Clarifying The NBA’s New Rule On Post-Buyout Signings

The NBA’s trade deadline is just 15 days away, which means we’re nearly in buyout season. Several veteran players on lottery-bound teams who are in the final year of their respective contracts will become candidates to be bought out if they’re not traded to a new team on or before February 8.

When the league and the players’ union finalized a new Collective Bargaining Agreement in 2023, they agreed to a new rule that affects the buyout market. This rule hasn’t been a factor yet this season, but it will likely be relevant in the coming weeks. And in the wake of the deal that sent Kyle Lowry to Charlotte, making him a buyout candidate, I’ve seen some confusion about how the rule works and which players are affected, so we’ll offer some clarity here.

First, here’s the new rule: A team whose salary is above either the first or second tax apron is not permitted to sign a free agent on the buyout market if his pre-waiver salary exceeded the non-taxpayer mid-level exception.

For the 2023/24 season, that means that any team whose taxable salary is above $172,346,000 is ineligible to sign a player who was cut this season if he was earning more than $12,405,000.

This applies to both buyouts and standard waivers, so regardless of whether or not the player agreed to give up any money as part of his release, he’s ineligible to sign with an apron team if he had been earning more than $12,405,000.

As Bobby Marks of ESPN noted earlier this week (via Twitter), these are the clubs whose team salaries are currently above the apron levels:

  • Boston Celtics
  • Denver Nuggets
  • Golden State Warriors
  • Los Angeles Clippers
  • Miami Heat
  • Milwaukee Bucks
  • Phoenix Suns

That means that a player like Lowry, whose $29.7MM salary far exceeds the mid-level exception, would currently be ineligible to sign with one of those seven teams if he’s bought out by the Hornets. However, that list of teams is subject to change as rosters changes and salaries fluctuate.

The Heat, for instance, reduced their payroll in the deal that sent out Lowry for Terry Rozier, whose cap charge is several million dollars smaller than Lowry’s. The Heat are currently above the first apron but well below the second, per Eric Pincus of Sports Business Classroom, so if they were to further trim their payroll, they could gain the ability to sign any player on the buyout market (well, with the exception of Lowry, due to a separate rule prohibiting a team from re-signing a player it traded if he’s waived by his new team).

Conversely, if a team like the Sixers, whose salary is currently less than $3MM shy of the first apron, took on several million dollars in salary in a deadline trade, they’d become ineligible to sign a player like Lowry in the buyout market.

A team can be above the luxury tax line but remain eligible to sign a player on the buyout market, since there’s a gap of approximately $7MM between the tax threshold ($165,294,000) and the first apron. The Lakers, for example, currently project to be a taxpayer, but they have enough room below the apron to ensure this restriction won’t apply to them.

In order to be eligible to sign a player who had been earning more than $12,405,000, the team must have a salary below the first apron upon the completion of the signing — that means a team whose salary is $1MM below the apron can’t offer a player a rest-of-season contract worth $1.2MM.

If a team were to sign a player like Lowry or Gordon Hayward (who is earning $31.5MM) on the buyout market, that club would subsequently be hard-capped at the first apron and would be prohibited from having its salary exceed $172,346,000 for the rest of the season.

Outside of Lowry, Hayward, and perhaps Knicks wing Evan Fournier, it doesn’t look like there will be many buyout candidates earning above the mid-level who would be particularly intriguing on the free agent market.

Players like Gary Harris, Marcus Morris, or Doug McDermott would certainly draw interest, but I don’t see them as viable candidates for buyouts unless they’re traded to a team that views them as a pure salary-matching chip. Guys like Davis Bertans and Joe Harris may appeal to a team in need of shooting, but they’ve barely played this season, so if they were bought out, the competition for their services may not be particularly fierce.

Still, even if this rule only affects a couple players this season, it’s worth keeping in mind. After all, several of the teams in that aforementioned group of seven are legitimate championship contenders. Those are the sorts of clubs that would benefit most from adding one more depth piece, so the fact that that they won’t have access to certain targets on the buyout market is noteworthy.

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