NBA salary cap

The NBA had a salary cap in the mid-1940s, but it was abolished after only one season. The league continued to operate without such a cap until the 1984–85 season, when one was instituted in an attempt to level the playing field among all of the NBA's teams and ensure competitive balance for the League in the future. Before the cap was reinstated, teams could spend whatever amount of money they wanted on players, but in the first season under the new cap, they were each limited to $4.6 million in total payroll. Under the 2005 CBA, salaries were capped at 57 percent of basketball-related income (BRI) and lasted for six years until June 30, 2011. The next CBA, which took effect in 2011, set the cap at 51.2 percent of BRI in 2011–12, with a 49-to-51 band in subsequent years. To ensure the players get their share of the BRI, teams are required to spend 90 percent of the salary cap each year. The salary cap for the 2022–23 season is $123.655 million (minimum team salary, which is set at 90 percent of the Salary Cap, is $111.290 million). The league's newest CBA, which took effect with the 2023–24 season, requires teams to meet the 90% salary floor at the start of preseason training camp. In December 2016, the league and the players' union reached a tentative agreement on a new CBA, with both sides ratifying it by the end of that month. This agreement was set to run through the 2023–24 season, with either side able to opt out after the 2022–23 season. The league and union reached agreement on a new CBA that took effect in 2023–24. DateFormat=x.y ImageSize= width:350 height:auto barincrement:20 Period = from:0 till:160 TimeAxis = orientation:horizontal PlotArea = right:10 left:5 bottom:50 top:5 Colors = id:barcolor value:rgb(0.99,0.7,0.7) id:line value:black id:bg value:white PlotData= width:15 textcolor:black shift:(5,-5) anchor:from fontsize:s bar:84 from:0 till:3.600 color:barcolor text:"84–85 3.600 million" bar:85 from:0 till:4.233 color:barcolor text:"85–86 4.233 million" bar:86 from:0 till:4.945 color:barcolor text:"86–87 4.945 million" bar:87 from:0 till:6.164 color:barcolor text:"87–88 6.164 million" bar:88 from:0 till:7.232 color:barcolor text:"88–89 7.232 million" bar:89 from:0 till:9.802 color:barcolor text:"89–90 9.802 million" bar:90 from:0 till:11.871 color:barcolor text:"90–91 11.871 million" bar:91 from:0 till:12.500 color:barcolor text:"91–92 12.500 million" bar:92 from:0 till:14.000 color:barcolor text:"92–93 14.000 million" bar:93 from:0 till:15.175 color:barcolor text:"93–94 15.175 million" bar:94 from:0 till:15.964 color:barcolor text:"94–95 15.964 million" bar:95 from:0 till:23.000 color:barcolor text:"95–96 23.000 million" bar:96 from:0 till:24.363 color:barcolor text:"96–97 24.363 million" bar:97 from:0 till:26.900 color:barcolor text:"97–98 26.900 million" bar:98 from:0 till:30.000 color:barcolor text:"98–99 30.000 million" bar:99 from:0 till:34.000 color:barcolor text:"99–00 34.000 million" bar:00 from:0 till:35.500 color:barcolor text:"00–01 35.500 million" bar:01 from:0 till:42.500 color:barcolor text:"01–02 42.500 million" bar:02 from:0 till:40.271 color:barcolor text:"02–03 40.271 million" bar:03 from:0 till:43.840 color:barcolor text:"03–04 43.840 million" bar:04 from:0 till:43.870 color:barcolor text:"04–05 43.870 million" bar:05 from:0 till:49.500 color:barcolor text:"05–06 49.500 million" bar:06 from:0 till:53.135 color:barcolor text:"06–07 54.135 million" bar:07 from:0 till:55.630 color:barcolor text:"07–08 55.630 million" bar:08 from:0 till:58.680 color:barcolor text:"08–09 58.680 million" bar:09 from:0 till:57.700 color:barcolor text:"09–10 57.700 million" bar:10 from:0 till:58.044 color:barcolor text:"10–11 58.044 million" bar:11 from:0 till:58.044 color:barcolor text:"11–12 58.044 million" bar:12 from:0 till:58.044 color:barcolor text:"12–13 58.044 million" bar:13 from:0 till:58.679 color:barcolor text:"13–14 58.679 million" bar:14 from:0 till:63.065 color:barcolor text:"14–15 63.065 million" bar:15 from:0 till:70.000 color:barcolor text:"15–16 70.000 million" bar:16 from:0 till:94.143 color:barcolor text:"16–17 94.143 million" bar:17 from:0 till:99.093 color:barcolor text:"17–18 99.093 million" bar:18 from:0 till:101.869 color:barcolor text:"18–19 101.869 million" bar:19 from:0 till:109.140 color:barcolor text:"19–20 109.140 million" bar:20 from:0 till:109.140 color:barcolor text:"20–21 109.140 million" bar:21 from:0 till:112.414 color:barcolor text:"21–22 112.414 million" bar:22 from:0 till:123.655 color:barcolor text:"22–23 123.655 million" bar:23 from:0 till:136.021 color:barcolor text:"23–24 136.021 million" bar:24 from:0 till:140.588 color:barcolor text:"24–25 140.588 million" bar:25 from:0 till:154.647 color:green text:"25–26 154.647 million" ScaleMajor = gridcolor:line unit:year increment:10 start:0 TextData = fontsize:S textcolor:black pos:(115,30) # tabs:(100-left) text:"NBA Salary Cap in USD" NBA Salary Cap in 2025 USD (Converted using CPI data) DateFormat=x.y ImageSize= width:350 height:auto barincrement:20 Period = from:0 till:160 TimeAxis = orientation:horizontal PlotArea = right:10 left:5 bottom:50 top:5 Colors = id:barcolor value:rgb(0.99,0.7,0.7) id:line value:black id:bg value:white PlotData= width:15 textcolor:black shift:(5,-5) anchor:from fontsize:s bar:84 from:0 till:10.778 color:barcolor text:"84–85 10.778 million" bar:85 from:0 till:12.434 color:barcolor text:"85–86 12.434 million" bar:86 from:0 till:14.015 color:barcolor text:"86–87 14.015 million" bar:87 from:0 till:16.781 color:barcolor text:"87–88 16.781 million" bar:88 from:0 till:18.785 color:barcolor text:"88–89 18.785 million" bar:89 from:0 till:24.157 color:barcolor text:"89–90 24.157 million" bar:90 from:0 till:28.063 color:barcolor text:"90–91 28.063 million" bar:91 from:0 till:28.681 color:barcolor text:"91–92 28.681 million" bar:92 from:0 till:31.205 color:barcolor text:"92–93 31.205 million" bar:93 from:0 till:32.965 color:barcolor text:"93–94 32.965 million" bar:94 from:0 till:33.734 color:barcolor text:"94–95 33.734 million" bar:95 from:0 till:47.219 color:barcolor text:"95–96 47.219 million" bar:96 from:0 till:48.866 color:barcolor text:"96–97 48.866 million" bar:97 from:0 till:53.139 color:barcolor text:"97–98 53.139 million" bar:98 from:0 till:57.985 color:barcolor text:"98–99 57.985 million" bar:99 from:0 till:63.570 color:barcolor text:"99–00 63.570 million" bar:100 from:0 till:64.553 color:barcolor text:"00–01 64.553 million" bar:101 from:0 till:76.081 color:barcolor text:"01–02 76.081 million" bar:102 from:0 till:70.487 color:barcolor text:"02–03 70.487 million" bar:103 from:0 till:74.733 color:barcolor text:"03–04 74.733 million" bar:104 from:0 till:72.325 color:barcolor text:"04–05 72.325 million" bar:105 from:0 till:79.061 color:barcolor text:"05–06 79.061 million" bar:106 from:0 till:82.511 color:barcolor text:"06–07 82.511 million" bar:107 from:0 till:83.194 color:barcolor text:"07–08 83.194 million" bar:108 from:0 till:88.068 color:barcolor text:"08–09 88.068 million" bar:109 from:0 till:85.197 color:barcolor text:"09–10 85.197 million" bar:110 from:0 till:83.080 color:barcolor text:"10–11 83.080 million" bar:111 from:0 till:81.406 color:barcolor text:"11–12 81.406 million" bar:112 from:0 till:80.231 color:barcolor text:"12–13 80.231 million" bar:113 from:0 till:79.809 color:barcolor text:"13–14 79.809 million" bar:114 from:0 till:85.666 color:barcolor text:"14–15 85.666 million" bar:115 from:0 till:93.912 color:barcolor text:"15–16 93.912 million" bar:116 from:0 till:123.663 color:barcolor text:"16–17 123.663 million" bar:117 from:0 till:127.061 color:barcolor text:"17–18 127.061 million" bar:118 from:0 till:128.291 color:barcolor text:"18–19 128.291 million" bar:119 from:0 till:135.786 color:barcolor text:"19–20 135.786 million" bar:120 from:0 till:129.682 color:barcolor text:"20–21 129.682 million" bar:121 from:0 till:123.683 color:barcolor text:"21–22 123.683 million" bar:122 from:0 till:130.674 color:barcolor text:"22–23 130.674 million" bar:123 from:0 till:139.285 color:barcolor text:"23–24 139.285 million" bar:124 from:0 till:143.961 color:barcolor text:"24–25 143.961 million" bar:125 from:0 till:154.647 color:green text:"25–26 154.647 million" ScaleMajor = gridcolor:line unit:year increment:10 start:0 TextData = fontsize:S textcolor:black pos:(100,30) # tabs:(100-left) text:"NBA Salary Cap in 2025 USD" ==Soft versus hard caps==

Unlike the NFL and NHL, the NBA features a so-called soft cap, meaning that there are several significant exceptions that allow teams to exceed the salary cap to sign players. This is done to allow teams to keep their own players, which, in theory, fosters fan support in each individual city. By contrast, the NFL and NHL salary caps are considered hard, meaning that they offer relatively few (if any) circumstances under which teams can exceed the salary cap. The NBA and MLS version of the "soft" cap does, however, offer less leeway to teams than that of Major League Baseball. MLB allows teams to spend as much as they want on salary, but it penalizes them a percentage of the amount by which they exceed the soft cap. The percentage increases as the number of consecutive years a team exceeds the cap grows, resetting only when a team falls under the cap. == Luxury tax ==

While the soft cap allows teams to exceed the salary cap indefinitely by re-signing their own players using the "Larry Bird" family of exceptions, there are consequences for exceeding the cap by large amounts. A luxury tax payment is required of teams whose payroll exceeds a certain "tax level", determined by a complicated formula, and teams exceeding it are punished by being forced to pay bracket-based amounts for each dollar by which their payroll exceeds the tax level. While most NBA teams hold contracts valued in excess of the salary cap, few teams have payrolls at luxury tax levels. The tax threshold in 2005–06 was $61.7 million. In 2005–06, the New York Knicks' payroll was $124 million, putting them $74.5 million above the salary cap, and $62.3 million above the tax line, which Knicks owner James Dolan paid to the league. Tax revenues are normally redistributed evenly among non-tax-paying teams, so there is often a several-million-dollar incentive to owners not to pay the luxury tax. The luxury tax level for the 2008–09 season was $71.15 million. The 2011 CBA instituted major changes to the luxury tax regime. The previous CBA had a dollar-for-dollar tax provision system, which remained in effect through the 2012–13 season. Teams exceeding the tax level were punished by being forced to pay one dollar to the league for each dollar by which their payroll exceeded the tax level. Starting in 2013–14, the tax changed to an incremental system. Under the current system, tax is assessed at different levels based on the amount that a team is over the luxury tax threshold. The scheme is not cumulative—each level of tax applies only to amounts over that level's threshold. For example, a team that is $8 million over the tax threshold will pay $1.50 for each of its first $5 million over the tax threshold, and $1.75 per dollar for the remaining $3 million. Starting in 2014–15, "repeat offenders", subject to additional penalties, are defined as teams that paid tax in previous seasons. In the first season, repeat offenders from in all previous three seasons paid a stiffer tax rate; from 2015 to 2016 thereafter, teams paying taxes in three out of four years are subject to the higher repeater rate. However, under the new scheme, no more than 50% of the total tax revenue can go exclusively to teams that did not go over the cap. For the 2013–14 season, the luxury tax threshold was set at $71.748 million. The Brooklyn Nets, whose payroll for that season was projected to be over $100 million, would face a luxury tax bill above $80 million, resulting in a total payroll cost of $186 million. Tax levels from 2023–24 The NBA's newest CBA, which took effect for the 2023–24 season, significantly changed the tax regime. First, the luxury tax brackets, which had been fixed amounts since 2013–14, now change each season by the same percentage as the salary cap. More significantly, a second tax "apron" has been introduced, which for 2023–24 was expected to be triggered at about $17.5 million over the tax line. Teams above the second apron face new restrictions on player movement, which will be discussed in later sections. ==Exceptions==

Because the NBA's salary cap is a soft one, the NBA allows for several important scenarios in which a team can sign players even if their payroll exceeds the cap. The exceptions are as follows: Mid-level exception Once a year, teams can use a mid-level exception (MLE) to sign a player to a contract for a specified maximum amount. The amount of the MLE and its duration depend on the team's cap status. In the 2017 CBA, the MLE was initially set at $8.406 million in the 2017–18 season for teams that are over the cap either before or after the signing, but under the luxury tax apron, set at $6 million above the tax line. Teams can use this exception to offer contracts of up to four years. Teams above the apron have an MLE initially set at $5.192 million, allowing contracts of up to three years. Teams with cap room, which were ineligible for the MLE before the 2011 CBA, have an MLE initially set at $4.328 million that allows two-year contracts. In subsequent seasons, all MLE amounts will be determined by applying the percentage change of the salary cap to the previous exception amount. Before the 2011 NBA, the MLE was equal to the average NBA salary for all teams over the cap; teams with cap room were then ineligible for the MLE. The MLE was $5.854 million for the 2009–10 NBA regular season. Under the 2017 NBA, the apron was initially set at $6 million above the tax line for the 2017–18 season. In a new feature, the apron changes from season to season, with the percentage change (up or down) set at half of the rate of change of the cap for that season. Bi-annual exception The bi-annual exception can currently be used by teams below the apron to sign a free agent to a contract starting at $3.29 million. The first second-round pick exception was executed by the Sacramento Kings when they signed No. 34 overall pick Colby Jones. Two-way contracts The 2017 CBA introduced two-way contracts between NBA teams and players in the NBA G League (formerly the D-League). Before the 2017 CBA, all D-League players were contracted directly with the league, and all D-League players could be called up by any NBA team, regardless of whether they were affiliated with the player's D-League team. Now, each NBA team can sign two players to contracts that allow them to assign the players to the G League without risk of being "poached" by another NBA team. The players signed to such deals benefit by receiving a considerably higher salary than other G League players while in that league, as well as earning a prorated share of the NBA minimum rookie salary for each day they are with their contracted NBA team. Salaries of two-way players are not included in salary cap calculations. Additionally, a team can convert a two-way contract to a standard NBA contract at any time, with the player's salary becoming the NBA minimum for the player's years of service, prorated from the time of the conversion; a converted contract also does not count in cap calculations. 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 thereof. 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. Since the 2011 CBA, Bird-exception contracts can be up to five years in length, down from six under the 2005 CBA. The 2023 CBA imposes severe trading restrictions on teams that are above the second tax apron. They are not allowed to send cash out in trades and cannot take in more salary than they send out. Also, while NBA teams are normally allowed to trade draft picks up to seven years in the future, the seventh year will not be available to teams above the second apron. Disabled Player Exception Allows a team that is over the cap to acquire a replacement for a disabled player who will be out for either the remainder of that season (for in-season injuries/deaths) or the next season (if the disability occurs during the offseason). The maximum salary of the replacement player is either 50% of the injured player's salary, or the mid-level exception for a non-taxpaying team, whichever is less. This exception requires an NBA-designated doctor to verify the extent of the injury. Under the 2005 CBA, a team could sign a player under this exception for five years; since the 2011 CBA, it has been allowed only for one year. Note that while teams can often use one exception to sign multiple players, they cannot use a combination of exceptions to sign a single player. Reinstatement A player banned from the league for a drug-related offense who is reinstated may be re-signed by his prior team for a salary up to his previous salary. ==Individual contracts under the CBA==

The maximum player salary is based on the number of years that player has played and the total of the salary cap. The maximum salary of a player with 6 or fewer years of experience is either $25,500,000 or 25% of the total salary cap (projected for 2017–18), whichever is greater. For a player with 7–9 years of experience, the maximum is $30,600,000 or 30% of the cap, and for a player with 10+ years of experience, the maximum is $35,700,000 or 35% of the cap. The players on maximum contracts may also receive an annual raise of upto 8% each year for up to five years, even if over individual salary maximum limit. Maximum contracts are usually five years long since that's how long a larry bird exemption contract can be. There is an exception to this rule: a player is able to sign a contract for 105% of his previous contract, even if the new contract is higher than the league limit. The 2017 CBA made a subtle change to the determination of maximum salaries. Under the 2011 CBA, the salary cap was based on players receiving 44.74% of the league's basketball-related income (BRI), while the calculation of maximum salaries used a lower figure of 42.14% of BRI. This difference was eliminated in the 2017 CBA, with the same 44.74% of BRI used for both cap and maximum salary calculations. In 2017, the scale for lottery picks was as follows: DateFormat=x.y ImageSize= width:300 height:auto barincrement:20 Period = from:0 till:6 TimeAxis = orientation:horizontal PlotArea = right:10 left:6 bottom:50 top:5 Colors = id:barcolor value:rgb(0.99,0.67,0.7) id:line value:black id:bg value:white PlotData= width:10 textcolor:black shift:(5,-5) anchor:from fontsize:s bar:1 from:0 till:5.8552 color:barcolor text: "1st (Markelle Fultz) 5,855,200" bar:2 from:0 till:5.2388 color:barcolor text: "2nd (Lonzo Ball) 5,238,800" bar:3 from:0 till:4.7045 color:barcolor text: "3rd (Jayson Tatum) 4,704,500" bar:4 from:0 till:4.2417 color:barcolor text:"4th (Josh Jackson) 4,241,700" bar:5 from:0 till:3.841 color:barcolor text:"5th (De'Aaron Fox) 3,841,000" bar:6 from:0 till:3.4886 color:barcolor text:"6th (Jonathan Isaac) 3,488,600" bar:7 from:0 till:3.1847 color:barcolor text:"7th (Lauri Markkanen) 3,184,700" bar:8 from:0 till:2.9176 color:barcolor text:"8th (Frank Ntilikina) 2,917,600" bar:9 from:0 till:2.6819 color:barcolor text:"9th (Dennis Smith Jr.) 2,681,900" bar:10 from:0 till:2.5477 color:barcolor text:"10th (Zach Collins) 2,547,700" bar:11 from:0 till:2.4204 color:barcolor text:"11th (Malik Monk) 2,420,400" bar:12 from:0 till:2.2294 color:barcolor text:"12th (Luke Kennard) 2,299,400" bar:13 from:0 till:2.1844 color:barcolor text:"13th (Donovan Mitchell) 2,184,400" bar:14 from:0 till:2.0753 color:barcolor text:"14th (Bam Adebayo) 2,075,300" ScaleMajor = gridcolor:line unit:year increment:1 start:0 TextData = fontsize:S textcolor:black pos:(70,30) # tabs:(100-left) text:"Rookie "scale" salary (US Dollars, millions) Second-round picks are not subject to a scale, and technically can be paid anywhere from the minimum to the maximum contract amount. In practice, they rarely receive more than the minimum. Prior to the 2017 CBA, the rookie scales for each season were negotiated into the agreement. For the current agreement, only the rookie scales for the 2017–18 season were determined in advance. In subsequent seasons, the percentage change in the salary cap will be applied to all dollar amounts in the previous season's scale. Amounts that are expressed as a percentage of salary, such as the allowable salary change from the third to the fourth season of the rookie contract, remain the same from season to season. Designated Player Since the 2011 CBA, each NBA team has been able to nominate a player on his rookie contract to receive a "Designated Player" contract extension. A Designated Player is eligible for a five-year contract extension, instead of being held to the standard four-year restriction. Under the 2017 CBA, the "Designated Player" limit remained at two, but in a new feature, teams are now able to create Designated Player contracts from their own veteran contracts. In addition, teams may now use their Designated Player slots on any combination of their own rookie contracts, their own veteran contracts, or players acquired in trades. it has been dubbed (and is more commonly known as) the "Derrick Rose Rule" after the 2011 MVP, due to the fact that when the criteria were introduced, Rose was the only player in the NBA eligible to sign the maximum extension (due to his MVP award). The reasoning for the rule is to suitably reward players being extended off their rookie contract who are considered to be of a higher "caliber" than their peers, without restricting them to the lower (25%) salary level. A player may sign a "5th Year, 30% Max" contract before the final year of his rookie contract and before fulfilling the criteria needed to receive the 30% salary grade. Should the player fail to fulfill the criteria before the start of his Designated Player contract, he will receive the standard five-year, 25% Designated Player contract. James Harden of the Los Angeles Clippers and Anthony Davis of the Los Angeles Lakers had such a clause in their contract extensions, but both failed to meet the criteria. The only player in the NBA who was attempting to qualify for a full 30% contract in 2013–14 was Paul George, who signed a provisional 30%/five-year contract in September 2013. George, who had made the All-NBA third team in 2012–13, The 2017 CBA changed the qualification criteria for "5th Year, 30% Max" contracts. Players who come off rookie contracts at the end of the 2017–18 season, or later, must meet any of the following criteria to qualify: • Selection to an All-NBA team (at any level) in the player's fourth season, or in two of the three seasons between his second and fourth seasons. • Selection as Defensive Player of the Year in the player's fourth season, or in two of the three seasons between his second and fourth seasons. • Selection as MVP in any season from the player's second onward. These criteria are identical to those for the veteran player extensions introduced in the 2017 CBA. Had these criteria been part of the 2011 CBA, Rose would still have qualified for a 30% contract, as he was in his third NBA season when he was named MVP. 5/30% Contracts The following players have signed five-year/30% contracts: • Blake Griffin (signed with the L.A. Clippers; was later traded to the Detroit Pistons in 2018) signed through 2018 (qualified by making the All-NBA second team in 2011–12 and 2012–13) • Paul George (signed with Indiana Pacers; since has been traded to the Oklahoma City Thunder and then to the Los Angeles Clippers prior to the 2019 season) signed until 2019 (qualified by making the All-NBA third team in 2012–13 and 2013–14) 5/25% Contracts In addition the following players are known to have signed five-year/25% contracts: • James Harden (Houston Rockets) until 2018 • Kyrie Irving (Boston Celtics) until 2020 • Damian Lillard (Portland Trail Blazers) until 2021 Kevin Love was eligible for a designated player contract, but the Minnesota Timberwolves opted for a 4-year contract (with a player option year included, potentially allowing him to become an unrestricted free agent) instead. During Kevin Durant's final five seasons with the Oklahoma City Thunder (2011–2016), he received a Designated Player level salary. His contract was initially drawn up before the lockout—during which the Derrick Rose Rule was implemented—but was officially approved under the provisions of the 2005 CBA by the NBA after the lockout. This led some people to question whether the Thunder had (with NBA approval) effectively signed two players as their Designated Player, as both were contracted for 5 years. "Supermax" Rule A provision in the 2017 CBA allows teams to create Designated Player contracts for their own veteran players, officially known as the "Designated Veteran Player Extension" (DVPE). Ironically, while the rule was intended to encourage star players to stay with their current teams, the first major move by an NBA team involving a player eligible for the DVPE was the Sacramento Kings' trade of DeMarcus Cousins to the New Orleans Pelicans during the 2017 All-Star break. Cousins' contract with the Kings was not set to expire until 2018, but he was eligible to sign a DVPE after the 2016–17 season for up to $209 million over five years, a financial commitment that the Kings were apparently unwilling to make.Teams who develop and retain homegrown superstars will find themselves rewarded with uniquely-bloated salary caps and stiff luxury tax payments. Meanwhile, superstars who decide to stay loyal will be asked to spend their prime with shorthanded rosters and handicapped front offices. Sharp's colleague Rohan Nadkarni questioned the DVPE eligibility criteria, as key players like Klay Thompson and Karl-Anthony Towns are not eligible despite their excellent performances. Players eligible for the supermax Following the announcement of the 2016–17 All-NBA team, four players were eligible to sign DVPE contracts during the 2017 offseason: • Stephen Curry of the Golden State Warriors • James Harden of the Houston Rockets • John Wall of the Washington Wizards • Russell Westbrook of the Oklahoma City Thunder All four were named to one of the three All-NBA teams for that season, though two, Curry and Westbrook, were already eligible under the new criteria. Harden and Westbrook would not have qualified under the standard DVPE criteria because both signed extensions to their contracts in the 2016 offseason, Harden for two years and Westbrook for one. The players' union and owners negotiated a special dispensation allowing them to sign DVPE contracts should they otherwise qualify. Davis also became the first player to publicly turn down a supermax offer, notifying the Pelicans during the 2018–19 season that he would not accept a supermax deal and also requesting a trade. Davis would ultimately be traded to the Los Angeles Lakers after the 2018–19 season. During the 2019 season, four further players qualified for supermax deals. Damian Lillard and Kemba Walker both qualified to immediately sign supermax deals by making a 2018–19 All-NBA Team. While Giannis Antetokounmpo would not have become a free agent until the 2021 offseason, he became eligible to sign a supermax deal in 2020 by making All-NBA Teams in both 2017–18 and 2018–19; he would later meet another supermax criterion by being named the 2019 MVP. Rudy Gobert became eligible by claiming Defensive Player of the Year honors for the second straight season. The Charlotte Hornets did not offer Walker a supermax deal, instead sending him to the Boston Celtics in a sign-and-trade deal in the 2019 offseason. Gobert signed a five-year extension with the Utah Jazz in the 2020 offseason, but chose not to take the full supermax of $228 million, instead opting for $205 million to give the team more cap room. Supermax contracts The first player to sign a supermax contract was Stephen Curry, who agreed to a new five-year DVPE deal with the Warriors, worth $201 million, that ran through the 2021–22 season. Curry signed the contract once the NBA's free agency moratorium ended on July 6, 2017. Shortly thereafter, James Harden agreed on a DVPE with the Rockets. At the time of signing, his current contract had two years remaining with total pay of $59 million; the extension added another $170 million over four seasons, ending in 2022–23. The next supermax signing was that of John Wall, who agreed later in July to a four-year, $170 million extension that began in 2019–20. In late September, Russell Westbrook became the fourth and final supermax signing of the 2017 offseason, signing a five-year, $205 million extension that started in 2018–19. Damian Lillard agreed to a four-year, $196 million extension with the Portland Trail Blazers during the 2019 offseason. The extension starts in 2021–22 and includes a player option for 2024–25. Giannis Antetokounmpo agreed to a five-year, $228 million extension with the Milwaukee Bucks during the 2020 offseason. The extension started in 2021–22 and includes a player option for 2025–26. During the 2023 offseason, Jaylen Brown signed a five-year, $304 million supermax extension with the Boston Celtics, the largest contract in NBA history. That contract was surpassed by his teammate Jayson Tatum the following offseason, who also signed a supermax extension with the Celtics for five years, $315 million. Over-38 rule The cap also includes a provision to close a potential loophole that would provide incentives for teams to skirt the cap by signing an older player to a long-term deal that would not end until after the team expects the player to retire. Cap analyst Larry Coon outlined how this potential loophole would work:For example, suppose the Non-Taxpayer Mid-Level exception is $9 million. With 5% raises, a three-year contract would total $28.35 million. But if they added a fourth year to the contract, the salary would total $38.7 million. If the player retires after three seasons and continues drawing his salary for the additional season, then he effectively will be paid $38.7 million for three years' work. In essence, they are giving the player a three-year contract with additional deferred compensation. To address this issue, CBAs since at least the 1990s have included what is now called the "over-38 rule", under which certain contracts that extend past the player's 38th birthday are presumed to cover seasons following the player's expected retirement. The age threshold that triggered this rule was originally set at 35, changed to 36 in the 1999 CBA, and changed again to 38 in the 2017 CBA. The salary for any years that come after the player's 38th birthday is presumed to be deferred compensation, and is shifted for cap purposes to the under-38 seasons of the deal, with the over-38 year(s) being referred to as "zero years" in the CBA. If the player continues to play under the deal (proving the presumption of retirement wrong), the salary that had originally been treated as deferred is distributed evenly over the remaining years of the contract, starting with the second season before the zero years. This rule had been a larger issue before the 2011 CBA, which limited the maximum contract length to 5 years. ==Free agency==

, pictured here in 2008, was able to receive a bigger contract as a restricted free agent by leaving the Golden State Warriors for the Washington Wizards in 2003, prompting the "Gilbert Arenas Rule". There are two types of free agency under the NBA's Collective Bargaining Agreement: Unrestricted and Restricted. Rather than spending salaries on teams like Major League Baseball, the NBA has a policy that strictly prohibits it using the salary cap in that fashion. Unrestricted free agent An unrestricted free agent is free to sign with any team that they choose to. Restricted free agent A restricted free agent is subject to his current team's Right of First Refusal, meaning that the player can be signed to an offer sheet by another team, but his current club reserves the right to match the offer and keep the player. An offer sheet is a contract offer of at least two years made by another team to a restricted free agent. For first-round draft picks, restricted free agency is only allowed after a team exercises its option for a fourth year, and the team makes a Qualifying Offer at the Rookie-scale amount after the fourth year is completed. For any other player to be a restricted free agent, he must be at most a three-year NBA veteran, and his team must have made a Qualifying Offer for either 125% of his previous season's salary or the minimum salary plus $200,000, whichever offer is higher. A player's original team can use the Early Bird exception or their Mid-Level exception to re-sign the player. The 2017 CBA changed the accounting rules for the player's original team in this scenario. If the original team matches, and has enough cap space to absorb the average annual salary of the offer, it can choose to take cap hits of either the actual contract payouts or the average of the contract in each season. July moratorium Players on a team's season-ending roster remain under contract with their respective team until the start of the new league year on July 1. From 6 pm Eastern Time (UTC−4) on June 30 and through the first few days of July, teams may begin negotiating with free agents, but trades cannot be made and most free agents cannot be signed; this is known as the "moratorium period". Contracts that are allowed during this period are limited to: • Rookie scale contracts to first-round draft picks. • A second-round draft pick can accept a required tender, which is a one-year contract that teams are required to offer in order to retain their rights to the player. • A restricted free agent can accept a qualifying offer from his previous team. • A restricted free agent finishing the fourth season of his rookie scale contract can accept a maximum qualifying offer. The actual amount is not determined until the end of the moratorium. • Teams may sign players to contracts of one or two years for the minimum salary. • Teams may sign players to two-way contracts, convert a two-way contract to a standard NBA contract, or convert a standard NBA contract with an Exhibit 10 bonus to a two-way contract Teams and players can reach verbal agreements, but they are not binding. Contracts can be signed once the moratorium ends. A year later, the moratorium period was shortened from 10 to 5 days in what was unofficially called the "DeAndre Jordan Rule". The change was intended to discourage parties from backing out of their agreements. Cap holds The end of a free agent's contract does not remove him from a team's cap calculations. During the free agency period (from July 1 until the player signs with a team, or the free agent's former team renounces its rights), each free agent carries a specified salary cap charge for his last team, most often called a "cap hold". Normally, the cap hold can be no more than a player's maximum salary, or less than his minimum salary, based on years of service. The only exception is for free agents who made the minimum salary in the previous season; if the league reimbursed the team for a portion of his salary in the last season of his contract, the reimbursement is not counted in the cap hold. Apart from these restrictions, the cap hold varies based on the status of the free agent and his salary in the previous season: • Bird free agent: • If not coming off a rookie scale contract, and salary was at or above the estimated average salary, 150% of previous salary. • If not coming off a rookie scale contract, and salary was below the estimated average salary, 190% of previous salary. • If coming off the fourth season of a rookie scale contract, and salary was at or above the estimated average salary, 250% of previous salary. • If coming off the fourth season of a rookie scale contract, and salary was below the estimated average salary, 300% of previous salary. • If coming off the third season of a rookie scale contract, the maximum amount that the team can pay under the Bird exception. • Early Bird: • If coming off the second season of a rookie scale contract, the maximum amount that the team can pay under the Bird exception. • Otherwise, 130% of previous salary. • Non-Bird: 120% of previous salary. The 2017 CBA increases some cap holds from those found in the 2011 CBA as follows: • Unsigned first-round draft picks: 120% of rookie scale (up from 100%) • Bird free agent (as of the 2018–19 season): • If coming off the fourth season of a rookie scale contract, and salary was at or above the estimated average salary, 250% of previous salary (up from 200%). • If coming off the fourth season of a rookie scale contract, and salary was below the estimated average salary, 300% of previous salary (up from 250%). ==Sign and trade agreements==

When a team is willing to sign an upcoming free agent, but the player's current team wants something in return, it might be in the best interest of both clubs to execute a sign-and-trade deal. This occurs when one team signs one of its free agents and immediately trades that player to another team. A sign-and-trade is beneficial to both the player and the teams; the player receives a bigger contract than he might ordinarily get from a team that he would like to play for, while the trading club gets something in return for a free agent, and the recipient of the trade gets the player they desire. Sign-and-trades are a reality in the NBA because of the CBA's rules: unlike baseball, where teams losing free agents are compensated with draft picks or cash, NBA teams that lose free agents receive no compensation. When a team initiates a sign-and-trade agreement, it must trade the signed player immediately; teams cannot renege on the arrangement and keep the player for themselves, using the other team's financial situation to leverage the signee into a more favorable deal for themselves. Also, the contract signed before the trade must be for at least 3 years, with the first year guaranteed. Because of the contract length requirement, the signing team cannot use an exception that cannot be used to offer a contract of 3 or more years. Since the 2011 CBA, the signed player must have been on the roster of his previous team at the end of the last regular season. Previous agreements allowed teams to sign-and-trade any player to whom they held Bird rights, which do not automatically disappear with a player's retirement—for example, in July 2010, the Los Angeles Lakers still held Bird rights to John Salley, who had not played since . In the , two teams used sign-and-trades on players who had been out of the league. The Dallas Mavericks signed Keith Van Horn out of retirement as part of a package to acquire Jason Kidd, and the Lakers did the same with Aaron McKie to facilitate their deal for Pau Gasol. The 2011 CBA put further restrictions on sign-and-trades, with these restrictions maintained in the 2017 and 2023 CBAs. Since the 2013–14 season, the payroll of the receiving team cannot exceed the so-called "apron" (as of 2017–18 set at $6 million above the tax line; this became the first tax apron for 2023–24 and beyond) as a result of the trade, and a team that has used the taxpayers' MLE cannot receive a player in a sign-and-trade in that season. Additionally, the apron becomes a hard salary cap for the first season after the signing. Teams above the apron before the trade cannot receive a player unless the trade leaves the team below the apron. ==Trading and the salary cap==

• Teams below the salary cap may trade without regard to salary, as long as they don't end up more than $100,000 above the cap following a trade. • Teams above the cap (or teams below the cap but would end up more than $100,000 over the cap following a trade) cannot acquire more than 125% plus $100,000 of the salary they trade away. Under the 2011 CBA, teams that remain below the luxury tax threshold even after the trade can acquire the lesser of 150% plus $100,000, or 100% plus $5 million, of the salary they trade away. There is no lower limit—teams may divest themselves of as much salary as they wish (or can convince another team to take on) in a trade. • No free agent signed in the offseason can be traded until December 15 of that year or until three months have passed (whichever comes later), a rule that prevents teams from signing free agents with the intent of using them strictly as trade fodder. For draft picks this moratorium lasts 30 days. • If teams acquire a player in a trade, they are allowed to trade that player straight-up for another individual player immediately. However, if teams wish to package that player with another and trade for a more expensive player, they must wait 60 days before doing so. The tight salary-matching rules of the 2005 CBA often required what NBA cap analyst Larry Coon called "trade ballast"—extra players added to a deal solely for salary matching, who would typically be waived by their new teams. Under that CBA, such players were restricted from rejoining their original teams for 30 days during the season or 20 days in the offseason. This led to what Coon called "wink-wink deals where players are traded with the full expectation of returning later." A notable example of such a deal occurred in the 2009–10 season, in which the Cleveland Cavaliers included Zydrunas Ilgauskas in their trade with the Washington Wizards for Antawn Jamison. Ilgauskas was waived a week later without ever appearing in a game for the Wizards, and re-signed with Cleveland after the 30-day waiting period passed. Since the 2011 CBA, a player acquired in a trade and waived by his new team cannot re-sign with his original team until one year after the trade or July 1 after the expiration of his contract, whichever is sooner. Base year compensation Certain players in the first few months of a new contract are subject to base year compensation (BYC). The intent of BYC is to prevent teams from re-signing players to salaries specifically targeted to match other salaries in a trade (in other words, salary should be based on basketball value, not trade value). A BYC player's trade value as outgoing salary is 50% of his new salary, or his previous salary, whichever is greater. BYC applies only to players who re-sign with their previous team and receive a raise greater than 20%. It also applies only when (and as long as) the team is over the salary cap. Since the 2011 CBA, players subject to BYC cannot be traded before January 15 except in a sign-and-trade, and BYC is only applied to outgoing salary in sign-and-trade deals. ==Waivers==

NBA teams can release a player to the waiver wire, where he can stay for 48 hours (during the regular season). While he is on waivers, other teams may claim him, for his existing salary. If he is not claimed, he is said to have "cleared waivers", and is treated like any free agent, able to sign with any team (with the special restriction noted above for players who were traded and then waived). Players waived after March 1 are not eligible to be on a team's playoff roster. The deadline was March 23 during the lockout-shortened 2011–12 season. ==Released players==

Released/waived players with guaranteed contracts continue to be included in their former team's payroll. Players whose contracts are guaranteed are included in team salary in the amount they made while they were with the team. Players on non-guaranteed "summer contracts" are not included in team salary unless they make the regular season roster. If another team signs a released player who had a guaranteed contract (as long as the player has cleared waivers), the player's original team is allowed to reduce the amount of money they still owe the player (and lower their team payroll) by the right of set-off. This is true if the player signs with any professional team—it does not even have to be an NBA team. The amount the original team gets to set off is limited to one-half the difference between the player's new salary and a pro-rated share of the minimum salary for a one-year veteran (if the player is a rookie, then the rookie minimum is used instead). Stretch provision Both the 2005 and 2011 CBAs contained a so-called "stretch" provision regarding the payment of guaranteed money to waived players and its effect on the salary cap; the 2011 provisions were kept in the 2017 CBA. Under the 2005 CBA, players and teams could alter the schedule of payments to waived players by mutual agreement. The remaining guaranteed salary was equally spread across the remaining years of the player's contract. The 2011 CBA dramatically changed this regime. While contracts signed under the 2005 CBA remained under the original scheme, different rules apply to contracts signed since the 2011 CBA went into effect. Today, when a team waives a player, it can spread the remaining guaranteed salary (and its accompanying cap hit) over twice the remaining length of the contract, plus one year. According to Coon, "if a team has an underperforming player with one season remaining at $12 million, the team can waive him and stretch his salary across three seasons at $4 million per season." ==Amnesty clause==

The NBA Amnesty Clause provided franchises a means of escaping a contractual obligation to a player whose performance falls far short of the extremely large salary they initially agreed to pay him. Under the 2005 CBA, one player could be waived prior to the start of the 2005–06 season and not count toward the luxury tax. Unlike the 2011 CBA, the player still counted under the salary cap. Jerome Williams retired from the NBA just two days after being waived under the amnesty clause. Under the 2011 Collective Bargaining Agreement (CBA), each franchise was allowed to waive one player prior to the start of any season between the 2011–12 and 2015–16 seasons. The remaining salary still contractually owed was not included in the salary cap or luxury tax totals of the team terminating his employment. Only players signed prior to the 2011–12 season could be "amnestied," and the clause could be exercised during the seven days following the NBA's July moratorium period on player transactions. ;Note ==Notes==