Hoops Rumors Glossary

The NBA draft lottery, which is set to take place next Tuesday, 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 a chance to land one of the top three picks in the draft.

Although the top three 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-three spot in the draft, but has the best chance to land the first overall pick and will receive the fourth overall selection at worst.

The first three 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 and three. The 14 teams involved in the draft lottery are all assigned a different number of combinations, as follows (worst to best):

1. 250 combinations, 25.0% chance of receiving the first overall pick
2. 199 combinations, 19.9%
3. 156 combinations, 15.6%
4. 119 combinations, 11.9%
5. 88 combinations, 8.8%
6. 63 combinations, 6.3%
7. 43 combinations, 4.3%
8. 28 combinations, 2.8%
9. 17 combinations, 1.7%
10. 11 combinations, 1.1%
11. 8 combinations, 0.8%
12. 7 combinations, 0.7%
13. 6 combinations, 0.6%
14. 5 combinations, 0.5%

If two lottery teams finish the season with identical records, each team receives an equal chance at a top-three pick by averaging the total amount of outcomes for their two positions. For instance, if two teams tie for the league's ninth-worst record, each club would receive 14 combinations and a 1.4% chance at the first overall pick — an average of the 17 and 11 combinations that the ninth- and tenth-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 instance, if two clubs tied for the league's worst record, the team that wins the coin flip would receive 225 of 1,000 chances at the first overall pick, while the loser would receive 224. The coin flip also determines which team will draft higher in the event that neither club earns a top-three pick.

The table below displays the odds for each lottery team, rounded to one decimal place. For our purposes, the first seed is the NBA's worst team. Click to enlarge:

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.

This post was initially published on April 25th, 2012.

The July moratorium is a period at the start of each NBA season during which teams aren't permitted to make trades or sign free agents. The specific dates vary from season to season, but for 2013, the moratorium will last from July 1st to July 9th. As of July 10th, teams can resume business as usual.

Each new NBA season officially begins on July 1st, which is also the day that free agents are freed from their previous contracts. However, before players can sign with new teams, the NBA must complete its audit, which establishes figures like the salary cap, luxury tax threshold, and average salary. Free agents are allowed to negotiate with clubs during the moratorium, and can agree to terms on new contracts, but they are unable to officially sign a new deal until the moratorium ends.

There are a number of types of signings that are permitted during the July moratorium, as follows:

• A first-round draft pick can sign a standard rookie scale contract with the team that drafted him.
• A second-round draft pick can accept the required tender, which is a one-year contract offer that allows a team to retain its rights to a drafted player.
• A restricted free agent can accept a qualifying offer from his team.
• A free agent can sign a minimum-salary contract for one or two seasons.

When the July moratorium ends, all free agents can officially sign contracts. Additionally, the new salary cap figures for the year take effect, and the seven-day amnesty period begins.

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.

This post was initially published on May 16th, 2012.

The mid-level exception is the most common way for over-the-cap NBA teams to sign other teams' free agents. The exception can be used every season and can be split among multiple players, but different teams receive access to different mid-level exceptions based on their cap situations.

A team whose total player salaries, cap exceptions, and cap holds amount to less than the salary cap forfeits its full mid-level exception. A taxpaying team also doesn't have access to the full mid-level. However, both under-the-cap and taxpaying teams receive a lesser form of the MLE. Here's a breakdown of the restrictions placed on each of the three forms of the exception:

For teams with cap room:

• Called the mini mid-level, or the room exception
• Maximum two-year contract
• Maximum 4.5% annual raises
• First-year salary grows by 3% annually, beginning at $2.5MM in 2011/12.

For over-the cap teams:

• Called the full or standard mid-level exception
• Maximum four-year contract
• Maximum 4.5% annual raises
• First-year salary grows by 3% annually, beginning at $5MM in 2012/13.
• Once used, the team cannot surpass the "tax apron" ($4MM above tax line) for the remainder of the season.

For taxpaying teams:

• Called the mini mid-level, or the taxpayer mid-level exception
• Maximum three-year contract
• Maximum 4.5% annual raises
• First-year salary grows by 3% annually, beginning at $3MM in 2011/12.

In 2012/13, the room exception was worth $2,575,000, the full mid-level was worth $5,000,000, and the taxpayer mid-level was worth $3,090,000. However, those values are all set to increase by 3% for the '13/14 season. Here's the maximum contract a free agent could receive this summer using each of these three forms of mid-level 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.

This post was initially published on April 24th, 2012.

Each year when July rolls around, we see a ton of free agent contracts signed and at least a handful of trades consummated. 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 critera must be met:

• The free agent must be signed-and-traded by the team with whom he finished the season. For instance, the Jazz could sign-and-trade Paul Millsap this summer, but another team couldn't sign Millsap and immediately move him.
• If the free agent is restricted, he can't be signed-and-traded after signing an offer sheet with a rival team.
• A team acquiring a player via sign-and-trade cannot be over the tax apron ($4MM above the tax line) after the deal.
• A team acquiring a player via sign-and-trade cannot have used the taxpayer mid-level exception.
• The free agent cannot be signed-and-traded once the regular season is underway.
• The free agent can't be signed using the mid-level exception or any other exception that doesn't allow for a three-year contract.

Sign-and-trade contracts can be worth any amount up to the player's maximum salary (with 4.5% raises), and must be for either three or four years. However, only the first year of the deal has to be guaranteed. For instance, last summer, the Hawks acquired DeShawn Stevenson via sign-and-trade as part of the Joe Johnson blockbuster with the Nets. Stevenson received a three-year contract, but only the first year was guaranteed.

If a sign-and-trade contract includes a signing bonus, either team can agree to pay it, though generally the team that signs the player pays the bonus. As for trade bonuses, they would kick in upon any subsequent trades rather than as part of the sign-and-trade transaction itself.

Under 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: As we've discussed numerous times, Dwight Howard can receive $30MM+ more in guaranteed money from the Lakers than from any other team this summer. If the Lakers were to sign-and-trade Howard, his contract couldn't exceed the four-year, $87.59MM max deal that another team could offer him straight-up. In previous CBAs, a sign-and-trade would have allowed Howard to earn the full $117.95MM max as well as getting to the team of his choice, but that is no longer the case.

Under the new CBA, there is 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 new team 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 cap space, rather than taking back unwanted assets in a sign-and-trade.

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 they can offer the free agent's prior team something of value. But these transactions are becoming less frequent than they once were.

The Stevenson/Johnson case from last summer provides an example of a sign-and-trade benefiting both the player and the team. Atlanta needed to add more incoming salary to make the Johnson trade work under CBA rules, so acquiring Stevenson via sign-and-trade allowed the Hawks to give Stevenson the bare minimum salary required ($2,240,450) to make the trade legal. From Stevenson's perspective, that $2.24MM salary was likely higher than he would have received on the open market, so even though the final two years of his contract may not become guaranteed, he still made out well in the deal.

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.

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. 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 has played three seasons or less in the NBA, his qualifying offer will be worth 125% of his prior salary, or his minimum salary plus $200K, whichever is greater. For instance, after making $473,604 this season, Pablo Prigioni will be eligible for a qualifying offer worth $988,872 for next year — calculated by adding $200,000 to his minimum salary for next season ($788,872). Tiago Splitter‘s 2012/13 salary, meanwhile, was $3,944,000, so his qualifying offer will be worth 125% of that figure, or $4,930,000.

The qualifying offer for a player 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 the QO for a 30th overall pick is 150% of his previous salary. The full first-round scale for the class of 2009, who will be hitting free agency this summer, can be found here, courtesy of RealGM.

A pair of examples for this season, based on RealGM’s chart: 2009 fourth overall pick Tyreke Evans, coming off a fourth-year salary of $5,251,825, must be extended a qualifying offer of $6,927,157 (a 31.9% increase) to become a restricted free agent. 28th overall pick Wayne Ellington will be eligible for a qualifying offer of $3,103,733, a 49.0% increase on this season’s $2,083,042 salary.

A wrinkle in the new Collective Bargaining Agreement complicates matters — as of last summer, a player’s previous performance can affect the amount of his qualifying offer. The new CBA identifies the “starter criteria” as starting 41 games or playing 2000 minutes per season, and rewards players for meeting those criteria. A player meets the starter criteria if he compiles at least 41 starts or 2,000 minutes in the season prior to his free agency, or averages at least that many starts or minutes over the two seasons before he becomes a free agent. Here’s how the starter criteria affect qualifying offers:

• 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.
• 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.
• 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.

You can find examples of free-agents-to-be to whom these conditions apply right here.

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. 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.

For instance, Brandon Jennings has strongly hinted on multiple occasions that he would prefer not to sign a long-term contract with the Bucks. If he’s serious about that stance, and is concerned about the Bucks matching a long-term offer sheet from a rival club, he could accept his one-year qualifying offer from Milwaukee this summer. Because he met the starter criteria in 2012/13, his QO will be worth $4,531,459. Accepting that one-year deal would make him an unrestricted free agent in the summer of ’14.

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 Storyteller’s Contracts were used in the creation of this post.

This post was initially published on May 3rd, 2012.

The Bird exception, named after Larry Bird, is a rule included in the NBA's Collective Bargaining Agreement that allows teams to go over the salary cap to re-sign their own players. A player who qualifies for the Bird exception, formally referred to as a Qualifying Veteran Free Agent, is said to have "Bird rights."

The most basic way for a player to earn Bird rights is to play for the same team for at least three seasons, either on a multiyear deal or separate one-year contracts. The criteria are a little more complicated than that though. A player retains his Bird rights in the following scenarios:

• He changes teams via trade, rather than being waived or signing elsewhere as a free agent. For instance, Anthony Morrow is in the third year of his contract. He has been traded twice, from the Nets to the Hawks and then to the Mavericks, but will earn Bird rights at season's end because he was never waived during those three seasons.
• He finishes a third season with a team after having only played partial seasons with the club for the first two years (without signing elsewhere in between).

However, a player sees the clock on his Bird rights reset to zero in the following scenarios:

• He changes teams via free agency.
• He is selected in an expansion draft.
• He is waived and is not claimed on waivers.
• His rights are renounced by his team.

If a player has earned Bird rights, he is eligible to sign a maximum-salary contract for up to five years with 7.5% annual raises when he becomes a free agent. The maximum salary will vary depending on how long the player has been in the league, but regardless of the amount, a team can exceed the salary cap to complete the deal.

Although the Bird exception allows teams to exceed the cap, a team cannot necessarily use free cap room to sign free agents and then re-sign its own players via Bird rights. A team with a Bird free agent is assigned a "free agent amount" or cap hold worth either 190% of his previous salary (for a player with a below-average salary) or 150% of his previous salary (for an above-average salary). For players coming off a rookie-scale contract, the amounts of those cap holds are 250% and 200%, respectively.

The Hawks, for instance, will have a $12.75MM cap hold for Devin Harris on their 2013/14 books — 150% of his $8.5MM salary this season. Atlanta could clear that $12.75MM in cap space by renouncing Harris, but then would lose his Bird rights. If the Hawks wanted to re-sign him at that point, they'd have to use either cap room or a different cap exception.

Ultimately, the Bird exception was designed to allow teams to keep their star players. The CBA ensures that teams are always able to re-sign their veteran stars to maximum contracts, assuming the player is interested in returning and his team is willing to go over the 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.

This post was initially published on April 17th, 2012.

The most common method over-the-cap teams use to sign free agents from other teams is the mid-level exception, but it's not the only tool those clubs can use to squeeze an extra player onto the payroll. The bi-annual exception is a way to sign a player who commands more than the minimum salary and less than the mid-level.

As its name suggests, the bi-annual exception can only be used every other year. Even if a team uses only a portion of the exception, it becomes unavailable the following year.

The bi-annual exception is available only to a select few clubs. Teams whose player salaries and cap exceptions add up to less than the salary cap lose their bi-annual exception as well as their full mid-level exception and any trade exceptions. They must use their cap room to sign players. Additionally, teams lose access to the bi-annual exception when they go more than $4MM over the tax threshold, exceeding what's known as the tax apron. So, only teams over the cap but under the tax apron can use the bi-annual exception.

Additionally, 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 with using the exception can't go over the tax apron at any time during the season in which the contract is signed.

The value of the bi-annual exception rises from $1.957MM in 2012/13 to $2.016MM for 2013/14, and will continue to go up by 3% each year during the current collective bargaining agreement. The contract can be for either one or two seasons, with a raise of 4.5% for the second season. The Clippers used the full bi-annual exception last summer to give Grant Hill a two-year deal worth a total of $4,002,065. Teams also have the option of splitting the exception among multiple players. The Spurs signed Nando De Colo to a two-year deal for a total of $2.863MM, but never used the remaining amount on the exception. The bi-annual exception becomes pro-rated starting on January 10th, so it's rarely used for late-season signees.

The Bulls, who gave Marco Belinelli a one-year contract for the full value of the bi-annual exception, were the only team besides the Clippers and Spurs to use it in 2012/13. So, those three clubs can't use the bi-annual in 2013/14, but any other team with a payroll above the cap and below the tax apron may.

Luke Adams contributed to this post, which was initially published on April 23rd, 2012.

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.

As its name suggests, the minimum salary exception can be used by an over-the-cap team to sign a player to a one- or two-year minimum-salary deal. The exception can also be used to acquire minimum-salary players via trade, without the players being counted for salary-matching purposes.

Players are entitled to varying minimum salaries based on how long they've been in the NBA. In 2012/13, a player with no prior NBA experience was eligible for a $473,604 minimum salary, while a player with 10+ years of experience was eligible for $1,352,181. Over the course of the current Collective Bargaining Agreement, the minimum salary will increase each season, as Larry Coon's CBA FAQ outlines. For both this season and next season, the breakdown is as follows:

Because the NBA doesn't want clubs to shy away from signing more expensive veteran players, the league reimburses teams for a portion of a minimum-salary player's cost if he has three or more years of experience, as long as the contract isn't a multiyear deal. The minimum salary for a player with two years experience is the most a team will pay, and the largest cap hit it will take, for a one-year minimum contract. For instance, when the Lakers signed 14-year veteran Antawn Jamison for 2012/13 using the minimum salary exception, he earned $1,352,181, but the team's cap hit was just $854,389. The league will be reimbursing the Lakers for the remaining $497,792.

Most salary cap exceptions can only be used once each season. When a team uses its full mid-level exception to sign one or more players, the club can no longer use that exception until the following season. Unlike the mid-level and other cap exceptions, however, the minimum salary exception can be used any number of times in a single season. The Knicks, for example, currently have six players on minimum-salary deals.

Over-the-cap teams can use the minimum salary exception to acquire players in trades without having to worry about matching salaries. That's how the Thunder were able to trade for Ronnie Brewer and give up only a second-round pick.

Chuck Myron contributed to this post, which was initially published on May 7th, 2012.

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.