The CBA Glossary

Exceptions, simply, are instruments which allow for surpassing the salary cap threshold, in certain prescribed fashions.

As described in the "what the salary cap is" basic CBA outline, the NBA's salary cap is "soft". This means it can be gotten around. The art of doing so - maximising talent acquisition while according with the rules designed to cap it - is the craft behind what makes for good roster management. (And which is also probably what brought you here.)

There are quite a few exceptions, and each of them has plenty of caveats and parameters to go through. So this is quite a long page.

Mid-Level Exception

The Mid-Level Exception is, arguably, the best-known NBA salary cap exception. Certainly, as far as free agency is concerned, it is often the most important.

The Mid-Level Exception is an exception granted every season to teams that are over the salary cap, which allows them to spend this amount on players. This is done so that teams over the cap are not completely stifled when it comes to improving their roster. The amount of this exception is equal to the average player salary. They calculate how much that is in that two week moratorium period in early July. That is what the period is mainly for - to do all the sums and stuff. In 2005, it was a round $5,000,000.

You get one of these every season that you are over the cap. If you are under the cap but the value of all your available roster exceptions puts you over the cap, you are regarded as over the cap and get an MLE. For example, if your teams salary figure is $47 million, the salary cap is $50 million and the mid level exception is $5 million, you get the $5 million MLE rather than $3 million of cap room. It can be split amongst multiple players, and players can be signed for a maximum of 5 years with it.

Deals signed via the Mid-Level Exception have a maximum non-compounded annual salary increase of up to 108% of the amount of the first season of the contract, and are for up to a maximum of four years in length.

The MLE is a free agency exception only, and cannot be used to bring in salary via trade. It can however be used for claiming players off of waivers.

Like most exceptions, any unused amount of the MLE has a cap hold.

Bird rights

Bird rights are exception rights given to a team which facilitates them in re-signing their own players. They are called that because the first person this exception was used on was Larry Bird, a former professional garbage collector from rural Indiana who gave basketball a go as a brief second career.

The basic principle is that Bird rights allow a team to go over the cap to re-sign its own players, without having to use its other cap exceptions (such as the Mid-Level Exception). This in turn prevents teams from losing players to free agency if they surpass their previous contract, and merit an unexpected pay rise.

There are two levels of Bird rights: full Bird rights (where the player involved has gone three years without changing teams as a FA) and early Bird rights (when the player has gone only two years). The difference between the two lies in how much money the team is able to spend on re-signing the player.

You are given 'full' Bird rights on a player who has played three years without changing teams as a free agent, or by being waived. This is key as it means that, if a player changes teams by being in a trade, the new team inherits the player's Bird rights. The exception to this is players who are playing on one-year contracts (two-year deals with a second option year suffice as such), and who will have either early or full Bird rights upon its completion, who then get traded. The team acquiring the player then has no Bird rights on them.

With full Bird rights, the team can re-sign its own player for a maximum of six seasons for up to that player's maximum allowable salary.

With early Bird rights, the team can re-sign its own player for a maximum of five seasons (with a minimum of two) for either 175% of their previous year's salary, or for the average NBA player's salary, whichever is greater (the average salary, as mentioned above, is the same value as the MLE. Note: when re-signing early Bird free agents in this manner, teams do not need to use their MLE to re-sign the player. This can be done in addition to spending that).

Those who have only lasted one season without changing teams as a free agent are said to have non-Bird rights. Functionally a form of Bird rights, tea

(Note that "Bird rights" and all its derivative terms are not actual CBA terminology, but much more passable colloquialisms that illustrate the point better. "Qualifying Veteran Free Agent" is the CBA's actual term for players who would meet the criteria for what is commonly called full Bird rights, and accordingly, Early Bird rights players are "Early Qualifying Veteran Free Agents", and non-Bird rights guys are "Non-Qualifying Veteran Free Agents". Such players would then be signed under the "Qualifying Veteran Free Agent Exception", rather than the Bird rights exception, as the latter is not CBA language. The colloquialisms suffice here, however.)Article I (Definitions) Section 1 (Definitions)

(yy) “Qualifying Veteran Free Agent” means a Veteran Free Agent who, prior to becoming a Veteran Free Agent, played under one (1) or more Player Contracts covering some or all of each of the three (3) preceding Seasons, and who either played exclusively with his Prior Team during such three (3) Seasons, or, if he played for more than one (1) Team during such period, changed Teams only (i) by means of trade, (ii) by means of assignment via the NBA’s waiver procedures during the first of the three (3) Seasons, or (iii) by signing with his Prior Team during the first of the three (3) Seasons.

(t) “Early Qualifying Veteran Free Agent” means a Veteran Free Agent who, prior to becoming a Veteran Free Agent, played under one (1) or more Player Contracts covering some or all of each of the two (2) preceding Seasons, and who either played exclusively with his Prior Team during such two (2) Seasons, or, if he played for more than one (1) Team during such period, changed Teams only (i) by means of trade, (ii) by means of assignment via the NBA’s waiver procedures, or (iii) by signing with his Prior Team during the first of the two (2) Seasons.

(rr) “Non-Qualifying Veteran Free Agent” means a Veteran Free Agent who is not a Qualifying Veteran Free Agent or an Early Qualifying Veteran Free Agent.

[STRESS THE WAIVERS THING POST NOVAK]

Traded Player Exception

Traded Player Exceptions are, essentially, time-delayed trades. The CBA calls them "non-simultaneous trades" for a reason.

It is well known that when NBA teams are over the salary cap - as they almost always all are, especially mid-season - teams can only make trades when the salaries of the players involved are closely matched. What Traded Player Exceptions (TPEs) do, however, is functionally add a 12-month timeframe to that.

In its simplest form, if a team over the salary cap trades away a player to a team who can incorporate that salary without sending any back - be it via cap room, or their own TPE - that first team get a Traded Player Exception created for the amount of that player's salary. They can then use that TPE for the next calendar year (not season, but calendar year; they can, and do, transcend season crossovers). That TPE allows them to take back additional salary via trade, as if they were under the cap, when they are not. Functionally, then, a TPE - being an exception - acts as a form of cap space, albeit one that can only be used via trade.

Trade math in the NBA is extremely complicated, even when it is simple. So perhaps the function and creation of TPEs is best explained by way of an extremely hypothetical example.

If the Colorado Hagfish traded Han Solo and his $806 million contract to the Bobson Dugnutts (who for convenience's sake have exactly $806 million in cap space in this scenario) for a future second-round pick, everyone gets what they want. The Dugnutts get Solo, the Hagfish get the pick, and the overall trade math works.

However, if the Hagfish were still over the cap at the completion of the trade, they would in the process have created an $806 million Traded Player Exception, which they could use for the next 12 months. This exception - as the name suggests - would allow them to take back $806 million extra in salary in a future deal, despite being over the salary cap.

If, say, eleven months later, they were to make a different trade, in which they acquired The Honky Tonk Man and his $795 million contract for the same second-round pick, they can incorporate Honky Tonk's salary via the TPE, despite being over the cap. The TPE has essentially meant that Solo was traded for the Tonk, albeit with an eleven-month time delay. This is exactly what TPEs are for. And in that scenario, whichever team that traded Tonk (whose scouting report reads "cool; cocky; bad") would get a $795 million TPE, if they too finished over the cap upon the deal's completion. This is how the trading ball stays in the air for so long.

(NB: Strictly speaking, in the CBA, the term "Traded Player Exception" refers to the ability for teams over the salary cap to make trades of any form, rather than the colloquial usage of TPE to mean, as explained above, the wheel-greaser for non-simultaneous trades. This discrepancy is hereby noted, but otherwise disregarded, as it adds more confusion than it solves. The colloquialism of TPE is here to stay and addressed accordingly.)

To break up this wall of text, here is a chimpanzee on a pushbike.

Disabled Player Exception

The Disabled Player Exception is a salary cap exception, awarded to provide extra spending power in the event of significant injury. If it is determined by a league-designated physician that a player is not going to return to the court this season, a discretionary DPE can be awarded to that player's team, in order to be able to acquire a replacement.

The Disabled Player Exception is not a roster exception; no extra roster spot is gained. A hardship exemption is required for that. No extra spot on the roster is created, nor is the team's roster size limit changed in any way. But the DPE is a financial instrument that faciliates a replacement acquisition if the team creates any roster spaces by its own volition.

Uniquely, teams have to apply for DPEs - they are not simply awarded. However, if they are in fact awarded, they can be for significant amounts. The amount of a Disabled Player Exception is for whichever is the lesser amount of half of the injured player's salary, or the non-taxpayer Mid-Level Exception that year. In both cases, $100,000 of wiggle room is also granted.

Teams can do this through either signing or trading, a bespoke trait of the DPE. That replacement, however, must be signed only for the remainder of the season, or on the final year of a pre-existing contract if acquired by trade.

This "final year" stipulation is important, and was not always the case. In 2011, when Yao Ming was ruled out for the season, the Houston Rockets were given a DPE equivalent to the full MLE, and used it to sign Trevor Ariza to a five-year deal, a term much longer than Yao was absent for. In the light of other team's protests that this was not in keeping with the spirit and intended purpose of the provision, the rule was changed in the next Collective Bargaining Agreement, and a DPE can now only be used to acquire players in the final season of their contract (a caveat which further disqualifies any deals including future option seasons). Such acquisitions can nevertheless be made through signings, by trade, or via waiver claims, expanding the options of what is possible, at least in theory.

Often, even when awarded, DPEs go unused. It is often hard to justify using the DPE on a mid-season free agent signing, as the above-the-minimum mid-season free agent signing is very rare to begin with, and any player worthy of commanding that kind of salary can surely also command future years on their deal, which the DPE does not allow. It is even less likely to come via a waiver claim. But remember as per the above, DPEs can be used in a trade.

Bear in mind, however, that any player acquired with a DPE - and it can only be one player, as it is not permitted to split the amount as can be done with other exceptions - is not free. Any player acquired with a DPE is still paid their salary by the team, still counts against the salary cap, and still counts towards luxury tax calculations. And nor is the salary cap number of the injured player reduced in any way.

The determination as to whether the injured party will indeed be out for the remainder of the season is done by an NBA-appointed physician, or, if necessary, a Fitness To Play panel. However, it can of course only ever be a matter of opinion, and it is possible for the player thought to be out for the season to return earlier than expected. If this happens, the good news is that any player signed or acquired via the awarded Disabled Player Exception is unaffected. In this circumstance, were that to happen, consider it a stroke of good luck to balance out the bad luck from the initial injury.

The fact that teams have to operate in the belief that such strokes of bad luck will not befall them, and thus assume the bulk of their salary cap position and exception-spending before the season begins, often means that DPEs awarded in-season are not nearly as fruitful as they may appear on first glance due to the proximities of the relative financial thresholds. But if nothing else, they are another tool.

(Also note that the CBA defines a "Replacement Player" as being someone acquired via a DPE, or via a trade. Not sure why they cannot discern between the two but there we are - in both instances, the acquired player is considered a Replacement.)Article I (Definitions) Section 1 (Definitions)

(ccc) “Replacement Player” means, where appropriate, either a player who is acquired by a Team pursuant to the Traded Player Exception, or a player who is signed or acquired by a Team pursuant to the Disabled Player Exception,

Room Exception

Mark Cuban, former majority owner of the Dallas Mavericks, takes credit for the invention of the Room Exception. It is a

Bi-Annual Exception

The oft-forgotten little brother of the MLE is the Bi-Annual Exception, or BAE. As the name suggests, this is, in theory, an exception that

Minimum Salary Exception

The minimum salary is the lowest amount an NBA player can sign for; the Minimum Salary Exception is often the vehicle by which it is signed. But not always.

The Minimum Salary Exception allows teams over the salary cap to sign players to the minimum salary for a maximum of two seasons, including partial first seasons. It is the most common way players

Additionally, the Minimum Salary Exception also allows teams over the salary cap to trade for players signed to the minimum salary - so long as they are not signed to a minumum salary contract that is longer than two years. This allows for bypassing, and creates many TPEs, albeit often of functionally-useless trivial amounts. Trade math is very complicated in the NBA, but being able to use the Minimum Salary Exception in trades can be a wheel-greaser - see the Trade Rules and How trades are constructed pages for more.

Unlike most other exceptions, the Minimum Salary Exception is inexhaustible. That is to say, unlimited - you can use it as often as you want/can.

More details related to the minimum salary can be found under the Minimum player salary section, including the important guidelines on how much money is actually paid in a minimum salary contract. ("The minimum" is confusingly used in salary cap parlance to refer to both the exception and the amount. It is however both possible, and not all that rare, to sign players for the minimum salary not using the Minimum Salary Exception, due to its maximum length of only two years. This is the main reason why the Second Round Exception was brought into being.)

Rookie Scale Exception

The Rookie Scale Exception is what allows teams to sign their first-round draft picks, no matter their proximity to the salary cap. It is explored in depth here.

The Rookie Scale Exception can be given only to those drafted in the first round of an NBA Draft, and only by the team who has their draft rights. It is not possible to give it to a second-round pick, undrafted player or veteran, no matter how generous you are feeling.

Second Round Exception

Because of the aforementioned limitations of the Minimum Salary Exception and the Rookie Scale Exception, teams who wanted or needed to sign their second-round draft picks to contracts that paid more than the two-year minimum salary contract had to do so with either cap space, or a chunk of their Mid-Level Exception. This was changed in the 2023 CBA, with the introduction of the new Second Round Pick exception.

Reinstatement Exception

If a player was banned from the NBA in relation to a violation of the league's Anti-Drug policy, and later reinstated, the team he was playing for at the time of the suspension may re-sign him for whichever is greater; an amount up to his previous salary before the suspension, or the estimated average salary for the season in which he is reinstated. This is the Reinstatement Exception.

However, it does not appear to have ever been required in practice. The most notable example of a player returning from such a suspension to the team he was with when he was cut is Chris Andersen, returning to the New Orleans then-Hornets in March 2008 two years and five weeks after his suspension. But when he re-signed, he took only a pro-rated minimum salary contract, thus not needing the reinstatement exception. It may have happened in the 1989 case of Houston Rockets and Lewis Lloyd, but specifics of his contract are unavailable nearly four decades on.

Declining values

It should be noted that the exception values ascertained above are listed as what they will be worth at the start of the season. Some of them decrease in value as the season goes along.

Beginning on 10th January,

This is rarely a factor, as by the time the depreciation begins, teams have almost always used their MLE, or decided not to. It did however matter in February 2012, when players who had signed in China for the 2011-12 season due to the NBA's lockout were looking to come back. Specifically, Wilson Chandler

When an exception prorates in value, so does its cap hold.

WHAT THE CBA ACTUALLY SAYS

1. What the salary cap is From why we're even here, to the difference between a hard cap and soft cap.
2. Reinstatement Exception - Article VII (Basketball Related Income, Salary Cap, Minimum Team Salary, Tax Level, Apron Levels, And Designated Share Arrangement), Section 6 (Exceptions to the Salary Cap): (l) Reinstatement. If a player has been dismissed and disqualified from further association with the NBA and subsequently reinstated pursuant to Article XXXIII (Anti-Drug Agreement), the Team for which the player last played may enter into a Player Contract with such player in accordance with the applicable rules set forth in Article XXXIII, Section 13(f) or (g), even if the Team has a Team Salary at or above the Salary Cap or such Player Contract causes the Team to have a Team Salary above the Salary Cap. If, in accordance with the preceding sentence, a Team and a player enter into a Player Contract and such Contract covers more than one (1) Season, annual increases and decreases in Salary and Unlikely Bonuses shall be governed by Section 5(a)(1) above.

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