Hoops Rumors Originals News & Rumors

The mid-level exception is the most common way for NBA teams that are over the salary cap to sign free agents from other clubs for more than the minimum salary. It’s not nearly as valuable as it used to be as the salary cap rises drastically, since the mid-level amounts were set when the league and the players negotiated the last collective bargaining agreement in 2011. The cap fluctuates based on revenue, but the mid-level doesn’t, moving up only in small, predetermined increments each year, so it’s becoming progressively more of “low-level” exception, as I examined in-depth.

Still, it has utility for teams as they build out their rotations. Different forms of the mid-level apply based on a team’s proximity to the cap. The most lucrative kind of mid-level exception is available to teams that are over the cap but less than $4MM above the tax threshold. Still, clubs deep into the tax, and even those under the cap, have access to lesser versions of the mid-level. Here’s a glance at how all three forms of the exception are structured:

For over-the-cap teams:

• Commonly called either the full mid-level exception, the nontaxpayer’s mid-level exception or simply the mid-level exception
• Contract can cover up to four seasons
• First-year salary is worth $5.628MM for 2016/17
• Once used, the team cannot surpass the “tax apron” ($4MM above tax line) for the remainder of the season.

For teams above the cap and the tax apron:

• Commonly called the taxpayer’s mid-level exception
• Contract can cover up to three seasons
• First-year salary is worth $3.477MM for 2016/17

For teams with cap room:

• Commonly called the room exception
• Contract can cover no more than two seasons
• First-year salary is worth $2.898MM for 2015/16

Each form of the mid-level allows for annual raises of up to 4.5% of the value of the first season’s salary. So, here are the maximum amounts a free agent could receive this summer under each of the three forms of the mid-level exception:

Full Mid-Level Exception

• 2016/17: $5,628,000
• 2017/18: $5,881,260
• 2018/19: $6,134,520
• 2019/20: $6,387,780
• Total: $24,031,560

Taxpayer’s Mid-Level Exception:

• 2016/17: $3,477,000
• 2017/18: $3,633,465
• 2018/19: $3,789,930
• Total: $10,900,395

Room Exception

• 2016/17: $2,898,000
• 2017/18: $3,028,410
• Total: $5,926,410

Teams can split the mid-level among multiple players, and that’s a common course of action. Few teams used the mid-level to give out contracts for as much as they could and for as many years as they could to any single player in 2015/16. The Pelicans used parts of their mid-level to sign Dante Cunningham, Alonzo Gee and Bryce Dejean-Jones in the summer of 2015, leaving a chunk still unused as training camp began. They waived Dejean-Jones in the preseason but signed him again in February, using yet another portion of the mid-level to do so.

Players drafted near the top of the second round often sign contracts for part of the mid-level because it allows teams to give them contracts worth more than the minimum salary, if only slightly so, that cover more than the two years the minimum salary exception provides. The Heat gave 2015 No. 40 pick Josh Richardson only the minimum salary, but they used the taxpayer’s mid-level to sign him for three years, so they’ll have full Bird rights instead of only Early Bird rights with him when his contract ends.

Some front offices prefer to leave all or part of their mid-level exception unused so they can lock up intriguing developmental players to long-term contracts toward the end of the season. Sean Kilpatrick impressed the Nets on a pair of 10-day contracts, prompting Brooklyn to use a leftover part of its taxpayer’s mid-level exception to re-sign him to a three-year contract in March. Had the Nets already used their entire mid-level, they wouldn’t have been able to sign him to a contract longer than two years.

The Kilpatrick signing also illustrates another aspect of the mid-level exception. The Nets weren’t a taxpaying team when they signed Kilpatrick, but because they’d already used parts of the taxpayer’s mid-level on Shane Larkin and Wayne Ellington, they couldn’t upgrade to the more valuable nontaxpayer’s mid-level. However, Brooklyn could have used the nontaxpayer’s mid-level on Kilpatrick if it hadn’t signed anyone using the taxpayer’s mid-level while it was over the tax apron.

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 appeared in 2012, 2013, 2014 and 2015.

Players and teams have to meet certain criteria to earn Bird rights and Early Bird rights, but Non-Bird rights are something of a given. They apply to players who’ve spent a single season or less with their teams, as long as they end the season on an NBA roster. Teams can also claim Non-Bird rights on Early Bird free agents if they renounce them. The primary utility in doing so would be so that the team could sign the free agent to a one-year contract, a move that’s not permitted via Early Bird rights.

Teams are allowed to sign their own free agents using the Non-Bird exception for a salary starting at 120% of the player’s previous salary, 120% of the minimum salary, or the amount of a qualifying offer (if the player is a restricted free agent), whichever is greatest. Contracts can be for up to four years, with 4.5% annual raises. The cap hold for a Non-Bird player is 120% of his previous salary, unless the previous salary was the minimum. In that case, the cap hold is equivalent to the two-year veteran’s minimum salary, which is $980,431 for the 2016/17 season.

The salary limitations that apply to Non-Bird rights are more severe than those pertaining to Bird rights or Early Bird rights, so in many cases, the Non-Bird exception isn’t enough to keep a well-regarded free agent. For instance, the Raptors will have Non-Bird rights with Bismack Biyombo if he turns down a player option worth slightly less than $2.941MM for next season. Biyombo showed his value as an efficient rebounder and one of the league’s toughest interior defenders this season. The Raptors can only use Non-Bird rights to sign him for 120% of his salary from this past season without dipping into another exception or opening cap space, and it’s unlikely they’ll have much room with more than $69.9MM in guaranteed salary on the books and DeMar DeRozan poised to enter free agency, too. Biyombo made just $2.814MM this year, and Non-Bird rights would provide for just $3,376,800 next season, much less than what the best backup centers signed for a year ago.

Non-Bird rights might not be of aid to the Raptors and Biyombo, but there are cases in which the exception proves helpful. Alan Anderson is coming off an injury-marred season for the Wizards, who are hoping to preserve as much cap space as possible. Anderson’s cap hold will be only 120% of the $4MM salary he received on the one-year contract he signed with Washington in the summer of 2015. Thus, the Wizards wouldn’t sacrifice much flexibility if, instead of renouncing him, they retained his Non-Bird rights, thus keeping his $4.8MM cap hold on the books so they can use Non-Bird rights to re-sign him once they’ve used their cap space on other free agents.

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 appeared in 2012, 2013, 2014 and 2015.