Hoops Rumors Glossary

Hoops Rumors Glossary: Rookie Scale

When a star player like Zion Williamson enters the NBA, his new team – in this case, the Pelicans – can rest assured that there will be little to no chance of him holding out for a larger contract. That’s because a first-round NBA draft pick is only eligible to sign a rookie scale contract, which limits his leverage and ensures that his draft slot will dictate how much he gets paid.

A rookie scale contract for first-rounders is always for two guaranteed seasons, with team options for the third and fourth seasons of the deal. The scale amount is strictly set by draft position for the first three years of the contract, with the amount of the fourth year determined by a percentage raise on the third-year salary, as RealGM’s rookie scale chart for 2019 picks shows.

Players are eligible to sign for as little as 80% or as much as 120% of the scale amount, though almost every player signs for the full 120%. Cavaliers first-round pick Kevin Porter Jr. became the first player in several years to sign for just 80% of his rookie scale amount this year, and even that rate only applies to his rookie season — he’ll get the full 120% in years two through four.

[RELATED: Rookie Scale Salaries For 2019 First-Round Picks]

Under the NBA’s current Collective Bargaining Agreement, the rookie scale will eventually increase annually at the same rate as the salary cap. In that scenario, a 5% salary cap increase would mean a 5% increase to rookie scale salaries.

However, the league has been gradually phasing in a 45% overall increase to rookie salaries over the last three seasons (15% per year), complicating that formula. For instance, while the cap only increased by about 7.1% from 2018/19 to 2019/20, the rookie scale amounts for each pick increased by approximately 19.5%.

For the 2019/20 season, the first-year rookie scale amount for the first overall pick is $8,131,200. That number increases to $8,537,900 in year two and $8,944,500 in year three, with a 26.1% raise for year four and a 30% raise for a fifth-year qualifying offer. Williamson signed with the Pelicans for 120% of that amount, meaning his contract looks like this:

Season Salary
2019/20 $9,757,440
2020/21 $10,245,480
2021/22 $10,733,400
2022/23 $13,534,817
2023/24 $17,595,262
  • Team option in green
  • Qualifying offer in blue

The scale amounts and fourth- and fifth-year raises vary depending on draft position. Top picks earn the highest salaries, while late first-round picks get the most substantial bumps at the end of their contracts. For instance, the 30th overall pick gets an 80.5% raise between years three and four, with a qualifying offer increase of 50%.

Here are several more details relating to rookie scale contracts:

  • Only first-round picks are eligible for rookie scale contracts. Second-rounders must be signed using cap room or exceptions.
  • A team does not have to be under the cap to sign rookie scale contracts. Any team can give a first-rounder a full 120% rookie contract, regardless of its cap status.
  • Because 120% contracts are so common, the cap hold for a first-round pick is also 120% of the player’s rookie scale amount.
  • If a player hasn’t signed by January 10, his rookie scale amount becomes prorated each day for the remainder of the season until he signs.
  • Teams have until October 31 each year to make decisions on the team-option seasons in rookie scale contracts. By October 31, 2019, teams will have to decide on the options for the 2020/21 season.
  • Players coming off rookie-scale contracts may be eligible for larger or smaller qualifying offers in their fifth year, based on whether or not they meet the “starter criteria.” I explained this in greater detail here.
  • If a team signs a first-round pick within three years of drafting him, the rookie scale for the year in which he signs is used. For instance, the Sixers acquired 12th overall pick Dario Saric in a draft-night deal in 2014. When Saric arrived stateside two years later, he signed a contract based on the rookie scale salary for the No. 12 pick in 2016.

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 salary information from Basketball Insiders was used in the creation of this post.

An earlier version of this post was published in 2012. Photo courtesy of USA Today Sports Images.

Hoops Rumors Glossary: Exhibit 10 Contract

After the NBA’s biggest-name free agents come off the board, many teams shift their focus to filling out their training-camp rosters. Teams can only carry 15 players on NBA contracts (plus two on two-way deals) during the regular season, but their maximum roster size increases to 20 players in the offseason, allowing clubs to bring a few extra players to camp to audition for a place on the regular-season roster or a spot on the team’s G League affiliate.

Many of those players will sign a contract with an Exhibit 10 clause. Introduced in the NBA’s most recent Collective Bargaining Agreement, Exhibit 10 contracts are one-year deals worth the minimum salary. They don’t come with any compensation protection, but can include an optional bonus ranging from $5K to $50K.

Let’s say an undrafted rookie signs an Exhibit 10 contract with the Knicks that includes a $50K bonus. He attends camp with the Knicks, but is waived before the regular season begins, with New York designating him an affiliate player in order to retain his G League rights. In that scenario, if the rookie elects to play in the G League for the Westchester Knicks and remains with the club for 60 days, he’d be entitled to his full $50K bonus.

The player wouldn’t receive that bonus if he opts to sign with a team overseas after being waived by the Knicks. Essentially, the Exhibit 10 bonus serves as an incentive for players to stick with their team’s G League affiliate — they must spend at least 60 days with the NBAGL club in order to get their bonus.

There’s another scenario in which that undrafted rookie who signs an Exhibit 10 deal with the Knicks would receive his $50K. Exhibit 10 contracts can be converted into two-way contracts, so if New York opted to do that before the season begins, the $50K bonus would turn into a salary guarantee for the player. As soon as his contract becomes a two-way deal, he’s entitled to that bonus, even if the Knicks waive him a week later.

Only teams with a G League affiliate can include an Exhibit 10 bonus in a contract. In 2019/20, the Pelicans will become the 28th NBA team with its own affiliate, leaving only the Trail Blazers and Nuggets on the outside looking in. Those clubs could technically sign players to Exhibit 10 deals, but wouldn’t be able to include bonus money.

The Heat have been one of the most active teams so far this offseason when it comes to signing Exhibit 10 contracts. Jeremiah Martin, Chris Silva, and Kyle Alexander have all received those deals, which benefit Miami in one important way — they don’t count against team salary during the offseason. That’s crucial for the hard-capped Heat, who are less than $1MM away from the tax apron and otherwise wouldn’t be able to add free agents to their roster without shedding salary elsewhere.

Here are a few more notes relating to Exhibit 10 contracts:

  • A team can’t carry more than six Exhibit 10 contracts at a time.
  • An Exhibit 10 contract can only be converted to a two-way deal before the regular season begins.
  • An Exhibit 10 contract that gets converted to a two-way deal can later be converted into a standard NBA contract.
  • An Exhibit 10 bonus earned by a player who ends up in the G League or on a two-way contract isn’t counted toward the NBA team’s total salary.

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.

An earlier version of this post was published in 2018.

Hoops Rumors Glossary: Base Year Compensation

As Larry Coon explains in his invaluable CBA FAQ, the term “base year compensation” technically no longer shows up in the NBA’s Collective Bargaining Agreement, and hasn’t since 2011. A relic of past agreements, the base year compensation rule was intended to prevent teams from signing free agents to new contracts that were specifically intended to facilitate salary-matching in trades.

While the base year compensation rules have mostly been adjusted and/or removed from the CBA in recent years, there’s still one situation where they apply. Teams have to take them into account when completing sign-and-trade deals.

The BYC rules apply to a player who meets the following criteria in a sign-and-trade:

  • He is a Bird or Early Bird free agent.
  • His new salary is worth more than the minimum.
  • He receives a raise greater than 20%.
  • His team is at or above the cap immediately after the signing.

If the player meets those criteria and is included in a sign-and-trade deal, his outgoing salary for matching purposes is considered to be his previous salary or 50% of his new salary, whichever is greater. For the team he is being signed-and-traded to, his incoming figure for matching purposes is his full new salary.

Here’s a specific example to help make things a little clearer: Let’s say the Celtics want to sign-and-trade Kyrie Irving this offseason. He’s a Bird free agent, his new salary will be well above the minimum, and the Celtics project to be an over-the-cap team. Having made $20,099,189 in 2018/19, Irving will also receive a raise significantly higher than 20% if he inks a maximum salary contract, which is projected to start at $32,700,000. So he meets the BYC criteria.

In that scenario, Irving’s salary for matching purposes from the Celtics’ perspective would be $20,099,189, since his previous salary is greater than 50% of his new salary. From his new team’s perspective, Irving’s incoming figure would be his actual salary, $32,700,000.

Typically, a team acquiring a player via sign-and-trade doesn’t have the cap room to sign the player outright, or else there would be little need to negotiate a sign-and-trade. That means salary matching is often required, and is complicated by base year compensation rules.

In this example, the Celtics wouldn’t be able to take back more than $25,223,986 in exchange for Irving, due to the league’s salary-matching rules. However, in order to take on $32,700,000 in salary, Boston’s trade partner would have to send out at least $26,080,000 in order to account for those salary-matching rules themselves. The discrepancy between those two figures would complicate sign-and-trade talks, likely requiring both teams to include additional pieces to make the deal work.

The base year compensation concept doesn’t surface frequently, as there have only been four sign-and-trades completed around the NBA in the last four offseasons. However, it looms large over most sign-and-trade attempts, reducing the likelihood of teams finding a deal that can be legally completed.

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 salary information from Basketball Insiders was used in the creation of this post.

Hoops Rumors Glossary: Ted Stepien Rule

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.

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 seasons.

For instance, since the Raptors have traded their 2019 first-round pick to San Antonio, they aren’t currently permitted to trade their 2020 first-rounder. Following the 2019 draft though, the Raptors will regain the right to trade that 2020 first-round pick, since their ’19 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 Toronto were to trade for a new 2019 first-rounder, that would give the Raptors the flexibility to move their 2020 pick without having to wait until after the 2019 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 Mavericks have traded a top-five protected 2019 first-round pick to Atlanta. That traded 2019 pick is protected through 2022, and as long as there’s still a chance it won’t convey immediately, the Mavs are prevented from unconditionally trading any of their next few first-round picks. That’s why when Dallas agreed to send two future first-round picks to New York in the Kristaps Porzingis trade, those picks came with conditions attached — the Knicks won’t receive the first of those selections until two years after the Mavs’ pick to Atlanta conveys.

[RELATED: Traded first round picks for 2019 NBA draft]

Teams will have to take the Stepien rule into account this offseason as they mull including draft picks in deals. Oklahoma City, for instance, is one of the teams most significantly impacted by the rule at the moment. The Thunder have committed their 2020 first-round pick to Philadelphia and their 2022 selection to Atlanta, limiting OKC’s ability to move any other first-rounders up until at least 2024.

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

  • For salary-matching purposes, a traded draft pick counts as $0 until the player signs a contract.
  • The “Seven Year Rule” prohibits teams from trading draft picks more than seven years in advance. For instance, during the 2018/19 season, a 2025 draft pick could have been traded, but a 2026 pick could not have been dealt.
  • A team can add protection to a pick it has acquired as long as there wasn’t already protection on the pick. For example, when the Sixers flipped the Kings’ 2019 first-round pick to the Celtics, Philadelphia included top-one protection on the pick. Boston will get that selection this year unless the 76ers beat the odds and land the No. 1 overall pick.

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 2012 and 2018 by Luke Adams.

Hoops Rumors Glossary: Qualifying Offers

Players eligible for restricted free agency don’t become restricted free agents by default. In order to make a player a restricted free agent, a team must extend a qualifying offer to him — a player who doesn’t receive one becomes an unrestricted free agent instead.

The qualifying offer, which is essentially just a one-year contract offer, varies in amount depending on a player’s service time and previous contract status.

If a player reaches free agency with three or fewer years of NBA service time under his belt, his qualifying offer is worth 125% of his prior salary, or his minimum salary plus $200K, whichever is greater. For instance, after earning $1,378,242 this season, Jordan Bell will be eligible for a qualifying offer worth a projected $1,818,486 this offseason — that’s calculated by adding $200,000 to his projected minimum salary for 2019/20 ($1,618,486). Tomas Satoransky‘s 2018/19 salary, on the other hand, was $3,129,187, so his qualifying offer will be worth 125% of that figure: $3,911,484

The qualifying offer for a former first-round pick coming off his rookie scale contract is determined by his draft position. The qualifying offer for a first overall pick is 130% of his fourth-year salary, while for a 30th overall pick it’s 150% of his previous salary — QOs for the rest of the first-rounders fall somewhere in between. The full first-round scale for the draft class of 2015, whose first-rounders will be hitting free agency this summer, can be found here, courtesy of RealGM.

Here are a pair of examples for this offseason, based on RealGM’s chart: 2015’s second overall pick D’Angelo Russell, coming off a fourth-year salary of $7,019,698, must be extended a qualifying offer of $9,160,706 (a 30.5% increase) to become a restricted free agent. Meanwhile, 20th overall pick Delon Wright will be eligible for a qualifying offer of $3,635,375, a 43.3% increase on this season’s $2,536,898 salary.

A wrinkle in the Collective Bargaining Agreement complicates matters for some RFAs-to-be, since a player’s previous usage can impact the amount of his qualifying offer. Certain players who meet – or fail to meet – the “starter criteria,” which we break down in a separate glossary entry, become eligible for higher or lower qualifying offers. Here’s how the starter criteria affects QOs:

  • A top-14 pick who does not meet the starter criteria will receive a same qualifying offer equal to 120% of the amount applicable to the 15th overall pick.
    • Note: For the summer of 2019, the value of this QO will be $4,485,665. Kristaps Porzingis is one example of a player who falls into this group.
  • A player picked between 10th and 30th who meets the starter criteria will receive a qualifying offer equal to 120% of the amount applicable to the ninth overall pick.
    • Note: For the summer of 2019, the value of this QO will be $4,915,726. Kelly Oubre is one example of a player who falls into this group.
  • A second-round pick or undrafted player who meets the criteria will receive a qualifying offer equal to 100% of the amount applicable to the 21st overall pick.
    • Note: For the summer of 2019, the value of this QO will be $3,021,354. Thomas Bryant is one example of a player who falls into this group.

A qualifying offer is designed to give a player’s team the right of first refusal. Because the qualifying offer acts as the first formal contract offer a free agent receives, his team then receives the option to match any offer sheet the player signs with another club.

A player can also accept his qualifying offer, if he so chooses. He then plays the following season on a one-year contract worth the amount of the QO, and becomes an unrestricted free agent at season’s end if he has at least four years of NBA experience. A player can go this route if he wants to hit unrestricted free agency as early as possible, or if he feels like the QO is the best offer he’ll receive. Accepting the qualifying offer also gives a player the right to veto trades for the season.

During the 2018 offseason, for instance, Rodney Hood signed his qualifying offer after failing to secure a longer-term deal with the Cavaliers. When Cleveland agreed to send him to the Trail Blazers prior to the trade deadline, Hood had to give his consent to be dealt, which he did.

Finally, while the details outlined above apply to players on standard NBA contracts who are eligible for restricted free agency, a different set of rules applies to players coming off two-way contracts. For most of those players, the qualifying offer would be equivalent to a one-year, two-way salary, with $50K guaranteed.

If a player coming off a two-way contract is ineligible to sign another one – either because he has already been on two-way deals with his current team for two seasons or because he has four years of NBA service – his qualifying offer would be a standard, minimum-salary NBA contract. The guarantee on that QO would have to match or exceed what a two-way player would earn in the G League.

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 salary information from Basketball Insiders was used in the creation of this post.

Earlier versions of this post were published in previous years. Photo courtesy of USA Today Sports Images.

Hoops Rumors Glossary: Bi-Annual Exception

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.

During the 2018/19 league year, three teams – the Pistons, Grizzlies, and Rockets – were ineligible to use the bi-annual exception at all, since they used it in 2017/18. Four teams have used the BAE this season, with the Bucks signing Brook Lopez, the Pelicans signing Elfrid Payton, the Knicks signing Allonzo Trier, and the Spurs signing Dante Cunningham. Those four clubs won’t have the exception at their disposal during the 2019/20 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 over the “tax apron,” a figure approximately $6MM+ above the tax line. So, only teams over the cap and 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 allowed for a starting salary of up to $3,382,000 in 2018/19. Under the NBA’s previous Collective Bargaining Agreement, the value of each season’s bi-annual exception was determined in advance. However, under the current CBA, the value of the BAE in future league years is tied to salary cap increases. If the cap goes up by 5%, the value of the bi-annual exception will also increase by 5%. Based on a $109MM cap estimate for 2019/20, the BAE is projected to start at $3,619,000.

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 2018/19, the maximum value of a two-year contract was $6,933,100. 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.

Several teams – including the Jazz, Clippers, and Magic – remain eligible to use the bi-annual exception this season, but they’re unlikely to take advantage of that opportunity at this point. Assuming those BAEs go unused, they’ll be available to those teams in 2019/20.

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 previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.

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.

Hoops Rumors Glossary: Sign-And-Trades

Each year when July rolls around, a ton of NBA free agents sign new contracts and teams around the league consummate trades. However, on a few occasions, these two forms of transactions are combined into something called a sign-and-trade deal. Sign-and-trades occur when a team re-signs its own free agent, only to immediately send him to another team in exchange for players, draft picks, and/or cash.

In order for a sign-and-trade deal to be completed, the following criteria must be met:

  • A free agent must be signed-and-traded by the team with whom he finished the season. For instance, the Sixers could sign-and-trade Jimmy Butler this offseason, but another team couldn’t sign Butler and immediately move him.
  • If the free agent is restricted, he can’t be signed-and-traded after he signs an offer sheet with a rival team.
  • A team acquiring a player via sign-and-trade cannot be over the tax apron after the deal, and can’t have used the taxpayer mid-level exception.
  • A free agent can’t be signed-and-traded once the regular season is underway.
  • A free agent can’t be signed using the mid-level exception or any exception that doesn’t allow for a three-year contract.
  • A player receiving a Designated Veteran contract can’t be signed-and-traded.

Sign-and-trade contracts can be worth any amount up to the player’s maximum salary (with 5% annual raises), and must be for either three or four years. However, only the first year of the deal has to be fully guaranteed.

If a sign-and-trade contract includes a signing bonus, either team can agree to pay it, though if the signing team pays it, it counts toward that club’s limit for cash included in trades for that league year. As for trade bonuses, they would kick in upon any subsequent trades rather than as part of the sign-and-trade transaction itself.

Under some previous Collective Bargaining Agreements, there was more incentive for players to work out sign-and-trade deals, since the contract restrictions weren’t as strict. For example, when Kevin Durant hits free agency this summer, he’d be eligible for a five-year contract worth up to a projected $221.27MM if he re-signs with the Warriors, but only four years and approximately $164MM with another team.

Prior to 2011’s CBA agreement, Durant could have received that five-year deal if Golden State had signed-and-traded him. But if the Dubs sign-and-trade KD this summer, he’d only be eligible for that four-year, $164MM max.

Under the current CBA, there’s less incentive for teams and players to participate in sign-and-trades. Generally, if a player wants to change teams, it makes more sense for him to sign with the new team outright, rather than making that club give up assets to complete the acquisition. Even the player’s old team may prefer to simply let the free agent walk and claim the resulting cap space, rather than taking back unwanted assets in a sign-and-trade.

There are other roadblocks as well. A team acquiring a player via sign-and-trade subsequently becomes hard-capped for the rest of that league year. Plus, a signed-and-traded player’s salary may be viewed differently than it would be in a standard trade for salary-matching purposes, which can compromise a team’s ability to meet those salary-matching requirements.

If a potential suitor is over the cap and under the tax, and wants to sign a player for more than the mid-level amount, then a sign-and-trade could make sense, particularly if that team can offer the free agent’s prior team something of value. But these transactions are becoming less frequent than they once were.

Since the summer of 2015, only four players have been involved in sign-and-trade deals: Kyle O’Quinn (2015), Troy Daniels (2016), Matthew Dellavedova (2016), and Danilo Gallinari (2017). No sign-and-trades were completed during the 2018/19 league year.

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.

An earlier version of this post was published in 2013 by Luke Adams.

Hoops Rumors Glossary: Non-Bird Rights

Players and teams have to meet certain criteria to earn Bird rights and Early Bird rights, but Non-Bird rights are something of a given. They apply to a player who has spent a single season or less with his team, as long as he finishes the season on an NBA roster.

Teams can also claim Non-Bird rights on Early Bird free agents if they renounce them. The primary motivator to do so would be to allow the team to sign the free agent to a one-year contract, a move that’s not permitted via Early Bird rights.

Teams are eligible to sign their own free agents using the Non-Bird exception for a salary starting at 120% of the player’s previous salary, 120% of the minimum salary, or the amount of a qualifying offer (if the player is a restricted free agent), whichever is greatest. Contracts can be for up to four years, with 5% annual raises.

The cap hold for a Non-Bird player is 120% of his previous salary, unless the previous salary was the minimum. In that case, the cap hold is equivalent to the two-year veteran’s minimum salary, which in 2019/20 projects to be worth $1,618,486. If a Non-Bird free agent only has one year of NBA experience, his cap hold is equivalent to the one-year veteran’s minimum salary.

The salary limitations that apply to Non-Bird rights are more severe than those pertaining to Bird rights or Early Bird rights, so in many cases, the Non-Bird exception may not be enough to retain a well-regarded free agent. For instance, the Grizzlies held Tyreke Evans‘ Non-Bird rights last summer, but would have been unable to realistically use them to re-sign the free agent guard.

The Grizzlies technically could have used Non-Bird rights to go over the cap to sign Evans, but because his 2017/18 salary was only $3,290,000, the club’s ability to offer raises using the Non-Bird exception was extremely limited — 120% of Evans’ previous salary worked out to just $3,948,000, which wouldn’t have been a competitive offer.

In order to make a realistic play for Evans, who ultimately signed a one-year, $12.4MM deal with Indiana, Memphis would have had to use cap room or another exception. Of course, during the 2019 offseason, the Pacers‘ Non-Bird rights for Evans will provide much more flexibility, since they could use those rights to offer up a salary up to $14.88MM — not that I expect them to do so.

Holding Non-Bird rights on a free agent didn’t help the Grizzlies, but there are cases in which the exception proves useful. The Spurs, for example, used the Non-Bird exception to give Rudy Gay a 20% raise last summer, bumping his salary from $8,406,000 to $10,087,200.

The Celtics took a similar route with Aron Baynes, re-signing him to a two-year, $10,646,880 contract using his Non-Bird rights. Baynes had initially signed a one-year, $4,328,000 deal with Boston in 2017, so the Non-Bird exception allowed the team to give him 120% of that amount ($5,193,600) in the first year of his new contract, without having to dip into the mid-level or bi-annual exception.

Meanwhile, Luke Kornet‘s deal with the Knicks provides an example of a team using Non-Bird rights on a minimum salary player. Kornet, whose minimum salary would have been $1,349,383, was eligible to sign for up to 120% of that amount via the Non-Bird exception. As such, his one-year deal with New York was worth $1,619,260.

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 previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.

Hoops Rumors Glossary: Early Bird Rights

Bird rights offer teams the chance to sign their own free agents without regard to the salary cap, but they don’t apply to every player. Other salary cap exceptions are available for teams to keep players who don’t qualify for Bird rights. One such exception is the Early Bird, which applies to players formally known as Early Qualifying Veteran Free Agents.

The Bird exception is for players who have spent three seasons with one club without changing teams as a free agent, but Early Bird rights are earned after just two such seasons. Virtually all of the same rules that apply to Bird rights apply to Early Bird rights, with the requirements condensed to two years rather than three. Players still see their Bird clocks restart by changing teams via free agency, being claimed in an expansion draft, or having their rights renounced.

The crucial difference between Bird rights and Early Bird rights involves the limitations on contract offers. Bird players can receive maximum-salary deals for up to five years, while the most a team can offer an Early Bird free agent without using cap space is 175% of his previous salary or 105% of the league-average salary in the previous season, whichever is greater. These offers are also capped at four years rather than five, and the new contracts must run for at least two years (with no second-year options).

Bojan Bogdanovic (Pacers), Rudy Gay (Spurs), and Taj Gibson (Timberwolves) are among the notable free agents who will have Early Bird rights at the end of the 2017/18 season. The Nuggets would have Early Bird rights on Paul Millsap if they decline his $30MM team option, as is expected.

In Millsap’s case, the Nuggets would theoretically be able to offer 175% of his current $29MM+ salary using Early Bird rights, but the team’s offer couldn’t exceed the maximum salary. Millsap’s max salary projects to be just over $38MM, comfortably within the Early Bird limit. However, he would only be able to sign a four-year contract rather than a five-year deal, since he won’t have full Bird rights. Of course, Millsap’s next contract will likely be far more modest, so these numbers are just hypothetical.

In some instances, teams can benefit from having Early Bird rights instead of full Bird rights if they’re trying to preserve cap space. The cap hold for an Early Bird player is 130% of his previous salary, significantly less than most Bird players, whose cap holds range from 150-300% of their previous salaries.

That could help the Pacers, since the cap hold for Bogdanovic, who is earning $10.5MM this season, will only be $13.65MM — given how well he has played since Victor Oladipo went down, he may be in line for a starting salary higher than that. If the Pacers reach an agreement to re-sign Bogdanovic in July, they could hold off on making it official, keeping his cap hold on the books until they use the rest of their cap room. Then they could go over the cap to finalize Bogdanovic’s deal using the Early Bird exception.

Meanwhile, some players with limited NBA experience are subject to a special wrinkle involving Early Bird rights, called the Gilbert Arenas Provision, which applies to players who have only been in the league for one or two years. We cover the Gilbert Arenas Provision in a separate glossary entry, so you can read up on the details there.

Finally, one more distinction between Bird rights and Early Bird rights applies to waivers. Players who are claimed off waivers retain their Early Bird rights, just as they would if they were traded. Those who had Bird rights instead see those reduced to Early Bird rights if they’re claimed off waivers. This rule stems from a 2012 settlement between the league and the union in which J.J. Hickson was given a special exception and retained his full Bird rights for the summer of 2012 even though he had been claimed off waivers that March.

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 salary information from Basketball Insiders was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.