Hoops Rumors Glossary

The mid-level exception is the most common tool used by over-the-cap teams to sign free agents from other teams to contracts worth more than the veteran’s minimum. 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 2023/24 league year, two teams – the Heat and Sixers – were ineligible to use the bi-annual exception at all, since they used it in 2022/23.

Three teams have used the BAE in ’23/24, with the Lakers signing Taurean Prince, the Cavaliers signing Ty Jerome, and the Raptors signing Jalen McDaniels. Those three clubs won’t have the exception at their disposal during the 2024/25 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 their bi-annual exception. Additionally, teams lose access to the bi-annual exception when they operate over the first “tax apron,” a figure approximately $7MM above the tax line this season. So, only teams over the cap and under the first apron can use the BAE.

If a team uses all or part of the bi-annual exception, the first tax apron becomes the club’s hard cap for that season. Teams that sign a player using the BAE can later go under the cap, but can’t go over the first apron at any time during the season once the contract is signed.

[RELATED: NBA Teams With Hard Caps In 2023/24]

Although a team with a salary exceeding the first tax apron isn’t permitted to use the bi-annual exception, that team could gain access to the BAE by shedding salary. As long as the team’s salary would be below the first tax apron after completing the bi-annual signing – and remains below that threshold for the rest of the season – that club is permitted to use the BAE, no matter how high its salary might have been earlier in the league year.

Under the NBA’s current Collective Bargaining Agreement, the value of the bi-annual exception in future league years is tied to the value of the salary cap. The BAE comes in at 3.32% of that season’s cap and is rounded to the nearest thousand.

For instance, this season’s cap is $136,021,000; 3.32% of that amount is $4,515,897.20. Rounding to the nearest thousand gets us to $4,516,000, which is the maximum starting salary for a bi-annual signing in 2023/24. The starting salary for the BAE in 2024/25 currently projects to be worth $4,681,000, based on a $141MM cap projection.

A player who signs a contract using the bi-annual exception is eligible for a one- or two-year deal, with a 5% raise for the second season. For a player signed using the BAE in 2023/24, the maximum value of a two-year contract is $9,257,800.

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 begins to prorate downward on January 10 each year, decreasing in value by 1/174th each day until the end of the regular season. However, a team that uses its BAE between Jan. 10 and the trade deadline wouldn’t be subject to that proration and could use the full amount it has left on the exception.

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.

Once the NBA trade deadline passes, the league’s buyout season unofficially begins. What exactly are buyouts, and how do they work? Today’s Hoops Rumors glossary entry will answer those questions. Let’s dive in…

What is a buyout?

Although the term “buyout” is often applied colloquially when any veteran is released after the trade deadline, it applies specifically to a player who gives up a portion of his salary to accommodate his release.

Rather than waiving a player outright, a team will negotiate the terms of the player’s release. Then, once the player clears waivers, his guaranteed salary with his previous team will be reduced or eliminated altogether.

So far this season, we’ve seen three point guards – Ricky Rubio, Kyle Lowry, and Delon Wright – and big man Daniel Theis agree to buyouts, surrendering a portion of the guaranteed money left on their respective contracts.

What’s the motivation for a buyout?

The most common form of buyout involves a veteran player on a non-contending team being granted his release during the final year of his contract to join a playoff club down the stretch.

It typically happens after the trade deadline because by that point there’s no other way for a player to change teams. It’s even more frequent if the player was traded at the deadline for salary-matching purposes to a team that doesn’t view him as part of its plans.

Lowry and Wright each fit this bill. The Hornets and Wizards aren’t going to make the playoffs this season and are more focused on developing their young players. Buyouts for those two veterans gave them a chance to join teams with grander short-term aspirations in Philadelphia and Miami, respectively.

For Theis, the motivating factor for pursuing a buyout was playing time — he was buried on the depth chart with the Pacers, prompting him to agree to a buyout and join another playoff team with whom he’d have a larger role.

For the player, the motivating factor is generally the desire to play for a winning team rather than a chance to earn the most money possible. Many players who are bought out give up roughly the amount of money they’ll make on new prorated minimum-salary contracts, meaning they don’t necessarily come out ahead financially — they just get a chance to play in the postseason before returning to free agency in the summer.

As for the team, there’s little downside to letting a veteran go, since the player is usually in the final year of his contract and the club completing the buyout is rarely in contention for a playoff spot. Buying out that veteran can save the team some money, earn some goodwill with a player and an agent, and open up a roster spot and/or minutes for a younger player to take over.

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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, letting him go. A player can’t sign three standard 10-day 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 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. In 2022, for instance, Drew Eubanks ended up signing five 10-day deals with the Trail Blazers. Eubanks was still limited to two standard 10-day contracts with Portland, but three of his deals came via a hardship exception, which the Blazers qualified for as a result of having four or more injured players.

However, that loophole was closed in the latest CBA as the NBA moved beyond its COVID era. Regardless of whether a player is signed to a standard or hardship 10-day contract, he’s no longer permitted to sign a third 10-day deal with the same club.

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 a hardship exception doesn’t count against that 15-man limit.

Under the NBA’s newest Collective Bargaining Agreement, a 10-day deal must be worth a prorated portion of the player’s minimum salary. In the past, a player could technically earn more than the minimum on a 10-day contract, though that essentially never happened.

A 10-day contract for a rookie this season will be worth $64,343, which is 10/174ths of the full-season rookie minimum salary. A one-year veteran will earn $103,550, and a 10-day deal for any veteran with two or more years of NBA service would represent a cost of $116,075 to the team.

Veterans with more than two years of NBA service would earn more than $116,075 on a 10-day contract, but the league would pay the extra freight. However, teams gain no financial advantage if they pass on 10-day agreements with more experienced players in favor of rookies or one-year veterans in an effort to limit their end-of-season luxury 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 be on the hook for a slightly higher salary 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 Celtics were to sign a player to a 10-day contract on February 14, for instance, his contract would actually cover 11 days, since Boston plays games on Feb. 14, Feb. 22, and 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. A team that terminates a 10-day contract early isn’t permitted to re-sign the player before the full 10-day term is over.
• Players whose 10-day contracts are terminated early don’t go on waivers, so they become free agents immediately. Still, those players receive their entire 10-day salaries — the contracts are fully guaranteed for the 10 days.
• A team is permitted to carry up to three players on standard 10-day contracts as long as the team has a full 15-man roster. A team with an open spot on its standard 15-man roster can only carry up to two players on 10-day deals. If a team has just 13 players on standard contracts, only one of them can be on a 10-day pact.
• 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.
• A standard 10-day contract can’t be signed with fewer than 10 days left in the regular season. However, a hardship 10-day deal can be signed during that time and would simply be prorated to cover the remaining days in the regular season. At the conclusion of the regular season, a player on a hardship 10-day deal would immediately become a free agent, with his team holding no form of Bird rights on him.

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.

The NBA’s salary cap is a “soft” cap, which is why most teams’ salaries have surpassed the $136,021,000 threshold for the 2023/24 season. Once a team uses up all of its cap room, it can use a series of “exceptions” – including the mid-level, bi-annual, and various forms of Bird rights – to exceed the cap.

Since the NBA’s Collective Bargaining Agreement doesn’t feature a “hard” cap by default, teams can construct rosters that not only exceed the cap but also blow past the luxury tax line ($165,294,000 in ’23/24). While it would be nearly impossible in practical terms, there’s technically no rule restricting a club from having a team salary worth double or triple the salary cap.

However, there are certain scenarios in 2023/24 in which a team can become hard-capped at one of two thresholds, known as the “tax aprons.” Those scenarios are as follows:

A team becomes hard-capped at the first tax apron if:

1. The team uses its bi-annual exception to sign a player.
2. The team uses more than the taxpayer portion of the mid-level exception to sign a player (or multiple players).
   • Note: In 2023/24, the taxpayer MLE is worth $5,000,000, compared to $12,405,000 for the full non-taxpayer MLE. The taxpayer MLE can be used to complete deals up to two years, while the non-taxpayer MLE can be used to complete deals up to four years.
     
3. The team acquires a player via sign-and-trade.
4. The team signs a player who was waived during the current season, if his pre-waiver salary for 2023/24 exceeded the amount of the non-taxpayer mid-level exception ($12,405,000).
5. The team takes back more than 110% of the salary it sends out in a trade (using salary-matching rather than cap room).

A team making any of those five roster moves must ensure that its team salary is below the first tax apron when it finalizes the transaction and remains below the apron for the rest of the league year.

For the 2023/24 league year, the first apron is set at $172,346,000, which is $7,052,000 above the tax line. A team that completes one of the five moves listed above can’t surpass that line under any circumstances.

A team becomes hard-capped at the second tax apron if:

1. The team uses any portion of the mid-level exception.

Under the previous Collective Bargaining Agreement, every team was permitted to use at least some portion of the mid-level exception, but it’s no longer available to teams above the second tax apron, so a club that uses any part of the MLE is hard-capped at that second apron.

As noted above, a team that uses more than the taxpayer portion ($5MM) is hard-capped at the first apron, which means teams between the first and second apron are allowed to spend up to $5MM in MLE money.

For the 2023/24 league year, the second apron is set at $182,794,000, which is $17.5MM above the tax line.

So far in ’23/24, a total of 11 teams have hard-capped themselves at the first tax apron by acquiring a player via sign-and-trade, using the non-taxpayer mid-level exception, using the bi-annual exception, or taking back more than 110% of the outgoing salary in a trade. Two more teams have hard-capped themselves at the second apron by using $5MM in mid-level money.

For many of those teams, the restriction is barely noticeable — they remain far below their hard cap and haven’t had to worry about whether a roster move might put them over it. However, a handful of clubs will have to be wary of that hard cap as they approach the trade deadline.

It’s worth noting that even if a team starts a new league year above the tax apron, that doesn’t mean they can’t become hard-capped at some point later in the season. For example, the Warriors are currently well above the second apron, but in the unlikely event that they dump a couple big contracts and then use $5MM of their mid-level exception to sign a free agent, a hard cap would be imposed and they’d be ineligible to surpass the $182.8MM second apron for the rest of the league year.

In other words, the hard cap applies from the moment a team completes one of the transactions listed above, but isn’t applied retroactively.

The list of roster moves that will impose a hard cap on a team will expand beginning in the 2024 offseason. After the last day of the 2023/24 regular season, the following restrictions will apply:

A team becomes hard-capped at the first tax apron if:

1. The team takes back more than 100% of the salary it sends out in a trade (when over the cap).
   • Note: This will replace the fifth rule listed above, reducing the salary-matching limit from 110% to 100% for teams over the first apron.
2. The team uses a traded player exception generated during the prior year (ie. between the end of the previous regular season and the end of the most recent regular season).

A team becomes hard-capped at the second tax apron if:

1. The team aggregates two or more player salaries in a trade.
2. The team sends out cash as part of a trade.
3. The team acquires a player using a traded player exception if that TPE was created by sending out a player via sign-and-trade.

Typically, a team’s hard cap expires on June 30 when the current league year comes to an end, with the team getting a clean slate on July 1. However, beginning in the 2024 offseason, if a team engages in any of the trade-related transactions prohibited for first or second apron teams between the end of the regular season and June 30, the team will not be permitted to exceed that apron level during the following season.

If, for example, a team sends out cash in a trade in June of 2024, that team won’t be allowed to exceed the second tax apron during the 2024/25 league year. The inverse is also true — a team whose 2024/25 salary projects to be over the second apron won’t be able to trade cash in June.

This rule only applies to trade-related transactions because the ones related to free agency don’t come into effect between the end of the regular season and the start of the next 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.

Previous versions of this post was published in 2020 and 2021.

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. These salary-matching rules are evolving – they changed prior to this season and will change again in 2024 – but 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, let’s say Team A has a team salary above the first tax apron and wants to acquire a player earning $30MM from Team B. Sending out a player earning $25MM would fall short of the minimum requirement, since Team A can only bring back up to 110% of the outgoing amount. Trading a $25MM player would allow the team to acquire up to $27.5MM in salary.

However, by adding a second player earning $3MM to its package, Team A would reach the minimum outgoing threshold by “aggregating” its two traded players, resulting in a total of $28MM in outgoing salary — that’s 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 separate $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 $28MM and another earning $5MM in exchange for its incoming $30MM player, there’s no need to aggregate the two outgoing salaries. Since $28MM 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 $28MM 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 Clippers acquired James Harden and P.J. Tucker from the Sixers last month. Harden ($35,640,000) and Tucker ($11,014,500) were earning a combined $46,654,500, so the Clippers – whose team salary was above both tax aprons – needed to send out at least $42,413,182 to get to within 10% of that amount.

Paul George or Kawhi Leonard are each earning more than $42.4MM on their own, but they weren’t going to be part of the deal with Philadelphia and no other Clipper was making close to that amount, so the team had to aggregate several players’ salaries in order to meet the required threshold. Los Angeles used Marcus Morris ($17,116,279), Nicolas Batum ($11,710,818), Robert Covington ($11,692,308), and KJ Martin ($1,930,681) to get there.

Because the Clippers’ four outgoing players combined to earn $42,450,086, the team was able to take back up to $46,695,095 (110% of the outgoing amount). That means that Harden was able to receive a small portion ($40,595) of his trade bonus while waiving the remaining amount. If Harden had insisted on receiving even one more dollar of his bonus, the Clippers would have had to aggregate a fifth salary to make the deal work.

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.

The one exception to that rule occurs if a player is traded on or before December 16, but less than two months until that season’s trade deadline. In that case, the player is permitted to be aggregated again either on the day before the deadline or the day of the deadline.

Any player traded after December 16 can’t have his salary aggregated with another player’s before the trade deadline. But, 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.

Here are a couple more notes related to salary aggregation:

• Beginning in the 2024 offseason, a team whose total salary is above the second tax apron will not be permitted to aggregate salaries as part of a trade. A team that does aggregate salaries in a trade will become hard-capped at the second apron for the rest of that league year (or for the following league year, if the trade is made between the end of the regular season and June 30).
• If a team is aggregating three (or more) player salaries in a trade in order to take back fewer than three (or more) players, no more than one of the aggregated players can be on a minimum-salary contract. This rule doesn’t apply between December 15 and the trade deadline, but is in effect the rest of the 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.

A previous version of this post was published in 2022.

If an NBA team’s salary continues to rise after it surpasses both the salary cap and the luxury tax line, it may reach or exceed a pair of tax “aprons.” The level of the first tax apron is several million dollars above the threshold at which a team becomes a taxpayer, while the second tax apron is another $10MM+ beyond the first apron.

A team whose salary exceeds the first apron is prohibited from making certain moves during that league year, while a team whose salary goes beyond the second apron faces even more restrictions. The goal is to limit the ability of the teams with the NBA’s highest payrolls to further upgrade their rosters and to encourage competitive balance.

Although the tax apron isn’t a new addition to the NBA’s Collective Bargaining Agreement, the 2023 CBA represents the first time that the league’s cap system features multiple aprons. The 2023 CBA also introduced several new rules that apply to teams whose salaries are above one or both aprons.

Let’s dive in and break down the tax aprons in greater detail…

How are the tax aprons calculated?

The formula that determined the level of the first tax apron in 2023/24 was as follows:

• Formula: $165,294,000 + ($6,716,000 x $129,838,000 / $123,655,000)
• Result: $172,346,000
  • Note: The result was rounded to the nearest thousand.

These may just look on the surface like a collection of random numbers, but there’s a method to the madness. $165,294,000 is this season’s luxury tax line, while $6,716,000 was the gap between the tax line and the apron in 2022/23. $129,838,000 is the average of this season’s and last season’s salary caps, while $123,655,000 was the amount of last season’s salary cap.

More simply put: The gap between the tax level and the apron was calculated by taking last season’s gap and increasing it by a percentage representing half of this season’s cap increase. The cap rose by 10% this past summer; this year’s difference of $7,052,000 between the tax threshold and the first apron is 5% more than last year’s difference of $6,716,000.

Going forward, the first tax apron will increase at the same rate as the salary cap, making the calculation a little simpler. The formula will be as follows:

• $172,346,000 x (salary cap for that season / $136,021,000)

For instance, if the salary cap for 2024/25 comes in at $145,000,000, the first tax apron would be $183,723,000.

The calculation of the second tax apron, newly created for the 2023/24 season, was much more straightforward — it was simply a matter of adding $17.5MM to this season’s tax line, so the second apron came in at $182,794,000.

Like the first apron, the second apron will rise at the same rate of the cap in future seasons, meaning the formula will be as follows:

• $182,794,000 x (salary cap for that season / $136,021,000)

If we use that same example as above of a $145,000,000 cap for 2024/25, the second apron would come in at $194,861,000 next season.

What restrictions does a team face if its salary is above the first tax apron but below the second apron?

The restrictions facing teams above the first tax apron are different in 2023/24 than they will be in future seasons, since the NBA wanted to phase in those rules gradually rather than implementing them all at once. Rolling out the changes over a couple seasons gives teams the opportunity to adjust their rosters to account for the new apron-related rules.

Here are the moves that a team whose salary is above the first tax apron – but below the second apron – is prohibited from making in 2023/24:

1. Acquiring a player via sign-and-trade.
2. Using any portion of the bi-annual exception.
3. Using more than the taxpayer portion (up to two years, with a starting salary of $5MM) of the mid-level exception.
4. Signing a player who was waived during the current season if his pre-waiver salary for 2023/24 exceeded the amount of the non-taxpayer mid-level exception ($12,405,000).
5. Taking back more than 110% of the salary it sends out in a trade (when over the cap).

The first four limitations on this list will remain in place in future seasons. The fifth will be modified to become even more restrictive.

Here are the additional moves that teams above the first apron – but below the second apron – will be ineligible to make beginning after the last day of the 2023/24 regular season:

1. Taking back more than 100% of the salary it sends out in a trade (when over the cap).
2. Using a traded player exception generated during the prior year (ie. between the end of the previous regular season and the end of the most recent regular season).

To clarify that second point, let’s say a team above the first apron currently has one trade exception worth $5MM, then generates another one worth $8MM at the 2024 trade deadline in February. Both of those exceptions would become unavailable once the team’s 2024 offseason begins.

That club could subsequently make a draft-night deal that generates a new $7MM TPE and use that exception at any point between its creation and the end of the 2024/25 regular season. But that TPE would once again become unavailable once the team’s 2025 offseason begins, prior to the typical one year expiration date.

What restrictions does a team face if its salary is above the second tax apron?

A team whose salary is above the second tax apron is prohibited from making any of the moves outlined above that are unavailable to teams above the first apron. That includes acquiring a player via sign-and-trade, using any portion of the bi-annual exception, and so on.

In 2023/24, a team above the second apron is also forbidden from using any portion of the mid-level exception.

Additional restrictions will be implemented beginning in 2024. Here are the moves that teams above the second tax apron won’t be permitted to make beginning after the last day of the 2023/24 regular season:

1. Using any portion of the mid-level exception.
2. Aggregating two or more player salaries in a trade.
3. Sending out cash as part of a trade.
4. Acquiring a player using a traded player exception if that TPE was created by sending out a player via sign-and-trade.

Teams above the second tax apron will face one more draft-related restriction beginning in the 2024/25 league year. If the team’s salary exceeds the second apron, its first-round pick in the draft seven years away will be frozen, making it ineligible to be traded.

If the team’s salary exceeds the second apron in at least two of the following four seasons (three of five in total), the frozen pick would move to the end of the first round for that draft. Conversely, if the team stays below the second apron for at least three of the subsequent four seasons, its pick becomes “unfrozen” and is once again tradable.

For instance, let’s say the Clippers finish the 2024/25 league year above the second tax apron. That would result in their 2032 first-round pick becoming frozen. If their team salary remains above the second apron for at least two more seasons between ’25/26 and ’28/29, their frozen pick would move to the end of the 2032 first round and would remain ineligible to be traded.

If multiple teams have a frozen pick moved to the end of the first round in a particular draft, they would make their selections in reverse order of their spot in the standings in the season prior to that draft. For example, if both the Clippers and Warriors have their 2032 first-rounders moved to the end of the round and Golden State finishes ahead of L.A. in 2031/32, the Clippers would pick ahead of the Warriors in that draft.

Can a team that begins a league year above the first or second tax apron gain the ability to make additional moves by reducing its salary and dipping below the apron(s)?

Yes. If a clubs opens the 2024/25 league year carrying $200MM in salary, then engages in a series of salary-dump trades that reduce its team salary to $125MM, it would no longer be subject to the restrictions facing a an apron team.

However, as long as the team’s salary remains above the first or second apron – or if the team is completing a transaction would push its salary above one apron or the other – that team is subject to the rules that apply to that apron level.

Critically, it’s worth noting that once a club engages in a roster move that is prohibited for a team above the first or second apron, that club will be hard-capped for the rest of the season at that apron level.

In 2023/24, for instance, teams like the Cavaliers and Rockets acquired players via sign-and-trade, the Lakers and Knicks used the non-taxpayer mid-level exception, and the Thunder and Trail Blazers took back more than 110% of their outgoing salary in trades. As a result, those teams are among several that are hard-capped at the first apron ($172,346,000) and aren’t permitted to surpass that salary level for the rest of ’23/24.

The Nuggets and Grizzlies are the only teams hard-capped at the second apron this season, since they used a piece of the mid-level exception that doesn’t exceed the taxpayer portion ($5MM) allotted to teams above the first apron.

Finally, there’s one more important point related to apron level restrictions and hard caps: A team that engages in any of the trade-related transactions prohibited for first or second apron teams between the end of the regular season and the end of that league year on June 30 will not be permitted to exceed that apron level during the following season.

If, for example, a team sends out cash in a trade in June of 2024, that team won’t be allowed to exceed the second tax apron during the 2024/25 league year. The inverse is also true — a team whose 2024/25 salary projects to be over the second apron won’t be able to trade cash in June.

This rule only applies to trade-related transactions because the ones related to free agency don’t come into effect between the end of the regular season and the start of the next league year.

Anything else I should know about the tax aprons?

It’s worth pointing out that a club with a number of incentive bonuses on its books may find itself operating above the first or second apron even if its base team salary doesn’t exceed those levels.

For the purposes of calculating a team’s salary, a player’s likely incentives are included in his cap hit, but his unlikely incentives aren’t (an incentive is considered likely to be earned if it was achieved last season and unlikely to be earned if it wasn’t). However, for the purposes of determining a team’s apron level, all those incentives are counted.

That means a team with a $170MM base salary in 2023/24 and an additional $5MM in unlikely incentives would be considered a first apron team and would be unable to make certain roster moves, since there’s a chance those incentives could be earned, pushing the club’s salary above $172,346,000.

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.

Most “exceptions” available to an NBA team in a given league year – such as the mid-level, bi-annual, or minimum-salary exception – give that club some additional spending flexibility to continue adding players once its team salary has reached or exceeded the cap.

The hardship exception doesn’t fall into that category — it’s not related to the salary cap. Instead of granting a team extra spending power, a hardship exception gives the team the ability to temporarily carry one or more extra players on its standard roster.

A team qualifies for a hardship exception when it meets all of the following criteria:

1. It has at least four players unavailable due to injury or illness.
2. All four of those players have missed at least three consecutive games.
3. All four of those players are expected to remain sidelined for at least two more weeks.

If a team meets those criteria, the NBA will grant a hardship exception, which gives the club the ability to sign a free agent to a 10-day contract even if its 15-man roster is already full.

Typically, the annual period for 10-day signings doesn’t open until January 5, but a team that qualifies for a hardship exception can sign a player to a 10-day contract prior to that date. When the player’s 10-day contract expires, he can be re-signed to another 10-day deal as long as the team still meets the criteria for a hardship exception.

The rules for standard 10-day contracts prohibit a player from signing more than two 10-day deals with the same team in a given season. That limit also applies to players signing 10-day contracts via hardship rules.

A team can qualify for multiple hardship exceptions simultaneously if it has more than four players who meet the hardship criteria. For instance, a team with five injured players who have missed three or more games and will remain out for at least two more weeks could be granted two extra roster spots via the hardship provision. A team with six players who fit that bill could be granted three extra roster spots, and so on.

The Grizzlies were the first team this season to request and receive a hardship exception, and since they had five injured players who met the hardship criteria (Steven Adams, Brandon Clarke, Luke Kennard, Marcus Smart, and Jake LaRavia), they were granted two additional roster spots. They used their hardship exceptions to sign Jaylen Nowell and Shaquille Harrison to 10-day deals and have since re-signed Nowell.

Here are a few more rules related to the hardship exception:

• Only players unavailable due to injury or illness can be counted toward a team’s sidelined players for hardship purposes. A player who is unavailable for other reasons (e.g. a personal absence, a suspension, etc.) would not qualify.
  • Note: For instance, if the Grizzlies only had three injured players, they wouldn’t be able to count suspended guard Ja Morant as a fourth unavailable player in order to qualify for a hardship exception. However, they were able to move him to the suspended list five games into his ban, temporarily opening up an extra roster spot that way.
• If one of the four injured players is ready to return earlier than anticipated and a team that used a hardship exception no longer meets the criteria, that team must reduce its roster count to 15 players. In this scenario, most clubs would simply terminate the 10-day contract signed by their hardship addition, but a team could also keep that player and waive someone else instead.
• If a player signs a hardship contract with fewer than 10 days left in the season, its expiry date is considered to be the last day of the regular season. The team wouldn’t hold any form of Bird rights on that player.
• Only a team with a full 15-man roster can qualify for a hardship exception.

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 Larry Coon’s Salary Cap FAQ and ESPN’s Bobby Marks was used in the creation of this post.

Derrick Rose‘s name doesn’t technically show up at all in the NBA’s Collective Bargaining Agreement. However, like Gilbert Arenas, the veteran NBA guard has become an informal namesake of one of the CBA’s rules.

The Rose rule allows a player who is finishing his rookie scale contract to sign a maximum-salary contract that exceeds the typical limit for a player with fewer than seven years of NBA experience. The rule, which was created after Rose won a Most Valuable Player award while playing on his rookie contract, allows young stars to qualify for a maximum salary worth 30% of the salary cap instead of 25%.

Although we colloquially refer to this rule as the Rose rule, it’s technically known in the CBA as the “higher max criteria” for “fifth year eligible” players, since a player has to meet certain performance benchmarks to qualify for the higher maximum salary in his fifth NBA season. A player becomes eligible for the 30% max entering his fifth season when at least one of the following is true:

• The player was named to an All-NBA team in the most recent season, or in two of the past three seasons.
• The player was named Defensive Player of the Year in the most recent season, or in two of the past three seasons.
• The player was named Most Valuable Player in any of the past three seasons.

A player signing a rookie scale extension can receive the higher Rose rule max as long as his extension covers at least four new years. A player signing a free agent contract can also be eligible for the Rose rule max if he’s coming off his four-year rookie contract — or if he’s a former second-round pick or undrafted free agent with four years of experience, and he’s re-signing with his current team.

This latter scenario almost never arises, since it’s extremely rare for a player who wasn’t drafted in the first round to develop into an All-NBA player within four years. There are rare scenarios in which it might happen — Nikola Jokic, for instance, was a second-round pick who made the All-NBA team in his fourth season. But he had already signed a second contract by that point, having re-upped with the Nuggets as a restricted free agent following his third season.

Of course, just because a player is eligible for a Rose rule extension, that doesn’t mean a team has to offer a starting salary worth the full 30% max. That’s still a matter of negotiation between the player and team, and a starting salary between 25-30% is possible.

Teams and players who agree to a rookie scale extension can also negotiate conditional maximum starting salaries that hinge on the player’s performance in his fourth season, before his extension begins.

For example, a team and player could agree to the following terms:

• The player’s starting salary will be worth 25% of the cap if he doesn’t make an All-NBA Team in his fourth season.
• The player’s starting salary will be worth 27% of the cap if he’s named to the All-NBA Third Team.
• The player’s starting salary will be worth 28% of the cap if he’s named to the All-NBA Second Team.
• The player’s starting salary will be worth 30% of the cap if he’s named to the All-NBA First Team.

Several players have agreed to this form of Rose rule extension since the rule was implemented in 2017. Devin Booker, Ben Simmons, and Pascal Siakam were among the players whose starting salaries on their rookie scale contracts could have ranged from between 27-30% depending on which All-NBA team they made.

Siakam was voted to the All-NBA Second Team the spring before his rookie scale extension went into effect, securing a starting salary worth 28% of the cap, based on the terms of his Rose rule deal. Simmons’ contract also began at 28% of the cap after he made an All-NBA Third Team that same year. Booker missed out on All-NBA honors ahead of his fourth season, however, so he received a standard 25% max deal.

In recent years, the significant majority of rookie scale extensions that include Rose rule language have been more of a yes or no proposition — a player qualifies for the 30% max with an All-NBA spot, regardless of which team he makes.

That’s reportedly the case for Anthony Edwards, Tyrese Haliburton, and LaMelo Ball, who signed maximum-salary rookie scale extensions this past offseason and would receive a bump to the 30% max by making an All-NBA team in 2024.

While a player can, in some cases, meet the Rose rule performance criteria after he signs his contract, he must meet the criteria before the contract begins. So if Edwards were to miss out on an All-NBA spot in 2024, then earned one in 2025, it would be too late for him to qualify for a Rose rule deal — his maximum-salary contract would start at 25% of the cap in 2024/25 and increase by 8% annually from there.

It’s worth noting that NBA’s previous Collective Bargaining Agreement also included the “designated rookie” rule, which was separate from the Rose rule but often applied to Rose rule deals. The designated rookie rule allowed teams to sign players to rookie scale extensions that spanned five new years instead of four. Teams weren’t permitted to carry more than two designated rookies at a time, including no more than one who was acquired via trade.

However, the latest CBA eliminated the designated rookie rule, allowing all rookie scale extensions to cover up to five new years and placing no restrictions on how many of those players those teams are permitted to carry or acquire. The Rose rule is now the only one governing deviations from the norm for rookie scale extensions.

Finally, a player with between seven and nine years of experience can qualify for a maximum salary worth 35% of the cap instead of 30% by meeting similar criteria, but that’s related to the designated veteran rule rather than the Rose rule. We cover that subject in a separate glossary entry.

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 variations of this post were published in 2013 and 2018 by Chuck Myron and Luke Adams.

The NBA’s salary cap primarily serves as a way to restrict the amount a team can invest in player salaries in a given year. However, because the league has a soft cap rather than a hard cap, there’s technically no specific figure that clubs are prohibited from exceeding once they go over the cap to re-sign players. As long as a team doesn’t use certain exceptions or acquire a player via sign-and-trade, that team doesn’t face a hard cap.

There is, however, a specific threshold on the lower end that teams must meet in each NBA season. The league’s minimum salary floor requires a club to spend at least 90% of the salary cap on player salaries. For instance, with the 2023/24 cap set at $136,021,000, the salary floor for this season is $122,418,000.

For the purposes of calculating whether a team has reached the minimum salary threshold, cap holds and international buyouts aren’t considered, but players who suffered career-ending injuries or illnesses are included in the count, even if they’ve since been removed from the club’s cap.

Under the NBA’s previous Collective Bargaining Agreement, the penalties levied against a team whose salary was below the minimum floor at the end of the season weren’t very harsh — the franchise was simply required to make up the shortfall by paying the difference to its players.

However, the new Collective Bargaining Agreement has made those penalties for teams below the minimum salary floor significantly more punitive. Here are the changes introduced in the latest CBA:

• A team is now required to reach the minimum salary floor by the start of the regular season, rather than the end of the regular season.
• A team whose salary is below the minimum floor at the start of the 2023/24 regular season will only be entitled to 50% of its end-of-season share of the NBA’s luxury tax payouts. Beginning in 2024/25, a team whose salary is below the minimum floor at the start of the regular season won’t receive a share of the end-of-season luxury tax payouts.
• A team whose salary is below the minimum floor at the start of the season will have a cap hold added to its salary in order to reach the minimum floor. For instance, a team with a $117,418,000 salary on opening night in 2023/24 would have a $5MM cap hold added to its salary to reach the $122,418,000 floor and would be unable to immediately access that $5MM of cap room.
• A team that begins the season below the floor cannot reduce the shortfall amount it will owe at the end of the season by spending on player salaries during the season. For example, a team that starts the season $5MM below the floor would owe no less than $5MM at the end of the season. The shortfall amount that club owes could increase if its team salary dips further than $5MM below the floor by the end of the season.

As noted above, the previous CBA called for a team that finished the season below the floor to pay the shortfall to its own players. Under the new agreement, however, that shortfall money is sent to the NBA, which then redirects it to all players. That shortfall money will generally be disbursed to each player in the league in proportion to his salary for that season.

Based on these changes, it’s easy to understand why all 30 of the NBA’s teams have already surpassed the minimum salary floor in 2023/24 and it’s probably safe to assume that trend will continue in future seasons.

After all, essentially every incentive a team has to remain below the floor by the time the regular season begins has been eliminated. A team in that boat wouldn’t be able to access all of its cap room, would forfeit an end-of-season tax payment, and wouldn’t even be able to award its shortfall amount exclusively to its own players.

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 ESPN’s Bobby Marks and Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in 2018, 2020, and 2021.