract using the bi-annual exception is eligible for a one- or two-year deal, with a raise of 5% for the second season. For players who signed using the BAE in 2017/18, the maximum value of a two-year contract was $6,744,500. Teams also have the option of splitting the bi-annual exception among multiple players, though that happens much less frequently than it does with the mid-level exception, since a split bi-annual deal may not even be worth more than a veteran’s minimum salary.
The bi-annual exception starts to prorate on January 10, decreasing in value by 1/177th each day until the end of the regular season.
During the 2017/18 league year, the Clippers were ineligible to use the bi-annual exception, since they used it to sign Luc Mbah a Moute in 2016/17. Three teams have used the BAE this season, with the Grizzlies signing Tyreke Evans, the Rockets signing Tarik Black, and the Pistons signing Anthony Tolliver. Those three clubs won’t have the exception at their disposal during the 2018/19 league year.
Several teams, including the Spurs, Bucks, Pelicans, and Raptors, remain eligible to use the bi-annual exception this season, but if they don’t take advantage of that opportunity, they’ll retain their eligibility to use it in ’18/19.
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.
Earlier versions of this post were published in 2012, 2013, 2014, 2015, and 2016 by Luke Adams and Chuck Myron.