Hoops Rumors Glossary: Mid-Level Exception

The mid-level exception is the most common way for over-the-cap NBA teams to sign free agents from other clubs for more than the minimum salary. It ensures that each club heads into the offseason with a little spending flexibility, even if that team is deep into luxury tax territory.

Each team is eligible to use a specific type of mid-level exception depending on its proximity to the salary cap. The most lucrative kind of mid-level is available to teams that are over the cap but below the tax apron. Still, clubs deep into the tax, and even those under the cap, have access to lesser versions of the MLE. Here’s a glance at how all three forms of the exception are structured:

For over-the-cap teams:

  • Commonly called either the full mid-level exception, the non-taxpayer’s mid-level exception or simply the mid-level exception.
  • Contract can cover up to four seasons.
  • First-year salary is worth $8,641,000 in 2018/19.
    • Note: Projected first-year salary for 2019/20 is $9,246,000.
  • Once used, the team cannot surpass the “tax apron” (approximately $6MM+ above tax line) for the remainder of the season.

For teams above the cap and the tax apron:

  • Commonly called the taxpayer’s mid-level exception.
  • Contract can cover up to three seasons.
  • First-year salary is worth $5,337,000 in 2018/19.
    • Note: Projected first-year salary for 2019/20 is $5,711,000.

For teams with cap room:

  • Commonly called the room exception.
  • Contract can cover no more than two seasons.
  • First-year salary is worth $4,449,000 in 2018/19.
    • Note: Projected first-year salary for 2019/20 is $4,760,000.

Each form of the mid-level allows for annual raises of up to 5% of the value of the first season’s salary. Last offseason, we broke down the maximum total salaries that players signed using the mid-level exception could earn. Those numbers can be found right here.

While teams can use their entire mid-level exception to sign one player, as the Grizzlies did this year with Kyle Anderson, clubs are also allowed to split the mid-level among multiple players, and that’s a common course of action. For instance, the Pistons have used their MLE to complete four separate signings, devoting parts of it to Glenn Robinson, Bruce Brown, Khyri Thomas, and Wayne Ellington.

Players drafted near the top of the second round often sign contracts for part of the mid-level because it allows teams to give them contracts for more years and more money than the minimum salary exception provides. For example, the Knicks used their mid-level to sign Mitchell Robinson to a four-year contract that starts at $1,485,440. Without the MLE, the Knicks would have been limited to a two-year deal for Robinson, and would have only had his Early Bird rights when his contract expires, rather than his full Bird rights.

Some front offices prefer to leave all or part of their mid-level exception unused in the offseason so it’s still available near the end of the regular season. At that point, a contender could use its MLE to try to sign an impact veteran on the buyout market, as the Pistons did with Ellington. A rebuilding club, on the other hand, could use its MLE to lock up an intriguing developmental player to a long-term contract, like the Timberwolves recently did with Cameron Reynolds.

Unlike the bi-annual exception, the mid-level exception can be used every season. So whether or not a team has used its mid-level in 2018/19, each club will have the opportunity to use some form of the MLE when the new league year begins on July 1, 2019.

Under the old Collective Bargaining Agreement, the mid-level exception increased annually at a modest, fixed rate, which limited its value as the salary cap spiked. However, under the new CBA, the mid-level will increase at the same rate as the salary cap, ensuring that its value relative to cap room remains about the same from year to year. Our estimates for 2019/20’s figures, based on the NBA’s current $109MM salary cap projection, can be found here.

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.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron.

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2 thoughts on “Hoops Rumors Glossary: Mid-Level Exception

  1. I don’t think the non-taxpayer MLE was less valuable under the old CBA. For some reason, it served as a market setter (rather than trailer) for MLE guys, of course, but also anyone below the max or close level. It may have been further from max percentage-wise for a few years, but it was almost always closer in actual dollars (and thus apparently an easier sell to non-max players). I think it’s kind of clear at this point that the old CBA (in total, not just the MLE rules) was better and keeping salaries proportionate to relative value among players than the new one (which, since 2016, has been first-come, first-serve, in terms of teams depleting their future cap). The new CBA has coincided with higher caps, so perhaps another cycle is needed before reaching definitive conclusions. But this is financial issue for the players. It’s a basketball issue for the teams. Both should work to resolve it.

    • x%sure

      Medium-salary guys are in charge of the players union now, will that make a difference?

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