Post#25 » by boogydown » Thu Feb 18, 2010 10:09 pm
Teams are not allowed to be over the salary cap, unless they are using one of these exceptions:
LARRY BIRD EXCEPTION -- This is the best known one. Players who qualify for this exception are called "Qualifying Veteran Free Agents" in the CBA, and this exception is a component of the Veteran Free Agent exception. This exception allows teams to exceed the salary cap to re-sign their own free agents, up to the player's maximum salary. The player essentially must play for three seasons without being waived or changing teams as a free agent. This means a player can obtain "Bird rights" by playing under three one-year contracts, a single contract of at least three years, or any combination. It also means that when a player is traded, his Bird rights are traded with him, and his new team can use the Bird exception to re-sign him. These contracts can be up to six years in length. A player can receive raises up to 10.5% of the salary in the first season of the contract. This exception is known as the Larry Bird exception because the Celtics were the first team allowed to exceed the cap to keep their own free agent, and the player happened to be Bird.
Note: There are some subtleties to the three-year tenure requirement, which are discussed in question number 25.
There is one more limit to the maximum salary that can be given using the Larry Bird exception. If the player was a first round draft pick and just completed the third year of his rookie scale contract, but his team did not exercise its option to extend the contract for the fourth season (see question number 41), then this exception cannot be used to give him a salary greater than he would have received had the team exercised their fourth year option. In other words, teams can't decline the option in order to get around the salary scale and give the player more money.
Starting January 10 of each season, this exception begins to reduce in value. See question number 20 for details.
EARLY BIRD EXCEPTION -- This is a weaker form of the Larry Bird exception, and is also a component of the Veteran Free Agent exception. Players who qualify for this exception are called "Early Qualifying Veteran Free Agents" in the CBA. A player qualifies for this exception essentially after playing two seasons without being waived or changing teams as a free agent (see question number 25 for details). Using this exception, a team may re-sign its own free agent for 175% of his salary the previous season or the average player salary, whichever is greater (see question number 24 for the definition of "average salary." Also note that for 2005-06 they used a defined figure of $5 million). Early Bird contracts must be for at least two seasons (which limits this exception's usefulness -- it's often better to take a lower salary for one more season and then have the full Bird exception available the next season) and no longer than five seasons. A player can receive raises up to 10.5% of the salary in the first season of the contract using this exception.
If the player was a first round draft pick and just completed the second year of his rookie scale contract, but his team did not exercise their option to extend the contract for the third season (see question number 41), then this exception cannot be used to give him a salary greater than he would have received had the team exercised their third year option. In other words, teams can't decline the option in order to get around the salary scale and give the player more money.
If the player is a restricted free agent with two years of service and receives an offer sheet from a new team, the player's prior team may use the Early Bird exception to match the offer sheet (see question number 36 for restricted free agency).
Starting January 10 of each season, this exception begins to reduce in value. See question number 20 for details.
NON-BIRD EXCEPTION -- This is also a component of the Veteran Free Agent exception. Players who qualify for this exception are called "Non-Qualifying Veteran Free Agents" in the CBA. They are veteran free agents who are neither Qualifying Veteran Free Agents nor Early Qualifying Veteran Free Agents, either because they haven't met the criteria, or because they are Early Bird free agents following the second season of their rookie scale contract and whose team renounced the Early-Bird exception. This exception allows a team to re-sign its own free agent to a salary starting at 120% of the player's salary in the previous season, 120% of the minimum salary, or the amount needed to tender a qualifying offer (if the player is a restricted free agent -- see question number 36), whichever is greater. Raises are limited to 8% of the salary in the first year of the contract, and contracts are limited to five seasons when this exception is used.
Starting January 10 of each season, this exception begins to reduce in value. See question number 20 for details.
MID-LEVEL SALARY EXCEPTION -- This exception allows a team to sign any free agent to a contract equal to the average salary, even if they are over the cap (see question number 24 for the definition of "average salary." Also note that for 2005-06 they used a defined figure of $5 million). This exception may be split and given to multiple players. It may be used for contracts of up to five years in length, and raises are limited to 8% of the salary in the first year of the contract. Signing a player to a multi-year contract does not affect a team's ability to use this exception every year. For example, a team can sign a player to a five-year contract using this exception and still use the exception the following year to sign another player. Also see question number 20 for more information on the availability and use of this exception.
If the player is a restricted free agent with one or two years of service and receives an offer sheet from a new team, the player's prior team may use the Mid-Level exception to match the offer sheet (see question number 36 for restricted free agency).
Here are the actual values of this exception for each season. Note that since this exception is based on the average player salary, the actual value of this exception is not determined until the start of the free agent signing period.
2005-06 $5 million
2006-07 $5.215 million
2007-08 $5.356 million
2008-09 $5.585 million
2009-10 $5.854 million
BI-ANNUAL EXCEPTION -- This exception was previously named the "$1 Million exception" (perhaps "misnamed" is more appropriate, since it was only valued at $1 million in 1998-99). It may be used to sign any free agent to a contract starting at the following amounts:
2005-06 $1.67 million
2006-07 $1.75 million
2007-08 $1.83 million
2008-09 $1.91 million
2009-10 $1.99 million
2010-11 $2.08 million
2011-12 $2.18 million
This exception may not be used two years in a row (and if the $1 Million exception was used in 2004-05, the Bi-Annual exception may not be used in 2005-06). It may be split and given to more than one player, and can be used to sign players for up to two years, with raises limited to 8%. Also see question number 20 for more information on the availability and use of this exception.
ROOKIE EXCEPTION -- Teams may sign their first round draft picks to rookie "scale" contracts even if they will be over the cap as a result (see question number 41).
MINIMUM PLAYER SALARY EXCEPTION -- Teams can offer players minimum salary contracts even if they are over the cap. Contracts can be up to two years in length. For two year contracts, the second season salary is the minimum salary for that season. The contract may not contain a signing bonus. This exception also allows minimum salary players to be acquired via trade. There is no limit to the number of players that can be signed or acquired using this exception.
This exception begins to reduce in value after the first day of the season. For example, if there are 180 days in the season, then this exception reduces in value by 1/180 of its initial value each day. If a team signs a minimum salary player 90 days into the season, it can pay the player only half the minimum salary.
See question number 72 for more information on how minimum salary players are handled in trade.
TRADED PLAYER EXCEPTION -- This exception is used for trades, and cannot be used to sign free agents. It allows teams to acquire more salary in a trade than they send away. It also allows teams to take up to a year to complete some trades, banking a credit in the interim. This exception is discussed in detail in question numbers 70 and 71. Also see question number 20 for more information on the availability and use of this exception.
DISABLED PLAYER EXCEPTION -- This exception allows a team which is over the cap to acquire a replacement for a disabled player who will be out for the remainder of that season (if the player is disabled between July 1 and November 30) or the following season (if the player is disabled after November 30). This exception can also be granted in the event of a player's death. This exception can only be used to acquire one player. The maximum salary for the replacement player is 50% of the injured player's salary, or the average salary, whichever is less (see question number 24 for the definition of "average salary"). Approval from the league (based on a determination by an NBA-designated physician) is required for this exception to be used. This exception can be used to sign a free agent, or to create room to accept a salary in trade. When used for trade, the team may acquire a player whose salary (including any trade bonus) is up to 100% of this exception plus $100,000 (not 125%). Also see question number 20 for more information on the availability and use of this exception.
If a player is disabled between July 1 and November 30, the team must acquire the replacement player within 45 days. If the player is disabled between December 1 and June 30, then the team has until October 1 to sign a replacement. If the disabled player comes back sooner than expected, then he may be activated immediately, and the replacement player is not affected. However, if the disabled player comes back before the exception is used, then the exception is lost.
Teams sometimes have had difficulty getting the NBA to approve an injury exception. For example, Danny Manning tore an ACL toward the end of the 1997-98 season, yet the NBA did not approve the Suns for this exception. More recently, the Magic did not receive this exception in 2003 for Grant Hill. However, this exception was granted in the 1999 offseason to San Antonio, so they could replace Sean Elliott, who was disabled due to kidney problems. This exception was also granted to Charlotte soon after Bobby Phills was killed.
Don't confuse this exception with the salary cap relief teams can apply for a year after losing a player to a career-ending injury or death (see question number 54). This exception allows a team to acquire a replacement player. The salary cap relief removes a contract from the books.
REINSTATEMENT -- If a player was banned from the league for a drug-related offense and later reinstated, his prior team may re-sign him for up to his previous salary.
