Hoops Rumors Glossary

For NBA teams looking to open up cap room, simply waiving a player isn’t as effective as it is in the NFL, where salaries are often non-guaranteed and most or all of a player’s cap charge can frequently be wiped from a team’s books. Still, the NBA’s Collective Bargaining Agreement does feature a rule that allows teams to spread a player’s cap hit over multiple seasons. This is called the stretch provision.

The stretch provision ensures that any player waived with at least $250K in guaranteed salary remaining on his contract will have the payment schedule of that money spread across multiple years. That schedule is determined as follows:

• If a player is waived between July 1 and August 31, his remaining salary is paid over twice the number of years remaining on his contract, plus one.
• If a player is waived between September 1 and June 30, his current-year salary is paid on its normal schedule, with any subsequent years spread over twice the number of remaining years, plus one.
• If a player in the final year of his contract is waived between September 1 and June 30, the stretch provision does not apply.

While the new payment schedule for a waived player is non-negotiable, teams get to decide whether or not to apply the stretch provision to that player’s cap charges as well. A team can stick to the original schedule for cap hit purposes, if it so chooses.

Rather than singling out a specific active player, we’ll use a hypothetical contract to create a clearer picture of what these rules look like. Let’s say there’s a player earning $19MM this season, $20MM in 2023/24, and $21MM in ’24/25 who has become a candidate to be waived.

Here’s what that contract would look like if it were waived without applying the stretch provision to the cap hits; if it were stretched before August 31; or if it were stretched after August 31:

Because this hypothetical player wasn’t waived and stretched before August 31, 2022, his salary for the current year can no longer be stretched. Stretching his contract last July or August would have resulted in cap hits of about $8.57MM spread across seven seasons (through 2028/29 and including ’22/23).

As this chart shows, it typically makes sense to waive and stretch a player’s contract in July or August if the team is looking to generate immediate cap flexibility for the current season and isn’t as concerned about the impact in future seasons. If this hypothetical player were stretched in July 2023, his team would trim nearly $12MM off its ’23/24 cap, but would remain on the hook for payments through 2028.

We saw a couple real-life examples of this philosophy at play last summer, when the Trail Blazers waived and stretched Eric Bledsoe and Didi Louzada and the Pacers waived and stretched Nik Stauskas, Juwan Morgan, and Malik Fitts.

Portland was looking to reduce its team salary for the current year in order to sneak below the luxury tax line, while Indiana wanted to carve out a little extra cap room in order to sign Deandre Ayton to a maximum-salary offer sheet.

In each of those cases, the club sought immediate cap relief. That wasn’t the case for the Spurs, who waived Danilo Gallinari last July and decided not to apply the stretch provision to his $13MM cap charge for 2022/23, since they had no specific use for that extra cap room. It made more sense for San Antonio to take the hit this season and keep Gallinari’s money off their future cap sheets.

There are a couple more key rules related to the stretch provision worth noting.

First, while the stretch provision regulates when money is paid out, it doesn’t prevent teams and players from negotiating a reduced salary as part of a buyout agreement.

For example, let’s say a player who has an $18MM expiring contract for 2023/24 agrees this July to give up $3MM in a buyout. As a result of that buyout agreement, his team could stretch his remaining salary and end up with cap hits of $5MM for three seasons (through ’25/26) rather than $6MM.

Second, non-guaranteed money isn’t subject to the stretch provision, since a team isn’t obligated to pay the non-guaranteed portion of a contract once it waives a player.

This rule can come in handy when a club decides to waive a player who has one or two non-guaranteed years tacked onto the end of his contract. For instance, when the Blazers waived Louzada last August, he had three years left on his deal, but only his 2022/23 salary of $1,876,222 was guaranteed — the $4,023,212 owed to him for the two seasons beyond this one was fully non-guaranteed.

That means that when they waived Louzada, the Blazers only owed him just $1,876,222 but were able to stretch that figure across seven seasons (twice the three years remaining on his contract, plus one). As a result, Portland will carry tiny $268,032 cap charges for Louzada on its books through the 2028/29 season.

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 version of this post were published in 2013 and 2017.

The NBA’s draft lottery, which takes place annually between the end of the regular season and the draft, is the league’s way of determining the draft order and disincentivizing second-half tanking. The lottery gives each of the 14 non-playoff teams – or whichever clubs hold those teams’ first-round picks – a chance to land one of the top four selections in the draft.

Although the top four picks of each draft are up for grabs via the lottery, the remaining order is determined by record, worst to best. The league’s worst team isn’t guaranteed a top-four spot in the draft, but is tied for the best chance to land the first overall pick and will receive the fifth overall selection at worst.

The first four picks are determined by a draw of ping-pong balls numbered 1 through 14. Four balls are drawn, resulting in a total of 1,001 possible outcomes. 1,000 of those outcomes are assigned to the 14-non playoff teams — for instance, if balls numbered 4, 7, 8, and 13 were chosen, that combination would belong to one of the 14 lottery teams. The 1,001st combination remains unassigned, and a re-draw would occur if it were ever selected.

The team whose combination is drawn first receives the number one overall pick, and the process is repeated to determine picks two, three, and four. The 14 teams involved in the draft lottery are all assigned a specific number of combinations, as follows (worst to best):

1. 140 combinations, 14.0% chance of receiving the first overall pick
2. 140 combinations, 14.0%
3. 140 combinations, 14.0%
4. 125 combinations, 12.5%
5. 105 combinations, 10.5%
6. 90 combinations, 9.0%
7. 75 combinations, 7.5%
8. 60 combinations, 6.0%
9. 45 combinations, 4.5%
10. 30 combinations, 3.0%
11. 20 combinations, 2.0%
12. 15 combinations, 1.5%
13. 10 combinations, 1.0%
14. 5 combinations, 0.5%

If two lottery teams finish the season with identical records, each team receives an equal chance at a top-four pick by averaging the total amount of outcomes for their two positions. For instance, if two teams tie for the league’s fourth-worst record, each club would receive 115 combinations and an 11.5% chance at the first overall pick — an average of the 125 and 105 combinations that the fourth- and fifth-worst teams receive.

If the average amount of combinations for two positions isn’t a whole number, a coin flip determines which team receives the extra combination. For example, if two clubs tied for the league’s third-worst record, the team that wins the coin flip would receive 133 of 1,000 chances at the first overall pick, while the loser would receive 132. The coin flip also determines which team will draft higher in the event that neither club earns a top-four pick.

The table below displays the odds for each lottery team, rounded to one decimal place. Seeds are listed in the left column, while the picks are noted along the top row. For our purposes, the first seed is the NBA’s worst team.

The NBA’s lottery format was changed in 2019, with that year’s draft representing the first one that used the new system. Previously, only the top three spots were determined via the lottery and the odds were weighted more heavily in favor of the league’s worst teams.

Beginning in 2021, the NBA’s lottery underwent another small change when the league introduced the play-in tournament. The lottery now includes the 10 teams that miss out on the playoffs and the play-in tournament, plus the four clubs that are eliminated in the play-in portion of the postseason.

That means a team can finish the regular season ranked seventh or eighth in its conference, but if that club is eliminated in the play-in tournament, it will be in the lottery. Conversely, a team that finishes ninth or 10th in its conference during the regular season and then wins a pair of play-in games to earn a playoff spot will be a non-lottery team.

Once the 14 lottery teams are determined, their lottery odds are still dictated by their regular season records, so the play-in losers won’t necessarily be the 11-14 “seeds” in the lottery. For example, in 2022, the 34-48 Spurs ended up with better lottery odds than the 37-45 Knicks or 35-47 Wizards, even though San Antonio participated in the Western Conference play-in tournament while New York and Washington didn’t qualify for the East’s play-in.

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.

Information from Tankathon.com and Wikipedia was used in the creation of this post. Earlier versions of this post were published in past years.

Relying on the trade machine at ESPN.com is probably the simplest way for NBA fans to verify whether or not a trade will work under league rules, but it’s a worthwhile exercise to examine and understand the primary tool in the NBA’s Collective Bargaining Agreement that determines a trade’s viability — the traded player exception.

Teams with the cap room necessary to make a trade work don’t need to abide by traded player exception rules. However, if a team makes a deal that will leave its total salary more than $100K above the salary cap, the club can use a traded player exception to ensure the trade is legal under CBA guidelines.

There are two different types of traded player exceptions used in NBA deals. One applies to simultaneous trades, while the other applies to non-simultaneous deals.

In a simultaneous trade, a team can send out one or more players and can acquire more salary than it gives up. In a non-simultaneous trade, only a single player can be dealt, and the team has a year to take back the equivalent of that player’s salary, plus $100K.

Let’s look into each scenario in greater detail….

Simultaneous:

In a simultaneous trade, different rules applies to taxpaying and non-taxpaying clubs. A non-taxpaying team can trade one or more players and take back….

1. 175% of the outgoing salary (plus $100K), for any amount up to $6,533,333.
2. The outgoing salary plus $5MM, for any amount between $6,533,333 and $19,600,000.
3. 125% of the outgoing salary (plus $100K), for any amount above $19,600,000.

Here’s a recent example of these rules in effect:

Last July, the Kings traded Justin Holiday and Maurice Harkless to the Hawks in exchange for Kevin Huerter.

Holiday is earning $6,292,440 in 2022/23, so if Sacramento had traded him on his own, the team could have taken back $11,111,770 (175% of his salary, plus $100K). However, that wouldn’t have been enough to cover Huerter’s salary of $14,508,929.

By adding Harkless and his $4,564,980 cap hit to their trade package, the Kings sent out a total of $10,857,420. The second rule listed above applies to that figure, meaning Sacramento was able to take back the outgoing amount plus an extra $5MM, for $15,857,420 in total — that was enough to cover Huerter’s salary, making the trade legal.

For taxpaying teams, the traded player exception rules for a simultaneous trade are simpler, albeit more restrictive. A taxpaying club can send out one or more players and take back 125% of the outgoing salary, plus $100K, no matter how much – or how little – outgoing salary is involved.

This rule was applied last August, when the Lakers sent Talen Horton-Tucker and Stanley Johnson to the Jazz in exchange for Patrick Beverley.

Because Horton-Tucker’s 2022/23 cap hit is $10,260,000, the Lakers would have been able to take back up to $12,925,000 in salary by trading him on his own. That’s 125% of his salary, plus $100K. But Beverley is earning $13,000,000 this season, so Los Angeles had to add a little more salary to its package to make the deal legal.

Johnson’s minimum-salary cap hit of $2,351,521 easily got the Lakers there — adding that figure to Horton-Tucker’s contract resulted in $12,611,521 of outgoing salary, so L.A. could have taken back as much as $15,864,401. Again, that’s 125% of the outgoing amount, plus $100K.

In simultaneous transactions, the traded player exception is used to instantly complete the deal, leaving no lingering loose ends. This form of the traded player exception isn’t what we’re talking about if we say a team “has a trade exception” available to use. Those outstanding trade exceptions come as a result of non-simultaneous deals.

Non-simultaneous:

In non-simultaneous deals, a team can trade away a single player without immediately taking salary back in return. The team then has up to one year in which it can acquire one or more players whose combined salaries amount to no more than the traded player’s salary (plus $100K).

For instance, when the Jazz sent Royce O’Neale to the Nets in exchange for a first-round pick last offseason, that was a non-simultaneous trade from Utah’s perspective, allowing the team to create a traded player exception worth O’Neale’s salary ($8,800,000).

The Jazz subsequently had a year to use that exception to acquire one or more players whose salaries total up to $8,900,000 (O’Neale’s salary, plus $100K). They’ve already made excellent use of it, absorbing Jarred Vanderbilt, Leandro Bolmaro, and Saben Lee into the exception, leaving just $202K left over. Trade exceptions expire after a year if they haven’t been used in full.

The Nets, meanwhile, were able to acquire O’Neale without sending out any salary despite being a taxpaying team because of a previous non-simultaneous trade they’d made involving James Harden, which had left them with a trade exception worth more than $11MM.

Putting the two together:

When evaluating an NBA trade, it’s worth remembering that two teams can view the deal entirely differently and that they’re allowed to divide a single trade into multiple parts to maximize their flexibility. For example, one team could consider a trade simultaneous, while the other team breaks the transaction down into two separate trades, one simultaneous and one non-simultaneous.

Let’s take a look at a recent real-life example, examining the eight-player September trade between the Rockets and Thunder.

From the Rockets’ perspective, the trade broke down as follows:

• Traded David Nwaba ($5,022,000) for Maurice Harkless ($4,564,980) and Ty Jerome ($4,220,057).
  • This trade is a simultaneous one for the Rockets, who were a non-taxpaying team, making them eligible to take back up to 175% of Nwaba’s salary, plus $100K. That figure works out to $8,888,500; Harkless and Jerome combine to earn $8,785,037, making them a snug fit.
• Traded Trey Burke ($3,423,750) and Sterling Brown ($3,000,000) for Derrick Favors ($10,183,800).
  • This is another simultaneous trade for the Rockets, who didn’t have an outgoing player earning enough on his own to match Favors’ $10MM+ cap hit. Adding Burke’s salary to Brown’s results in a total of $6,423,750, allowing Houston to take back up to $11,341,563 (175% of the outgoing salary, plus $100K). Favors’ salary fits.
• Traded Marquese Chriss ($2,193,920) for Theo Maledon ($1,900,000).
  • This segment of the deal actually represents a non-simultaneous trade for the Rockets, since they’re only trading one player and they’re taking back less salary than they’re sending out. That allows them to create a traded player exception worth $293,920, the difference between Chriss’ salary and Maledon’s. That amount is too small for Houston to realistically find a use for it, but it’s still technically a trade exception the team will have at its disposal until next fall.

Here’s how it looked from the Thunder’s perspective:

• Traded Maurice Harkless ($4,564,980) for David Nwaba ($5,022,000) and Sterling Brown ($3,000,000).
  • In a simultaneous trade of Harkless, the non-taxpaying Thunder were permitted to take back $8,088,715, which is 175% of his salary, plus $100K. That’s an ideal match for Nwaba and Brown, who are earning a combined $8,022,000.
• Traded Theo Maledon ($1,900,000) for Trey Burke ($3,423,750).
  • This doesn’t look on the surface like a match, given that Burke’s salary is nearly double Maledon’s. But 175% of Maledon’s salary is $3,325,000. Add another $100K and you get $3,425,000, which covers Burke’s cap hit in a simultaneous trade by a grand total of $1,250.
• Acquired Marquese Chriss ($2,193,920) using the minimum salary exception.
  • Players who are earning the minimum salary on a one-year or two-year contract can be taken in using the minimum salary exception, with no outgoing salary required. That was the case for Chriss, who was in the second season of a two-year, minimum-salary contract.
• Generated traded player exceptions worth $10,183,800 and $4,220,057.
  • Because the Thunder needed only two outgoing salaries to account for all four incoming players, that leaves Derrick Favors and Ty Jerome as essentially being traded for “nothing.” As a result, Oklahoma City was able to create trade exceptions worth each of their outgoing salaries, treating the trades of Favors and Jerome as non-simultaneous.

More notes on traded player exceptions:

• A team’s outgoing salary for matching purposes is the guaranteed salary rather than the total salary. For example, a player with a $2MM partial guarantee on a $10MM salary would only count for $2MM for salary-matching purposes for the team trading him (the team acquiring him would still have to account for him as $10MM in incoming salary). Between the end of a team’s season and June 30, the outgoing salary for a traded player is the lesser of his full current-season salary and his guaranteed salary for the next season. We have more details on this rule in a separate glossary entry.
• When determining whether a team is over the cap or the luxury tax line for traded player exception purposes, the team’s total salary after the trade is the deciding factor.
• Trade exceptions created in non-simultaneous trades can’t be combined with one another, with other exceptions, or with a player’s salary; they can’t be used to sign a free agent (except in a sign-and-trade); and they can’t be traded outright to another team.
• The salary in a sign-and-trade can sometimes be subject to base year compensation rules. In that case, the player’s outgoing salary for trade purposes is either his previous salary or 50% of his new salary, whichever is greater. For instance, when the Cavaliers signed-and-traded Collin Sexton to the Jazz in the Donovan Mitchell blockbuster, Sexton’s incoming salary from Utah’s perspective was $16,500,000, but his outgoing salary from Cleveland’s perspective was just $8,250,000.
• Teams that are under the cap before a trade and go over the cap as a result of the trade can’t create a trade exception as a result of that deal.
• For salary-matching purposes, future draft picks or the draft rights to an unsigned player aren’t taken into consideration.

The traded player exception is one of the CBA’s more complicated tools and can make it challenging for over-the-cap teams to navigate the trade market. It’s undoubtedly simpler to use an online trade machine to determine whether a deal is legal, but examining the rules and figuring out exactly how a blockbuster trade breaks down can provide rewarding insight into an NBA club’s management of its cap.

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, 2018, 2020, and 2021.

During the early part of an NBA season, a team that wants to sign a player to a short-term contract generally does so by agreeing to a non-guaranteed deal, giving the club the flexibility to waive him without paying his full-season salary. But non-guaranteed contracts are only an option until January 7 — any standard, rest-of-season deal signed after that date must be guaranteed for the season.

Around the same time the league-wide salary guarantee date arrives, the NBA gives teams the ability to sign players to 10-day contracts, which essentially replace non-guaranteed deals during the second half of the season.

Ten-day contracts can be signed each year beginning on January 5 and are exactly what they sound like — contracts that cover 10 days (including the day they’re signed). A player who signs a 10-day deal on January 5 would remain eligible to play for his team through January 14, but not on January 15, unless he signs a new contract.

A team can sign a player to as many as two 10-day contracts before committing to him for the rest of the season or, as in many cases, turning him away. A player can’t sign three 10-day standard contracts with the same team, but after signing two 10-day deals with one club, he’s allowed to sign another with a separate club.

The NBA has tweaked this rule in recent years to allow three or more 10-day contracts with the same team for players who are signed via the hardship provision. Last season, for instance, Drew Eubanks ended up signing five 10-day deals with the Trail Blazers. A team qualifies for a hardship exception when it meets certain criteria — those criteria have evolved in recent years to cover COVID-19 cases, but historically involved the club having at least four injured players.

While a team signing a player to a standard 10-day contract must have an open spot on its 15-man roster to accommodate the signing, a player signed via the hardship provision doesn’t count against that 15-man limit.

Even though they can technically be worth more, 10-day deals are almost always worth a prorated portion of the player’s minimum salary. A minimum-salary 10-day contract for a rookie this season will be worth $58,493, or 10/174ths of the full-season rookie minimum salary. A one-year veteran would earn $94,136. A minimum-salary 10-day deal for any veteran of two or more seasons would represent a cost of $105,522 to the team.

Veterans with more than two years of NBA experience would earn more than $105,522 on a 10-day contract, but the league would pay the extra freight. However, teams gain no financial advantage if they eschew 10-day contracts with more experienced players to sign rookies or one-year veterans to 10-day deals in an effort to reduce their tax penalty — those deals count the same as the ones for two-year veterans when the league calculates a team’s salary for tax purposes.

Teams would have to pay slightly more if they sign a player to a 10-day contract and they have fewer than three games on their schedule over that 10-day period. In those cases, the length of the 10-day contract is extended so that it covers three games for the team.

It’s rare that any team would have such a light schedule, since most play at least three games a week, but the rule generally comes into play for contracts signed just before the All-Star break. If the Knicks were to sign a player to a 10-day contract on February 13 this season, for instance, his contract would actually cover 12 days, since New York plays games on Feb. 13, Feb. 15, and then not again until Feb. 24.

Here are a few more rules related to 10-day contracts:

• A team may terminate a 10-day contract before it runs to term if it wants to use the roster spot to accommodate a waiver claim, signing, or trade acquisition.
• Players whose 10-day contracts are terminated early don’t go on waivers, so they become free agents immediately. Still, those players receive their full 10-day salaries — the contracts are fully guaranteed for the 10 days.
• A team with a full 15-man roster is permitted to have up to three active players on 10-day contracts.
• A 10-day deal must be a standard NBA contract. In other words, a team can’t sign a player to a two-way, 10-day contract.

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 2013, 2014, 2015, 2016, and 2017 by Luke Adams and Chuck Myron.

When an NBA team is over the salary cap and wants to make a trade, certain rules in the Collective Bargaining Agreement dictate how much salary the team is permitted to take back. We’ve outlined these rules in detail in our glossary entry on the traded player exception. Essentially, in most cases, an over-the-cap team must send out nearly as much salary as it acquires for the trade to be legal.

In some scenarios, salary aggregation is required in order to legally match the incoming player’s cap hit. Aggregation is the act of combining multiple players’ salaries in order to reach that legal outgoing limit.

For example, if Team A wants to acquire a player earning $30MM from Team B, sending out a player earning $20MM would fall short of the minimum requirement, since Team A can only bring back up to 125% of the outgoing amount (plus $100K). Trading a $20MM player would allow the team to acquire up to $25.1MM in salary.

However, by adding a second player earning $4MM to its package, Team A would reach the minimum outgoing threshold by “aggregating” its two traded players, resulting in a total of $24MM in outgoing salary — that’s just barely enough to bring back a $30MM player.

Only player salaries can be aggregated. Trade exceptions cannot be aggregated with one another or with players. That means a team with a $10MM trade exception can’t aggregate that exception with a $20MM player (or a $20MM trade exception) to acquire a $30MM player.

Crucially, sending out two players together in a trade doesn’t necessarily mean they have to be aggregated.

For instance, if Team A sends out one player earning $25MM and another earning $5MM in exchange for its incoming $30MM player, there’s no need to aggregate the two outgoing salaries. Since $25MM is an amount sufficient to take back $30MM, the $5MM player can essentially be traded for “nothing,” creating a $5MM trade exception that could be used at a later date.

Because trade exceptions can only be created in “non-simultaneous” trades and salary aggregation can only be completed in a “simultaneous” trade, trade exceptions can’t be generated in scenarios in which salaries are aggregated. In the hypothetical trade above, swapping the $25MM player for the $30MM player represents a simultaneous trade, while sending out the $5MM player represents a non-simultaneous trade, resulting in the trade exception.

Here’s another example to illustrate that point, using the same $30MM incoming player: If Team A decides to salary-match by sending out one player earning $20MM and a second earning $15MM, that team can’t generate a trade exception worth the excess amount ($5MM), because the two outgoing salaries must be aggregated, resulting in a simultaneous trade.

One good recent example of salary aggregation came when the Celtics acquired Malcolm Brogdon from Indiana over the summer. In order to take on Brogdon’s $22.6MM salary, Boston needed to send out $18MM, but the team didn’t have one player earning that amount it wanted to trade to make the deal legal.

In order to get to $18MM, the Celtics began by building a package around Daniel Theis ($8,694,369) and Aaron Nesmith ($3,804,360). Still $5,501,271 short of the required minimum, Boston also gave partial guarantees to Nik Stauskas ($2,106,932), Juwan Morgan ($1,728,689), and Malik Fitts ($1,665,650), aggregating all five players’ salaries to match Brogdon’s figure.

The NBA’s trade rules state that when a team acquires a player using salary-matching or a trade exception (rather than cap room), it cannot aggregate that player’s salary in a second trade for two months. That makes December 9 an important date on this season’s trade calendar, since February 9 is the 2023 trade deadline. Any player acquired after today won’t be eligible to have his trade aggregated prior to the deadline.

As outlined above, that doesn’t mean that a player acquired after today can’t be traded again before the deadline along with other players — it simply means his salary can’t be aggregated as part of the deal.

For instance, when the Thunder acquired Maurice Harkless from Atlanta on September 27 using a trade exception, he became ineligible to be aggregated in a second deal until November 27. However, Oklahoma City traded him to Houston along with three other players on September 30.

That move was possible because Harkless’ salary didn’t need to be aggregated with Derrick Favors‘, Ty Jerome‘s, and/or Theo Maledon‘s in order to make that second trade legal for Oklahoma City. From the Thunder’s perspective, the eight-player trade broke down into multiple smaller parts, with Harkless essentially being traded “by himself” despite being part of a package.

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.

While a rule like the Gilbert Arenas provision can flatter its namesake, the late Ted Stepien, former owner of the Cavaliers, may have preferred not to go down in history as the reference point for the Ted Stepien rule.

Stepien owned the Cavs in the early 1980s, and made a number of trades that left the franchise without first-round picks for several years. As a result, the NBA eventually instituted a rule that prohibited teams from trading out of the first round for consecutive future seasons. It’s now informally known as the “Stepien rule,” even though the Cavs owner isn’t explicitly mentioned in the league’s Collective Bargaining Agreement.

Because the Stepien rule applies only to future draft picks, teams are still permitted to trade their first-rounders every year if they so choose, but they can’t trade out of the first round for back-to-back future drafts.

For instance, since the Celtics have traded their 2023 first-round pick to Indiana, they aren’t currently permitted to trade their 2024 first-rounder. Following the 2023 draft, the Celtics would regain the right to trade that 2024 first-round pick, since their ’23 first-rounder will no longer be considered a future pick.

The Stepien rule does allow a team to trade consecutive future first-round picks if the team has acquired a separate first-rounder from another team for either of those years. So if Boston were to trade for another team’s 2023 first-rounder, that would give the Celtics the flexibility to move their 2024 pick without having to wait until after the 2023 draft.

Teams are permitted to include protection on draft picks. This can create complications related to the Stepien rule, which prevents teams from trading a first-round pick if there’s any chance at all that it will leave a team without a first-rounder for two straight years.

For example, the Trail Blazers have traded a lottery-protected 2023 first-round pick to Chicago — it will only convey if it falls outside of the top 14. That traded 2023 pick is protected all the way through 2028, and as long as there’s still a chance it won’t convey immediately, the Blazers are prevented from unconditionally trading any of their next few first-round picks.

Portland could trade a conditional 2025 first-round pick, but a team acquiring that pick would have to accept that it would be pushed back one year every time the pick Portland has traded to Chicago doesn’t convey.

[RELATED: Traded first round picks for 2023 NBA draft]

Teams will have to take the Stepien rule into account at this season’s trade deadline as they mull including draft picks in deals. It’s why the Lakers, for instance, don’t currently have a tradable first-round pick prior to 2027.

As part of the Anthony Davis blockbuster, Los Angeles agreed to send its 2024 first-rounder to New Orleans, but the Pelicans have the option to defer that pick until 2025. As a result, the Lakers can’t trade their 2023 or 2026 first-rounder, since moving either one could put them in position to be without first-round picks in consecutive future years.

Here are a few more rules related to trading draft picks:

• The “Seven Year Rule” prohibits teams from trading draft picks more than seven years in advance. During the 2022/23 season, a 2029 draft pick can be traded, but a 2030 pick cannot be dealt.
• The Seven Year Rule applies to protections on picks as well. If a team wants to trade a lottery-protected 2029 first-rounder at this year’s deadline, it can’t roll those protections over to 2030. For example, one of the picks the Timberwolves sent to the Jazz in the Rudy Gobert trade is a top-five protected 2029 first-round pick. If that pick falls in its protected range, Utah will instead receive Minnesota’s 2029 second-rounder, since picks in 2030 and beyond were off limits when the two teams negotiated the protections.
• A team can add protection to a pick it has acquired as long as there wasn’t already protection on the pick. For instance, the Jazz currently control the Timberwolves‘ unprotected 2023 first-round pick. If Utah wants to include that selection in a trade, the team could put, say, top-three protection on it.
• For salary-matching purposes, a traded draft pick counts as $0 until the player signs a contract.

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 version of this post were published in previous years.

When an NBA team cuts a player, he doesn’t immediately become a free agent. Instead, the player is placed on waivers, which serves as a sort of temporary holding ground as the other 29 teams decide if they want to try to add him to their roster.

A player remains on waivers for at least 48 hours after he is formally cut by his team. During that time, a team can place a waiver claim in an attempt to acquire the player. If two or more clubs place a claim, the team with the worst record takes priority (before December 1, records from the previous season determine waiver order).

If a team claims a player off waivers, it assumes his current contract and is on the hook for the remainder of his salary. The claiming team also pays a $1,000 fee to the NBA office. If no claims are placed on the player, he clears waivers at 4:00 pm Central time two days after his release (or three days later, if he was cut after 4:00 pm CT) and becomes an unrestricted free agent.

While the waiver format is simple enough, not every team will have the salary cap flexibility to make a claim for any waived player it wants. There are only a handful of instances in which a club is able to claim a player off waivers:

• The team is far enough under the salary cap to fit the player’s entire salary.
• The team has a traded player exception worth at least the player’s salary.
• The team has a disabled player exception worth at least the player’s salary, and he’s in the last year of his contract.
• The player’s contract is for one or two seasons and he’s paid the minimum salary.
• The player is on a two-way contract.

Since most NBA teams go over the cap and sizable TPEs and DPEs are somewhat rare, the majority of players who are claimed off waivers are either on minimum-salary contracts or two-way deals. Claiming those players simply requires an open roster slot.

More often than not though, waived players go unclaimed. In that case, the player’s original team remains on the hook for the rest of his salary.

Unless the player is in the final year of his contract and is waived after August 31, his club has the option of “stretching” his remaining cap hit(s) over multiple years using the stretch provision, which we explain in a separate glossary entry. A team that waives a player and uses the stretch provision on him cannot re-acquire that player until after his contract would have originally expired.

In the case of any player without a fully guaranteed contract, the non-guaranteed portion of a player’s salary is removed from a club’s cap immediately once the player is waived.

When a player is “bought out” by his club, he’s placed on waivers as part of the agreement. He and his team agree to adjust the guaranteed portion of his contract, reducing the amount owed to the player by the team, assuming he clears waivers.

Here are several more notes related to waiver rules:

• Players can be waived and claimed off waivers during the July moratorium.
• A player waived after March 1 is ineligible for the postseason if he signs with a new team.
• A player on an expiring contract can’t be waived between the end of the regular season and the start of the next league year.
• A player claimed off waivers can’t be traded for 30 days. If he’s claimed during the offseason, he can’t be traded until the 30th day of the regular season.
• If a player is traded and then is waived by his new team, he can’t re-sign with his former club until one year after the trade or until the July 1 after his original contract would have expired, whichever is earlier.
  • Note: If a player is traded twice before being waived, he’s allowed to re-sign with the team that first traded him.
• A player who has Early Bird or full Bird rights retains Early Bird rights if he’s claimed off waivers.
• If a team makes a successful waiver claim, it doesn’t lose its spot in the waiver order — the 30th-ranked team at the end of a season remains atop the waiver priority list until December 1 of that year, even if that team makes multiple offseason claims.
• A team with a full roster can submit a waiver claim and wouldn’t have to clear a spot on its roster for a claimed player until it’s determined that the claim is successful.

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, 2018, and 2020.

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.

For instance, if a team is granted a disabled player exception for a player earning $10MM, the exception would be worth $5MM. But if the injured player is earning $30MM, the DPE would be worth the equivalent of the mid-level exception (this season, that’s $10,490,000).

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 the exception 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, rather than spread out across multiple players. 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 $5,000,000 DPE could be used to trade for a player making $5,100,000.

A free agent signed using the DPE can only be offered a rest-of-season deal, 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. Essentially, the purpose of the exception is to give the team some flexibility to replace a player following a season-ending injury, but not beyond the current season.

The team must have room on its roster to sign the replacement player — the disabled player exception doesn’t allow the club to carry an extra man.

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 (ie. before the end of the season), the team is allowed to carry both players.

However, if a team has an unused disabled player exception and then trades its injured player, the team would lose the exception. The same is true if the injured player returns to action before the DPE has expired or been used.

Most disabled player exceptions ultimately go unused, but some come in handy in trades. For example, after being granted a DPE in the wake of Chet Holmgren‘s season-ending foot injury earlier this year, the Thunder used that exception to acquire Maurice Harkless from Atlanta in a deal where Vit Krejci‘s outgoing salary wasn’t sufficient for matching purposes.

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.

Earlier versions of this post were published in 2012 and 2017.

It’s common practice in the National Football League for a team to renegotiate its contract with a player, but we hear far less about the concept in the NBA. So can an NBA team actually renegotiate a contract with one of its players?

The answer is almost always no, and it’s a firm no if the follow-up question is whether the sides can renegotiate the value of the contract downward. Unlike NFL teams, an NBA club can’t create extra cap flexibility by renegotiating a contract to push present-day cap hits into future years.

However, renegotiations are allowed to make an NBA contract more lucrative, and they can happen as long as a specific set of circumstances are in place:

• Only contracts that cover four or more seasons can be renegotiated, though that rule doesn’t apply to rookie scale deals — even though they run for four years, they can’t be renegotiated.
• Renegotiations can only occur after the third anniversary of a contract signing, an extension, or a previous renegotiation (assuming the previous renegotiation increased the salary in any season by 5% or more).
• Perhaps most importantly, teams can’t renegotiate any contracts if they’re over the cap, and they can only increase the player’s salary in the current season by the amount of cap room that they have (or to the player’s maximum salary).

The raises for any seasons that follow the first renegotiated season in a contract are limited to 8%. That’s also true of salary decreases, though if a renegotiation happens at the same time as an extension, the player’s salary can decrease by as much as 40% from the last season of the existing contract to the first season of the extension.

Here are a few other rules related to contract renegotiations:

• Teams can’t renegotiate contracts between March 1 and June 30, so the last day of February is always the deadline to complete renegotiations in a given league year.
• Renegotiations can’t occur as part of a trade, and if a player waives some or all of his trade kicker to facilitate a trade, he’s ineligible to renegotiate his contract for the next six months.
• In order for a signing bonus to be included in a renegotiation, the contract must be extended as well.
• Two-way contracts can’t be renegotiated.

Renegotiating a contract to include a significant raise for the current season can be a clever way of incentivizing a long-term extension for a player who would otherwise reach free agency. However, an extensive set of rules limits the appeal of that sort of deal, and teams generally require substantial cap room to pull it off, so contract renegotiations are rare.

The last NBA contract to be renegotiated was Robert Covington‘s with the Sixers in November 2017. At the time, Covington was earning a minimum salary of approximately $1.6MM and the 76ers had just over $15MM in cap room available.

Since Covington had outperformed that contract and Philadelphia wanted to lock him up long-term, the team used its remaining cap room to renegotiate his deal, giving him a raise to nearly $16.7MM for the 2017/18 season, then tacking on four more years, the first of which was worth just over $10MM, representing a 40% dip.

Because two NBA teams – San Antonio and Indiana – currently have substantial cap room available, the renegotiation tactic is worth keeping in the back of our minds this season.

Unfortunately for the Spurs, the team’s top extension candidates – Jakob Poeltl and Tre Jones – signed three-year contracts during the 2020 offseason. That makes them ineligible for a renegotiation, since only contracts covering four or more seasons can be renegotiated.

The Pacers, on the other hand, have one renegotiation candidate in Myles Turner, who signed a four-year rookie scale extension in 2018. Turner has an $18MM cap hit this season, so veteran extension rules would typically restrict the Pacers from offering more than a 20% raise, which would work out to a $21.6MM starting salary in 2023/24.

However, by renegotiating his contract, the Pacers could get more creative if they want to try to extend Turner, offering him a big raise on this year’s $18MM salary — in theory, they could double that figure and still have a chunk of cap room (approximately $10MM) left over. Doing so would reduce the trade opportunities the Pacers’ cap room affords them at the trade deadline, but they’ll need to spend that money somehow in order to reach this season’s salary floor.

Additionally, because a renegotiation in conjunction with an extension allows for a 40% dip in the first year of the extension, the Pacers could still start an extension offer for Turner at $21.6MM even after increasing his current-year salary to $36MM. It’s not as if a big salary bump for this season would force them to keep increasing that cap number in future years — a Turner extension could theoretically look the same beyond this season as it would without a renegotiation.

Keith Smith of Spotrac explores the concept of a possible Turner renegotiation and extension in more detail.

Turner may prefer to test the free agent market next summer; perhaps the Pacers would prefer to trade him before this season’s deadline. But if there’s any mutual interest in a long-term deal, the two sides would be wise to explore the renegotiate-and-extend route, since this could represent a rare instance where it makes sense to take that path.

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 version of this post were published in 2015 and 2017.

An NBA team that want to re-sign a player before he reaches free agency can do so, but only at certain times and if his contract meets specific criteria.

Rookie scale extensions, which can be completed for former first-round picks between the third and fourth years of their rookie scale contracts, were the NBA’s most common form of extension in the past. But in its 2017 Collective Bargaining Agreement, the league relaxed its criteria for veteran extensions, resulting in a significant increase in those deals in recent years. They’ve now overtaken rookie scale extensions as the league’s most frequently signed extensions.

[RELATED: 2022/23 NBA Contract Extension Tracker]

A veteran extension is any contract extension that tacks additional years onto a contract that wasn’t a rookie scale deal. Even if the player is still on his first NBA contract, he can technically receive a “veteran” extension if he was initially signed as a second-round pick or an undrafted free agent rather than via the league’s rookie scale for first-rounders.

Here’s a full breakdown of how players become eligible to sign veteran extensions, and the limits that come along with them:

When can a player sign a veteran contract extension?

A team that wants to sign a player to a veteran extension wouldn’t be able to simply complete that extension one year after the initial contract was signed. The team must wait a specified period of time before the player becomes extension-eligible, as follows:

• If the player initially signed a three- or four-year contract: Second anniversary of signing date.
  • Note: The second anniversary date also applies if the player previously signed an extension that lengthened his contract to three or four total seasons.
• If the player initially signed a five- or six-year contract: Third anniversary of signing date.
  • Note: The third anniversary date also applies if the player previously signed an extension that lengthened his contract to five or six total seasons.
• If the player previously renegotiated his contract and increased his salary by more than 10%: Third anniversary of renegotiation date.

This set of rules has been complicated in recent years by the COVID-19 pandemic that forced the NBA to adjust its usual calendar during the 2019/20, ’20/21 and ’21/22 league years. For instance, the 2020 free agency period was delayed until November 21 instead of beginning on July 1.

Due to that delay, Pat Connaughton signed a three-year free agent contract on November 23, 2020, which would normally make him ineligible to be extended until November 23, 2022. However, the NBA adjusted that two-year waiting period to better reflect certain stages of the offseason rather than adhering to specific dates on the calendar.

As a result, Connaughton was able to sign a new extension with the Bucks this year on July 18. Similarly, Lakers star LeBron James became extension-eligible on August 4 this year after signing his previous extension on December 3, 2020.

Going forward, the usual two- and three-year waiting periods will once again apply. For instance, after signing a four-year extension on July 6, 2022 that lengthened his contract to six total seasons, Devin Booker will become extension-eligible again on July 6, 2025. Connaughton, whose new three-year extension lengthened his contract to four total seasons, will be eligible to sign another extension on July 18, 2024.

How many years can a player receive on a veteran extension?

A veteran extension can be for up to five years, including the year(s) remaining on the previous contract. The current league year always counts as one of those five years, even if an extension is agreed to as late as June 30.

For instance, when John Konchar signed an extension earlier this summer with the Grizzlies, he had two years left on his current contract, which ran through 2023/24. He added three extra years via the extension, maxing out at five years overall.

If a player signs a “designated” veteran extension, he can receive up to six total years, as we cover in a separate glossary entry. Booker, Karl-Anthony Towns, and Nikola Jokic have all taken this route during the 2022 offseason after meeting the super-max criteria.

How much money can a player receive on a veteran extension?

The first-year salary in a veteran extension can be worth up to 120% of the salary in the final year of the player’s previous contract or 120% of the NBA’s estimated average salary, whichever is greater. Annual raises are limited to 8% of the first-year extension salary.

When Terry Rozier signed an extension with the Hornets a year ago, he added four extra years to the one year and $17,905,263 remaining on his previous deal. Because that $17.9MM cap hit greatly exceeds the league’s estimated average salary, Rozier was eligible to earn up to 120% of his final-year salary in the first year of his extension. As such, his new contract begins this season with a salary of $21,486,316, with 8% annual raises from there.

Dorian Finney-Smith, on the other hand, was only earning $4,000,000 when he signed an extension with the Mavericks in February. A 20% raise on that amount wouldn’t have been worth Finney-Smith’s while, but he was eligible to receive 120% of the NBA’s estimated average salary, which was $10,335,000 in 2021/22. As a result, Finney-Smith’s four-year extension with Dallas begins this season at $12,402,000.

In 2022/23, the NBA’s estimated average salary is $10,792,000, so an extension-eligible player earning less than that amount – such as Pelicans big man Larry Nance Jr. – would be able to sign an extension with a starting salary of up to $12,950,400.

A contract extension can’t exceed the maximum salary that a player is eligible to earn, so there are some instances in which a player won’t be able to get a full 20% raise on a new extension.

For instance, James’ new two-year extension is technically a maximum-salary contract, but his cap hit is this season is $44,474,988, which already exceeds the standard league-wide max. A full 120% raise on that figure would be $53,369,986, which will almost certainly exceed his maximum possible salary for 2023/24. The salary cap would have to increase to approximately $152.5MM for a raise of that size to be permitted, and currently the cap is only projected for $133MM.

Because a player’s own personal maximum salary on an extension is always at least 5% of his previous salary, James is assured of at least a 5% raise to $46,698,737 in the first year of his new deal. If the cap lands beyond its current $133MM projection, James’ raise could end up between 5% and 20%, since he’d be eligible for a starting salary worth 35% of next season’s cap.

Designated veteran extensions and renegotiated contracts have slightly different rules for salaries and raises than standard veteran extensions. You can read about those differences in our glossary entries on those subjects.

Can a player sign a veteran extension as part of a trade?

The NBA’s Collective Bargaining Agreement does allow for extend-and-trade transactions, but the rules governing them are more limiting than for standard veteran extensions.

A player eligible for an extension can sign one in conjunction with a trade, but he would be limited to three overall years and a starting salary worth 105% of the final-year salary on his previous deal. Subsequent annual raises are limited to 5% as well.

A player who receives an extension that exceeds those extend-and-trade limits becomes ineligible to be traded for six months. Conversely, a player who is involved in a trade becomes ineligible to sign an extension for six months if the extension would exceed the extend-and-trade limits.

Thaddeus Young‘s two-year extension with the Raptors is an example of a recent extension that didn’t exceed the extend-and-trade limits — he took a pay cut from $14,190,000 to $8,000,000 and the deal lengthened his contract to three total years. Because that extension fell within the extend-and-trade parameters, Young could be dealt this month if Toronto wanted to do so.

Conversely, even though James’ new extension only covers three total years and will only start at 105% of his previous salary (assuming the current cap projection of $133MM is accurate), it exceeds the extend-and-trade limits by virtue of the 8% raise he’ll receive between the 2023/24 and ’24/25 seasons. As a result, he’s ineligible to be traded until February 18, which will almost certainly be after the 2023 trade deadline has passed.

An extension-eligible player can’t be extended-and-traded between the end of the season and June 30 if there’s a chance he could become a free agent that July. That rule applies to both veterans on expiring contracts and veterans with team or player options that have yet to be exercised.

For example, while Young is eligible to be traded now by the Raptors, he couldn’t have been dealt in conjunction with his extension in June.

What are the other rules related to veteran extensions?

There are many more minor rules and guidelines related to veteran extensions, including several involving bonuses and option years. A full breakdown can be found in Larry Coon’s CBA FAQ, but here are some of the notable ones most likely to come into play:

• A contract with an option can be extended if the player opts in or the team picks up the option.
• A contract with an option can also be extended if the option is declined, as long as the extension adds at least two new years to the deal and the first-year salary isn’t worth less than the option would have been. The only exception to this rule involves an early termination option — a contract with an ETO can’t be extended if the ETO is exercised, ending the contract early.
• A newly-signed extension can contain a player or team option, but not an early termination option.
• If a contract contains incentive bonuses, a veteran extension must contain the same bonuses. The bonus amounts can be increased or decreased by up to 8%, but they must still be part of the deal. An extension also can’t contain bonuses that weren’t part of the original contract.
• If a contract includes an unearned trade bonus, it doesn’t necessarily have to be applied to the extension. If the team and player elect not to carry over the trade bonus to the extension and the player is dealt before the extension takes effect, the application of the bonus would ignore the extension.

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 CBA FAQ was used in the creation of this post.

A previous version of this post was published in 2019.