NBA Finance Part III: Salary Exceptions

Part I: The Salary Cap
Part II: Player Contracts

Because the NBA has a soft salary cap, there are many exceptions to the salary cap rules I went over in part one, allowing teams to exceed the cap if certain conditions are met. These exceptions can be tricky and a little confusing at first, so I won’t go over all of them. But there are a few that we hear about every off season, so here are the important ones that may be helpful:

Larry Bird Exception: This exception is one of the most common. It says that a team may resign it’s own free agents to the player’s maximum salary, even if it puts them over the salary cap, if the player has “Bird Rights.” These rights are obtained by playing three consecutive years on a team without being waived or changing teams as a free agent. If the player is traded, those rights are traded with him and continue with the new team. This allows teams to re-sign their superstars, even if they wouldn’t normally have the cap room to do that. There is also an “Early Bird Exception”, which is two years instead of three, and the player can be resigned for up to 175% of his previous salary or the average player salary, whichever is greater.

Mid-Level Salary Exception: Using this exception, a team may sign any free agent for up to the average player salary. This exception may be used for only one player, or split up for multiple players, as long as the total does not exceed the average salary.

Rookie Exception: Teams may sign their draft picks according to the rookie scale salary even if it puts them over the cap limit.

Minimum Player Salary Exception: A team may sign a player for the minimum possible salary for up to two years, even if it puts them over the cap. There is no limit to how many players can be signed using this exception. This exception is how the Celtics signed Shaquille O’Neal this year.

Disabled Player Exception: If a player is injured and will be out for the rest of the season or the following season, the team may sign a new player for up to 50% of the injured player’s salary or the average salary, whichever is less. This exception must be approved by the NBA, based on findings of an NBA-designated physician.

There are a few more obscure exceptions, but these are the big ones that are used every off-season.

Don’t forget to check out the first two parts of this series:

Part I: The Salary Cap
Part II: Player Contracts
Part IV: The Collective Bargaining Agreement

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