Most salary cap workarounds, such as the mid-level exception, can be used every year — or at least every other year, as in the case of the bi-annual exception. However the disabled player exception is only available under certain circumstances. Like other salary cap exceptions though, the DPE allows a team to sign a player without using cap space.
If a player is seriously injured, his team can apply for the disabled player exception to replace him. In order for the exception to be granted, an NBA-designated physician must determine that the player is “substantially more likely than not” to be sidelined through at least June 15 of that league year. If granted, the disabled player exception allows a club to sign a replacement player for 50% of the injured player’s salary, or for the amount of the non-taxpayer’s mid-level exception, whichever is lesser.
This season, for instance, two teams have applied for and received a disabled player exception. One was the Celtics, who lost Gordon Hayward, and the other was the Clippers, who had Patrick Beverley ruled out for the season. Hayward is earning over $29.7MM this year, so Boston’s disabled player exception is worth $8.406MM, the value of the non-taxpayer’s mid-level exception. Beverley, on the other hand, has a salary of just over $5.5MM, so the Clippers’ DPE is worth half of that amount (about $2.76MM).
A team must formally apply for a disabled player exception and it requires the approval of the league. The cutoff to apply for a DPE each season is January 15. If a team has a player go down with a season-ending injury after that date, it cannot obtain a DPE to replace him. A team must also use its DPE by March 10 of the current season or it will expire.
Unlike mid-level, bi-annual, or trade exceptions, the disabled player exception can only be used on a single player. However, a team can use it in a variety of ways — the DPE can be used to sign a free agent, to claim a player off waivers, or to acquire a player in a trade.
If a team uses its disabled player exception to take on salary in a trade, it can acquire a player making up to 100% of the DPE amount, plus $100K. For example, a $4MM DPE could be used to trade for a player making $4.1MM. A free agent signed using the DPE can be offered a maximum of one year, while a player acquired via trade using the DPE must be in the final year of his contract. A player claimed off waivers must also be in the final year of his contract, and his salary must fit into the team’s DPE.
In the event that a team is granted a disabled player exception, uses it to acquire a player, and then has its injured player return ahead of schedule (before the end of the season), the team is allowed to carry both players. However, the team would lose its exception if it trades the injured player, or if the player returns to action before the DPE has expired or been used.
The disabled player exception is rarely exercised, but it does give teams a backup plan of sorts, providing the means to replace seriously injured players.
Note: This is a Hoops Rumors Glossary entry. Our glossary posts 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.
An earlier version of this post was published in 2012 by Luke Adams.