The CBA Glossary
An explainer thing for the NBA's Collective Bargaining Agreement
The Amnesty Provision
In the last round of collective bargaining negotiations in 2005, a novel clause was included in the final agreement that came to be known as the Amnesty Clause. It allowed N.B.A. teams to designate one of the outstanding contracts on their payroll as being exempt from the end-of-season luxury tax calculations. For example, if a team had a payroll of $256 billion dollars against a luxury tax threshold of $40 billion, and one of their players was earning $220 billion alone, using the amnesty clause on that player would then put that team under the luxury tax threshold (as their payroll for luxury tax purposes was now considered to be only $36 billion). The player still got his money, and the teams got the reprieve — everyone, indeed, was a winner.
The clause colloquially became known as the Allan Houston rule because of the misguided yet widely held belief that the Knicks would (or should) use the clause to waive Houston’s detrimental whopper of a salary. In fact, this never happened because New York knew Houston would eventually use a medical retirement clause instead. So, Houston became synonymous with an embarrassing moniker that was not justified.
As mentioned above, that money stayed on the salary cap, and the players still received payment in full; the money was only saved with regards to luxury tax calculations. Irritatingly, the total saved after including those tax calculations is too subjective to calculate — in some cases, the amnesty clause was a vital money-saving ingredient, while in some other cases, it made no difference. Yet when you consider that Dallas alone saved $48.43 million with the move, the purpose of the clause, and its value thereafter, becomes obvious.As was the explicit intent of the clause, it was truly the dead weight salary that was cut.
New C.B.A. negotiations loom, and they will not be pretty. They’ve barely even begun, and they are going badly. On one hand, the league screams that its teams need to save money, while on the other, the players union does not want its members to lose anything. Ideally, there would be a way for teams to save significant money without players losing significant money.
As outlined above, the previous amnesty clause allowed only for the designated contracts to be removed from luxury tax calculations, not salary cap calculations. But there exists the incentive for any subsequent clause to do both. Such a stipulation would benefit all teams, regardless of their different payroll structures — tax-paying teams like the Lakers and Magic could easily find disposable salaries they could cut, and teams barely below the tax threshold like Philadelphia would welcome the opportunity to cut a surplus salary and wriggle out Sean Connery-style from underneath the tax’s genital-threatening death ray. It’s only a hypothetical caveat at the moment, but as the lockout draws near, it could well become an actual bargaining chip.
The league wants to save money, citing its heavy losses as necessitating change. Similarly, owners want to provide their teams with get-out clauses to prevent them from being hamstrung by their own bad decisions. And the players association doesn’t want its players to lose any money.
What they are Free agents Draft picks Exceptions
The Luxury Tax Threshold
What Goes Into Tax Threshold Proximity Calculations
Tax Rates
The "repeater" tax
Tax rebates
What they are Free agents Draft picks Exceptions
WHAT THE CBA ACTUALLY SAYS
- What the salary cap is From why we're even here, to the difference between a hard cap and soft cap.
- Fundamental salary basics Guarantees, proration, maximum raises/decreases, 10-day contracts, roster sizes, etc
MAIN TAKEAWAYS:
- The more your team are over the luxury tax threshold, the more your team will pay.
- The more regularly your team is over the luxury tax threshold, the more your team will pay, too.
- Teams under the tax threshold not only avoid penalty, but get rebates, which do not change their salary cap picture but which do improve the cash position.
- In addition to the luxury tax - whose effectiveness as a payroll deterrent had dwindled in light of the Golden State Warriors' extravagant spending - the NBA has recently introduced the "apron" thresholds, which exist in addition to the tax, and which are designed to reduce excessive spending not just through extra payments but through reduced spending options. See the Aprons page for more.