Hoops Rumors Glossary

When NBA teams are in the process of filling out their training camp rosters, the most common form of deal signed by players around the league is the Exhibit 10 contract. An Exhibit 10 contract can be converted into a two-way deal or puts a player in line to earn a bonus if he’s waived and then joins his team’s G League affiliate.

Many of those non-guaranteed training camps also include an Exhibit 9 clause in addition to – or in place of – Exhibit 10 language.

An Exhibit 9 clause protects an NBA team in the event that a player suffers a significant injury in training camp.

If a player on a standard non-guaranteed contract without an Exhibit 9 clause suffered such an injury, his club would be required to pay him his salary until he’s healthy enough to play or until the end of that season, whichever comes first. For example, a player on a non-guaranteed rookie minimum deal who sustained a season-ending ACL tear would be owed his full $1,119,563 salary.

If the injured player’s contract includes Exhibit 9 language, however, his team could waive him and only be on the hook for a one-time payment of $15K. That amount has increased from $6K in the NBA’s previous Collective Bargaining Agreement.

An Exhibit 9 contract, which is non-guaranteed and doesn’t count against the salary cap until the start of the regular season, can only be a one-year, minimum-salary deal. A team can carry up to six players on Exhibit 9 deals, but can’t sign a player to such a contract unless it has at least 14 players already under contract (not including two-way deals).

In most cases, if a team plans to have a player on a non-guaranteed contract participate in training camp and/or the preseason, his contract will include an Exhibit 9 clause in order to limit the club’s liability.

Earlier this offseason, for example, the Rockets wanted to begin signing their training camp invitees, but only had 13 players on standard contracts. Houston signed Joshua Obiesie to an Exhibit 10 pact, making him their 14th man and meeting the roster minimum required to begin completing Exhibit 9 deals. Because the Rockets don’t have injury protection for Obiesie, they reportedly have no intention of having him take part in camp.

The Heat took a similar approach, signing Brandon McCoy as their 14th man to an Exhibit 10 contract that didn’t include an Exhibit 9 clause. With 14 players on standard contracts, Miami subsequently signed several players to Exhibit 9 deals, waiving McCoy in the process — he won’t be on the Heat’s camp roster.

An Exhibit 9 contract that also includes Exhibit 10 language can be converted into a two-way deal. In that scenario, the Exhibit 9 clause would become null and void, so the team would no longer have injury protection.

In the event that a player with Exhibit 9 language in his contract makes his team’s regular season roster, his deal would be converted to a standard non-guaranteed contract. The Exhibit 9 protection wouldn’t carry over into the regular season.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

An earlier version of this article was published in 2014.

The rules governing the number of players an NBA team can carry on its roster vary depending on the time of year.

Between the start of the regular season and the last day of a team’s season, a club isn’t allowed to carry more than 15 players on its roster, except in rare instances. Generally, when a club with 15 players on its roster acquires a new player, it must waive someone to clear a spot. In the offseason though, teams are permitted to carry up to 21 players on their rosters.

The regular season limit applies to players on standard contracts, while the offseason limit applies to players on any form of contract.

During both the regular season and offseason, a team is permitted to carry up to three players on two-way contracts, which are a non-standard form of deal that allows a player to be transferred back and forth between the NBA and G League.

In the regular season, two-way players don’t count toward the 15-man limit, meaning teams can essentially have 18 players under contract at a time. However, two-way players do count toward the 21-man limit in the offseason. If a club is carrying 21 players on standard NBA contracts in August, it can’t sign a player to a two-way deal without waiving someone.

[RELATED: 2023/24 NBA Roster Counts]

In some cases, a team ravaged by injuries will receive one or more extra spots on its regular season roster via the hardship provision. The NBA can grant a hardship exception – which allows the club to sign a player to a 10-day contract without requiring a roster spot – when a team has at least four players who have missed three consecutive games and who are expected to remain sidelined for at least the next two weeks due to injury or illness.

A team qualifies for a single hardship exception when it has four players who meet that criteria, but it can become eligible for additional hardship exceptions if it has a fifth or sixth injured/ill player. For example, if a club has six players who have missed at least three consecutive games due to injury and are expected to remain out for two more weeks, it could be granted three hardship exceptions, allowing the club to temporarily carry three extra players beyond its usual 15 (not counting two-ways).

A club is also permitted to add a 16th man to its regular season roster if it has a player on the suspended list. A player who is suspended by his team for four or more games may be placed on the suspended list following the third game of his ban, while a player suspended by the NBA for six or more games can be placed on the suspended list following the fifth game of his ban. Teams can’t make use of the suspended list for shorter suspensions.

Generally speaking, the fewest number of players an NBA team can have on its roster during the regular season is 14, not counting two-way players. However, a team is permitted to dip to 12 or 13 players for a limited period. That club can’t carry fewer than 14 players on standard contracts for more than two weeks at a time or more than 28 total days during a regular season.

The rules for in-game roster minimums and maximums are as follows:

• A team can have between 12 or 15 players listed as active for a game.
• A team can carry as few as 11 active players for up to two weeks at a time or up to 28 total days during a regular season.
• A team must have at least eight players dressed for a game (at least three or four players beyond those eight must technically be listed as active).

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in 2012 and 2013 by Luke Adams.

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 helps ensure that virtually every team heads into the offseason with a little spending flexibility.

Teams are eligible to use specific types of mid-level exceptions depending on their proximity to the salary cap. The most lucrative form of mid-level is available to teams that are over the cap but below the first tax apron. Clubs above the first apron, and even those operating under the cap, have access to lesser versions of the MLE.

Here’s a breakdown of how the various forms of the exception are structured:

For teams over the cap and below the first tax apron:

• Commonly called either the full mid-level exception or the non-taxpayer mid-level exception.
• Contract can cover up to four seasons.
• First-year salary is worth $12,405,000 in 2023/24; maximum four-year value is $53,341,500.
• Once used, the team cannot surpass the first tax apron (approximately $7MM above the tax line in 2023/24) for the remainder of the season.
• Beginning in 2024/25, this form of mid-level exception can be used to acquire a non-free-agent via trade or waiver claim, as long as his contract fits into the exception (in terms of years and dollars). Only the player’s current-year salary must fit into the MLE.

For teams operating under the cap:

• Commonly called the room exception.
• Contract can cover no more than three seasons.
• First-year salary is worth $7,723,000 in 2023/24; maximum three-year value is $24,327,450.
• Beginning in 2024/25, this form of mid-level exception can be used to acquire a non-free-agent via trade or waiver claim, as long as his contract fits into the exception (in terms of years and dollars). Only the player’s current-year salary must fit into the room exception.

For teams over the cap and the first tax apron, but below the second apron:

• Commonly called the taxpayer mid-level exception.
• Contract can cover up to two seasons.
• First-year salary is worth $5,000,000 in 2023/24; maximum two-year value is $10,250,000.
• Once used, the team cannot surpass the second tax apron ($17.5MM above the tax line in 2023/24) for the remainder of the season.

For teams over the cap and both tax aprons:

• No mid-level exception is available.

Each form of the mid-level allows for annual raises of up to 5% of the value of the first season’s salary.

Teams can use their entire mid-level exception to sign one player. However, only one club has taken this route so far in 2023/24, with the Raptors signing Dennis Schröder to a multiyear contract that’s worth $12,405,000 in year one.

Teams are also allowed to split the mid-level among multiple players, and that has become an increasingly common course of action. For instance, the Mavericks have used their MLE to sign Seth Curry ($4MM) and Dante Exum ($3MM) so far in ’23/24 and still have more than $5MM remaining.

In the past, players drafted in the second round often signed contracts using a portion of the mid-level because the exception allows teams to offer more years and more money than the minimum salary exception provides. However, the new second-round pick exception has all but eliminated the need for teams to use the MLE on second-round picks.

Still, if a team wants to sign an undrafted free agent to a longer-term contract or convert a two-way player to a multiyear deal, the mid-level can come in handy. The Pelicans used their MLE this summer to move E.J. Liddell from his two-way deal to a three-year contract that begins at the minimum ($1,801,769).

Some front offices prefer to leave all or part of their mid-level exception unused in the offseason so it’s still available during the second half of the regular season. At that point, a contender could dangle its MLE in an effort to outbid rivals for top players on the buyout market. A non-contending club, on the other hand, could use its MLE to lock up an intriguing developmental player to a long-term contract.

Unlike the bi-annual exception, the mid-level exception can be used every season. So whether or not a team uses any of its mid-level in 2023/24, each club below the second tax apron in ’24/25 will have the opportunity to use some form of the MLE.

The amount of each form of mid-level exception increases – or decreases – at the same rate as the salary cap, ensuring that its value relative to cap room remains about the same from year to year. So if the salary cap rises by 10%, the mid-level values would rise by the same amount.

Here are a few more notes related to the mid-level exception:

• A contract signed using a mid-level exception can include bonuses as long as the player’s maximum potential compensation doesn’t exceed the maximum value of the exception. For example, in 2023/24, a team can’t sign a player to a contract using the non-taxpayer mid-level exception that has a base salary of $12,405,000 and another $1MM in incentives. But a contract with a base salary of $11,405,000 and $1MM in incentives is permitted.
• A team is only allowed to use one form of mid-level exception in a given season. For instance, an over-the-cap club that uses a portion of its non-taxpayer mid-level exception before shedding salary and dipping below the cap would not then be permitted to use the room exception.
• On the day after the trade deadline, the value of a team’s unused mid-level exception begins to prorate downward. The exact amount of proration depends on how much of the MLE was unused as of January 10 and how many total days there are in the regular season. For example, if a team had $3MM of its mid-level left on January 10 and there are 174 days in that season, the MLE would decrease in value by $17,241 per day (1/174th of $3MM).

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.

It’s not uncommon in many major professional sports for a player to negotiate a contract that includes a no-trade clause, which prohibits him from being traded – either at all or to certain specific teams – without his consent. However, no-trade clauses are extremely rare in the NBA.

When the Wizards signed Bradley Beal to a new contract in 2022 that included a no-trade clause, Beal became just the 10th player in NBA history to receive that perk.

In order to qualify for a no-trade clause, a player must meet the following criteria:

• He must be signing a free agent contract, not an extension.
• He must have at least eight seasons of NBA experience.
• He must have spent at least four seasons with the team he’s signing with.

This last point is the most malleable of the three. In order to qualify for a no-trade clause, a player doesn’t necessary need to have spent the past four consecutive seasons with his team — he just needs to have spent at least four seasons with that team at some point.

For example, if LeBron James were to become a free agent next summer and decided to sign with the Heat, he could negotiate a no-trade clause into his new contract, since he spent four years in Miami from 2010-14.

Additionally, a partial season can be counted as one of those four seasons a player needs to spend with a team in order to qualify for a no-trade clause. For instance, if Jordan Clarkson had become a free agent this offseason, he would’ve been eligible to negotiate a no-trade clause with the Jazz, who traded for him during the 2019/20 season. Clarkson has only been in Utah for three full years and part of a fourth season, but that’s enough to meet the criteria.

Still, those three requirements are enough to eliminate a no-trade clause as an option for many players. One prominent recent example is Jaylen Brown. Although Brown has spent more than four years with the Celtics, he has only been in the NBA for seven seasons and is signing an extension rather than a free agent contract, so a no-trade clause wasn’t available to him.

A player who has a no-trade clause in his contract and consents to a trade retains the right to veto a trade when he joins his new team. So Beal’s no-trade clause remains in effect now that he’s a member of the Suns.

Although explicit no-trade clauses are rare, there are a couple other scenarios in which a player can receive an implicit no-trade clause, meaning his consent is still required in order to trade him.

First, a player who re-signs with his previous team on a one-year contract, or a two-year deal with an option year, is given no-trade protection for the rest of that league year — or until his second-year option is exercised.

Heat forward Kevin Love and Suns wing Josh Okogie are among the players who will fall into this group in 2023/24.

Here are a few more notes related to these criteria:

• A player who meets these criteria and still decides to consent to a trade will lose his Bird or Early Bird rights at the end of the season and will instead be deemed to have Non-Bird rights.
• Although those criteria don’t apply to players on two-way contracts, they do apply to players who accept standard (ie. non two-way) one-year qualifying offers as restricted free agents. So Hornets forward Miles Bridges will have the right to veto a trade in ’23/24.
• The NBA’s new Collective Bargaining Agreement allows a player who re-signs with his former team on a one-year contract (or two-year deal with an option) to waive his ability to veto a trade. A handful of players have done so this offseason, including Lakers guard D’Angelo Russell and Nuggets guard Reggie Jackson. They’re eligible to be traded without their approval in 2023/24.

Second, a player who signs an offer sheet as a restricted free agent and has that offer matched by his previous team has the ability to veto a trade for a full calendar year. That means Trail Blazers swingman Matisse Thybulle and Sixers big man Paul Reed will have de facto no-trade protection until next July.

While explicit no-trade clauses in the NBA are rare, these criteria that give players veto rights for a year at a time aren’t uncommon at all, and often end up applying to non-stars, giving them a little control over their own professional futures.

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.

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 three on two-way deals) during the regular season, but their maximum roster size increases to 21 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 2017 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 worth as little as $5K and – in 2023/24 – as much as $75K.

Let’s say an undrafted rookie signs an Exhibit 10 contract with the Jazz that includes a $75K bonus. He attends camp with the Jazz, but is waived before the regular season begins, with Utah 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 Salt Lake City Stars and remains with the club for 60 days, he’d be entitled to his full $75K bonus.

The player wouldn’t receive that bonus if he opts to sign with a team overseas after being waived by the Jazz. 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 Jazz would receive his $75K. Exhibit 10 contracts can be converted into two-way contracts before the regular season begins, so if Utah opted to do that, the $75K 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 Jazz waive him a week later.

The maximum Exhibit 10 bonus will increase in future seasons at the same rate as the NBA salary cap. For instance, if the cap rises by 10% in 2024/25, the maximum Exhibit 10 bonus would rise by 10% too, from $75,000 to $82,500.

Only teams with a G League affiliate can include an Exhibit 10 bonus in a contract. In 2023/24, the Trail Blazers will become the 29th NBA team with its own affiliate, leaving only the Suns on the outside looking in (they’re aiming to get an NBAGL team in place by ’24/25). Phoenix could technically sign players to Exhibit 10 deals, but wouldn’t be able to include bonus money.

Exhibit 10 contracts don’t count against a team’s salary cap during the offseason. However, they would begin to count against the cap if a team decides to keep a player on an Exhibit 10 contract into the regular season, essentially converting his deal to a standard one-year, minimum-salary deal.

Although they’re not technically required to, virtually every Exhibit 10 contract also contains an Exhibit 9 clause, which provides a team protections when a player on a non-guaranteed training camp contract suffers an injury. If a team wants to sign a player to a deal that includes both an Exhibit 9 and Exhibit 10 clause, it must already be carrying at least 14 players on standard contracts.

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 subsequently 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.

Earlier versions of this post were published in 2018 and 2019.

When an NBA team selects a player in the first round of the draft, there’s never any concern about how the player will be signed, regardless of how far over the salary cap the team might be. The rookie scale exception allows teams to sign as many first-round picks as they need to, within a predetermined salary range, without requiring cap room.

However, there hasn’t historically been a similar cap exception for second-round picks. That means clubs intent on locking up their second-rounders to three- or four-year contracts have had to use cap space or a portion of the mid-level exception to do so. If a team wanted to give its second-round pick more than the minimum salary, it would require cap room, the mid-level, or another exception such as the room or bi-annual.

In the 2023 Collective Bargaining Agreement, the NBA and NBPA addressed this issue by adding a new second-round pick exception, which looks like a win for both sides. Teams will have more freedom to sign their young players to multiyear contracts without having to worry about carving out cap room or exception money for them.

Players, meanwhile, don’t have to worry that their new team’s cap situation might force them to accept a minimum-salary contract or a two-way deal. Of course, some late second-rounders will still sign a two-way deal or for the minimum salary, but a team will no longer be able to point to its lack of spending power to explain why that’s the only offer on the table.

Like the rookie scale exception, the second-round pick exception isn’t limited to a single use. It can be deployed as many times as needed in a given league year.

The second-round exception can be used to sign a player to either a three-year contract that includes a third-year team option or a four-year contract that features a fourth-year team option. Here’s what the salary structure looks like:

Three-year deal

• The first year can be worth up to the minimum salary for a player with one year of NBA experience.
• The second and third years are worth the second- and third-year minimum salaries for a rookie.
• The third year is a team option.

As our chart of minimum salaries shows, in 2023/24, the maximum three-year salary for a contract with this structure would be about $5.9MM. Here’s the year-by-year breakdown (option year in italics):

Four-year deal

• The first year can be worth up to the minimum salary for a player with two years of NBA experience.
• The second year can be worth up to the second-year minimum salary for a player with one year of experience.
• The third and fourth years are worth the third- and fourth-year minimum salaries for a rookie.
• The fourth year is a team option.

In 2023/24, the maximum four-year salary for a contract with this structure would be nearly $8.8MM. Here’s what it looks like from year to year (option year in italics):

In any deal that uses this four-year contract structure, the salary increase or decrease between the first and second season can’t exceed 5%. For instance, a team wouldn’t be permitted to negotiate a contract that starts at the rookie minimum ($1,119,563) and jumps to $2,120,693 in year two.

Players who are signed using the second-round pick exception won’t count against a team’s cap between July 1 and July 30 of their first season. That will allow teams to preserve all the cap room they need until July 31 without having to worry about their second-rounders cutting into it. And it will position those players to sign their first NBA contracts before taking part in Summer League games.

The introduction of the second-round exception doesn’t mean that teams must use it to sign their second-round picks. They’re still permitted to use cap room or another exception to negotiate deals with those players. That would be necessary in situations where the player has the leverage to command a salary greater than the two-year veteran’s minimum.

This has already happened a couple times in 2023/24. Second-round picks Vasilije Micic (Thunder) and Sasha Vezenkov (Kings) have reportedly agreed this offseason to three-year contracts worth $23.5MM and $20MM, respectively.

Both players are experienced EuroLeague stars who will be arriving in the NBA several years after being drafted in the second round, so their new deals will exceed what a team can offer using the second round pick exception. They’ll be signed using either cap space or the room exception.

Finally, it’s worth noting that no matter how his NBA career plays out, Kings rookie wing Colby Jones has already earned a minor claim to fame by being the first player to ever sign a contract that uses the second-round 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.

The NBA’s maximum salary is determined by a player’s years of NBA experience. Players with between zero and six seasons under their belts are eligible for a starting salary worth up to 25% of the salary cap. That figures increases to 30% for players with seven to nine years of NBA experience, and to 35% for players with 10+ years of service.

However, there are certain scenarios in which a player can achieve a higher maximum salary than his years of service dictate. When a player who would normally qualify for the 30% max becomes eligible for a starting salary worth up to 35% of the cap before he gains 10+ years of NBA experience, he can sign a Designated Veteran contract, also known as a “super-max” deal.

A player who has seven or eight years of NBA service with one or two years left on his contract becomes eligible for a Designated Veteran contract if he meets the required performance criteria.

A Designated Veteran contract can also be signed by a player who is technically a free agent if he has eight or nine years of service and meets the required performance criteria.

However, a player can’t sign a Designated Veteran deal with a new team — only his current team. If he has been traded at any time since his first four years in the NBA, he becomes ineligible for such a deal. Players like Donovan Mitchell, Domantas Sabonis, and Lauri Markkanen are no longer eligible for that reason. Even if they meet the required performance criteria, the fact that they’ve been traded in recent years disqualifies them.

Speaking of that performance criteria, here’s what it looks like. At least one of the following must be a true for a player to be eligible for a Designated Veteran contract:

• He was named to an All-NBA team in the most recent season, or in two of the last three seasons.
• He was named NBA MVP in any of the three most recent seasons.
• He was named NBA Defensive Player of the Year in the most recent season, or in two of the last three seasons.

Given the exclusivity of the MVP and Defensive Player of the Year awards, players who qualify for a Designated Veteran contract do so most often by earning All-NBA nods. For instance, Celtics wing Jaylen Brown became eligible for a super-max extension earlier this month when he was named to the All-NBA Second Team.

Brown and his Celtics teammate Jayson Tatum are the only players currently eligible to sign Designated Veteran contracts, and Brown is the only player who can do so during the 2023 offseason. Tatum has met the performance criteria but doesn’t have quite enough service time to sign a super-max extension, so he’ll have to wait until after the 2023/24 season.

As outlined above, if the Celtics were to trade Brown (or Tatum), he would no longer be super-max eligible.

Designated Veteran contracts are different than Designated Rookie contracts, which in turn are slightly different than Rose Rule deals. The Rose Rule allows players with fewer than seven years of NBA experience to qualify for contracts that begin at 30% of the cap instead of 25%, as we outline in a separate glossary entry.

Here are a few other rules related to Designated Veteran contracts:

• Even if a player qualifies for a Designated Veteran contract, his team isn’t obligated to start its extension offer at 35% of the cap. The player is eligible for a salary up to that amount, but the exact amount is still a matter for the two sides to negotiate. For example, after becoming super-max eligible, Rudy Gobert signed a contract with the Jazz that began at just over 31% of the cap.
• A Designated Veteran extension can’t exceed six years, including the number of years left on the player’s contract. So if a player signs a Designated Veteran extension when he has two years left on his current contract, he could tack on four new years to that deal.
• A player signing a Designated Veteran contract as a free agent can’t sign for more than five years.
• A Designated Veteran extension can only be signed between the end of the July moratorium and the last day before the start of the regular season.
• If a player signs a Designated Veteran contract, he is ineligible to be traded for one year.
• Under the 2017 Collective Bargaining Agreement, a team wasn’t permitted to carry more than two players on Designated Veteran contracts at a time. However, that rule won’t carry over to the 2023 CBA.

Our list of the players who have signed Designated Veteran contracts since their inception in 2017 can be found right 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 was used in the creation of this post.

A previous version of this glossary entry was published in 2018.

Under the NBA’s old Collective Bargaining Agreement, which was in effect through the 2016/17 season, a player’s full cap hit was used for salary-matching purposes in trades, whether or not his salary was guaranteed. If a player had an $10MM salary with a partial guarantee of $1MM, his outgoing salary in a trade was the same as it would have been for a player who had a fully guaranteed $10MM contract.

That’s no longer the case, however. Now, only the guaranteed portion of a player’s contract counts for outgoing salary purposes in a trade, limiting the appeal of non-guaranteed salaries as trade chips.

This detail is crucial for determining how much salary a team can acquire in a trade — unless a team is under the cap, the amount of salary it sends out in a trade dictates how much salary it can take back. The amount of salary an over-the-cap team can acquire in a trade ranges from 125% to 175% of its outgoing salary, depending on exactly how much salary the team is sending out and whether or not the team is a taxpayer.

Under the old system, it might make sense for a cap-strapped club to trade a player with a guaranteed salary for a player earning an equivalent non-guaranteed salary — the cap-strapped club could then waive that newly-acquired player to cut costs. That’s no longer a viable strategy.

Complicating matters further is the fact that a team can’t simply circumvent the new rules by trading a player before a league year ends on June 30, then having his new team waive him once his new non-guaranteed cap hit goes into effect on July 1. After the end of the regular season, a player’s outgoing salary for trade purposes is the lesser of his current-year salary and the guaranteed portion of his salary for the following season.

Here’s a practical example: Chris Paul‘s deal with the Suns featured a fully guaranteed salary of $28.4MM in 2022/23, with only $15.8MM of $30.8MM guaranteed for ’23/24. Between the end of the Suns’ season and June 28 – which is when Paul’s full ’23/24 salary will become guaranteed – his outgoing salary for matching purposes is just $15.8MM, but his incoming salary for his new team would be $30.8MM.

Paul is far from the only player who could be affected by these trade rules this summer. Nets forward Royce O’Neale, Jazz big man Kelly Olynyk, Clippers guard Eric Gordon, Lakers center Mohamed Bamba, and Magic wing Gary Harris are among the many players who have partially guaranteed or non-guaranteed salaries for 2023/24 and won’t make great trade candidates unless those guarantees are increased.

Last offseason, when the Hawks agreed to send Danilo Gallinari to the Spurs in their trade for Dejounte Murray, Gallinari’s cap charges were $20.5MM for 2021/22 and $21.5MM for ’22/23, which should have been more than enough to account for Murray’s incoming salary ($15.4MM for ’21/22; $16.6MM in ’22/23). But Gallinari’s 2022/23 salary was only partially guaranteed for $5MM, which wouldn’t have been satisfactory to match Murray’s full cap hit, so Atlanta and San Antonio had to increase that partial guarantee in order to make the deal legal.

To paint a complete picture of exactly how these new rules work, let’s assume that a free agent signs a two-year, $24MM contract during the summer of 2023. His cap hit in each year is $12MM, but the first season of the contract is partially guaranteed for $3MM, while the second year is fully non-guaranteed. Here’s how it would count, for trade purposes, as outgoing salary:

1. From the date of the signing until the one-quarter mark of the 2023/24 season:
   • $3MM
   • Note: Due to other CBA rules, the player wouldn’t become trade-eligible until at least December 15, 2023 anyway.
2. From the one-quarter mark of the 2023/24 regular season until salaries become guaranteed on January 10, 2023:
   • A prorated amount of the salary based on the player’s earnings to date.
   • Note: The player would earn 1/174th of his $12MM salary per day; so 60 days into the season, his outgoing salary in a trade would be $4,137,931 (60/174ths of $12MM).
3. From January 10, 2024 until the 2024 trade deadline:
   • $12MM
4. From the day after the team’s 2023/24 season ends until the start of the 2024/25 regular season:
   • $0
5. From the start of the 2024/25 regular season until salaries become guaranteed on January 10, 2025:
   • A prorated amount of salary based on earnings to date.
   • Note: The player would once again earn 1/174th of his $12MM salary per day; so 10 days into the season, his outgoing salary in a trade would be $689,655 (10/174ths of $12MM).
     
6. From January 10, 2025 until the 2025 trade deadline:
   • $12MM

This change to the NBA’s trade rules hasn’t stopped teams from tacking on non-guaranteed years to the end of certain players’ contracts, since those non-guaranteed salaries still provide flexibility. However, we’re not seeing teams construct contracts with non-guaranteed cap hits solely for trade purposes like we sometimes used to.

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 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 all of 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 are a couple specific examples to help make things a little clearer:

Let’s say the Nets want to sign-and-trade Cameron Johnson this offseason. He’s a Bird free agent, his new salary will be well above the minimum, and Brooklyn projects to be an over-the-cap team. Having made $5,887,899 in 2018/19, Johnson figures to receive a raise significantly higher than 20% — his next deal could easily start at or above $20MM. So he meets the BYC criteria.

In a scenario where he signs a deal with a $22MM starting salary as part of a sign-and-trade, Johnson’s salary for matching purposes from the Nets’ perspective would be $11MM, which is 50% of his new salary (that amount is greater than his previous salary). From his new team’s perspective, Johnson’s incoming figure would be his actual salary, $22MM.

James Harden is another top free agent who would meet the BYC criteria if he’s signed-and-traded by the Sixers this offseason. If he gets a maximum salary contract – projected to be worth $46.9MM for a player with his NBA experience – Harden’s outgoing salary for matching purposes would be $33MM, the amount he made in 2022/23 — that figure would be higher than 50% of his new salary.

Often, 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 incentive to negotiate a sign-and-trade. That means salary-matching is required, which can be complicated by base year compensation rules.

In the scenario outlined above, the Nets wouldn’t be able to take back more than $16MM in salary in exchange for Johnson due to the league’s matching rules. That number would dip to $13.85MM if Brooklyn’s team salary is above the tax apron.

However, in order to take on $22MM in incoming salary, Brooklyn’s hypothetical trade partner – assuming they’re over the cap – would have to send out at least $17MM in order to account for those salary-matching rules themselves.

The gap between the salary-matching figures from the two teams’ perspectives complicates sign-and-trade talks, requiring both clubs to include additional pieces to make the deal work. A third team could even be necessary to make the numbers line up.

One recent example of two teams navigating base year compensation rules to complete a sign-and-trade occurred last September, when the Cavaliers sent Collin Sexton to the Jazz as part of the Donovan Mitchell blockbuster. Sexton’s first-year salary was $16.5MM, which was the amount Utah had to account for when matching salaries. But from Cleveland’s perspective, Sexton’s outgoing salary was just $8.25MM, half of that amount, since he met the BYC criteria.

In packaging Sexton with Lauri Markkanen and Ochai Agbaji, the Cavs’ outgoing salary for matching purposes was $28.6MM, which was enough to accommodate Mitchell’s $30.9MM salary. From Utah’s perspective, the three incoming players were worth $36.9MM in incoming salary when taking into account Sexton’s full cap hit. But the Jazz were permitted to take back up to approximately $38.7MM (125% of Mitchell’s salary, plus $100K), so the deal worked for both sides.

The base year compensation concept doesn’t surface all that often, due to the specific criteria that must be met. However, it looms large over sign-and-trade attempts involving free agents who receive significant raises, 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.

Previous versions of this post were published in 2019 and 2022.

The Mavericks have a little less than $104MM in guaranteed money committed to player salaries for 2023/24. However, even though next season’s salary cap is expected to come in at $134MM, Dallas won’t begin the 2023 offseason with $30MM+ in cap room to spend.

In fact, the Mavericks technically won’t open the new league year with any cap space at all. Each of Dallas’ own free agents will be assigned a free agent amount – or “cap hold” – until the player signs a new contract or the Mavericks renounce his rights.

The general purpose of a cap hold is to prevent teams from using room under the cap to sign free agents before using Bird rights to re-sign their own free agents. If a team wants to take advantage of its cap space, it can renounce the rights to its own free agents, eliminating those cap holds. However, doing so means the team will no longer hold any form of Bird rights for those players — if the team wants to re-sign those free agents, it would have to use its cap room or another kind of cap exception.

The following criteria are used for determining the amount of a free agent’s cap hold:

• First-round pick coming off rookie contract: 300% of the player’s previous salary if prior salary was below league average; 250% of previous salary if prior salary was above league average.
• Bird player: 190% of previous salary (if below league average) or 150% (if above average).
• Early Bird player: 130% of previous salary.
• Non-Bird player: 120% of previous salary.
• Minimum-salary player: Two-year veteran’s minimum salary, unless the free agent only has one year of experience, in which case it’s the one-year veteran’s minimum.
• Two-way player: One-year veteran’s minimum salary.

A cap hold for a restricted free agent can vary based on his contract status. A restricted free agent’s cap hold is either his free agent amount as determined by the criteria mentioned above or the amount of his qualifying offer, whichever is greater.

No cap hold can exceed the maximum salary for which a player can sign. For example, the cap hold for a Bird player with a salary above the league average is generally 150% of his previous salary, as noted above. But for someone like Mavericks star Kyrie Irving, whose cap charge was $39,204,557 this season, 150% of his previous salary would be nearly $59MM, well beyond his projected maximum salary.

Instead, Irving’s cap hold will be equivalent to the maximum salary for a player with 10+ years of NBA experience. If we assume a cap of $134MM, that figure works out to $46.9MM.

One unusual case involves players on rookie contracts whose third- or fourth-year options are declined. The amount of their declined option becomes their cap hold, and if the player’s team wants to re-sign him, his starting salary can’t exceed that amount.

For instance, the Jazz declined Udoka Azubuike‘s 2023/24 fourth-year option last fall. As a result, Utah won’t be able to offer Azubuike a starting salary this offseason worth more than $3,923,484, the amount of that option. That figure will also be his cap hold.

That rule is in place so a team can’t circumvent the rookie scale and decline its option in an effort to give the player a higher salary. It applies even if the player is traded after his option is declined, but only to the club the player is part of at season’s end. Any team besides the Jazz could offer Azubuike a starting salary greater than $3,923,484 this offseason.

If a team holds the rights to fewer than 12 players, cap holds worth the rookie minimum salary are assigned to fill out the roster. So, even if a front office chooses to renounce its rights to all of its free agents and doesn’t have any players under contract, the team wouldn’t be able to fully clear its cap. An incomplete roster charge in 2023/24 projects to be worth $1,102,929, meaning a team without any guaranteed salary or any other cap holds would have closer to $121MM in cap room than $134MM due to its 12 rookie minimum holds.

A player who has been selected in the draft but has not yet officially signed his rookie contract only has a cap hold if he was a first-round selection. A cap hold for a first-round pick is equivalent to 120% of his rookie scale amount, based on his draft position. An unsigned second-round pick doesn’t have a cap hold.

Cap holds aren’t removed from a team’s books until the player signs a new contract or has his rights renounced by the club. For example, the Warriors are still carrying cap holds on their books for retired players like David West and Matt Barnes, who never signed new contracts since playing for Golden State.

Keeping those cap holds allows teams some degree of cushion to help them remain above the cap and take advantage of the mid-level exception and trade exceptions, among other advantages afforded capped-out teams. If and when the Warriors want to maximize their cap room, they’ll renounce West and Barnes, but they’ve remained over the cap – and haven’t needed to remove those holds – since those players became free agents in 2017.

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.