The NBA season is marked by crisis, excitement and Woj bombs, but it is also defined by a flurry of complicated terms like as “non- taxpayer middle- level exception” and “designated former player extension”. There’s also a lot of discussion of bibs, even though there is no cooking involved.
But, if you’re confused about why your favorite group the n’t mark your favorite player or why certain people are earning more than others, we’ve got you covered. Here’s an explanation of how NBA agreements work.
A fixed sum of money known as the salary cap is intended to limit how much money a team you spend on player payment. The proportion of projected basketball-related money for the upcoming year is used to determine the number for each year. In 2024- 25, the income cap will get$ 140.588 million.

Unlike the NHL, which has a “hard cap” that cannot be exceeded under any scenarios, the NBA has a” soft cap” ( like a yarmulke ). NBA teams are permitted to bypass the salary cap design by making a number of exceptions, as described in the following collective bargaining agreement ( CBA ). In the 2023- 24 year, 29 of the team’s 30 groups spent more than the cover on gamer salaries.
Entrepreneurs must spend at least 90 % of the salary cap to ensure that people receive their fair share of league revenue. However, the cover eventually serves to control owners ‘ costs. It also encourages balance by preventing massive spending disparities, like those found in MLB.
A group may give a duty if its payroll exceeds the salary cap. Businesses start by paying the league$ 1.50 for every dollar they spend above the cap this season, and the rate gradually increases as they continue to exceed it. Furthermore, the league places an extra dollar-for-dollar tax on repeat offender holders who paid taxes in three of the past four seasons over the payroll threshold.
Around a quarter of clubs have paid the tax in any given time over the past ten years. In 2023- 24, the Golden State Warriors paid a whopping$ 176.9 million in luxury tax, followed by the Los Angeles Clippers ($ 142.4 million ), Phoenix Suns ($ 68.2 million ) and five other franchises. The NBA distributes the remaining funds to the other team in equal shares, accounting for half of the money collected from the taxable teams.
The 2023 CBA introduced an extra amount that is$ 17.5 million over the pleasure tax boundary. A long list of roster-building restrictions apply to teams that finish their time with payrolls over the second belt ( there is also a second belt with fewer restrictions ).
As outlined in the CBA, next apron teams the n’t do a number of things in a trade: give out cash, overall contracts, or take up more approaching money than cheerful money, among other frequently- used techniques. Additionally, they are unable to appoint people whose former team ‘ contracts were terminated. Also, groups finishing 2024- 25 over the next belt will have their 2032 initial- round takes frozen ( i. electronic. untradable ).

Any moves that occur below the second apron that are considered “hard-capped” will automatically be prohibited at the second apron ( i .e., prohibited from making moves that cause their payroll to exceed it ).
The mid-level exception ( MLE ) is a tool that can be used by each team once a year to sign one or more players if their payroll exceeds the salary cap. In the upcoming season, taxpayers can offer up to$ 5.2 million in deals lasting up to two years, while non-taxpayers can offer up to$ 12.8 million in deals lasting up to four years. These amounts fluctuate annually in tandem with modifications to the income cap.
Teams that are above the following apron are not allowed to use the MLE to signal free agents, and those who do so are also hard-capped at the next apron.
The bi-annual exemption is a device that can be used by each team to mark one or more people in non-consecutive seasons if their payment has now exceeded the income cover. Teams can offer first-year salaries of up to$ 4.7 million in deals lasting up to two years in the upcoming season.
Teams are hard-capped at the first apron and cannot use the bi-annual exception if they’ve already used the MLE.
A team may re-sign its own free agents at a salary greater than the cap under the” Bird exception” if the team can raise the salary. The Boston Celtics were the first team allowed to re-sign one of their own players after the salary cap, so a qualifying player must continue to play for the same team for three seasons.
There is also the “early Bird exception,” which allows a team to re-sign its own free agents if they have spent some or all of the previous two seasons with the organization. The team may grant a salary increase of up to 10 % of the player’s average salary from the previous season or a salary increase of 17 %.
Lastly, a team can still re- sign its own free agent who neither has Bird nor early Bird rights, albeit with more restrictions on the player’s salary.
The value of rookie contracts for NBA first-round draft picks fluctuates depending on the players ‘ draft slots, with lower picks receiving lower salary increases in the first round. The first two years of such agreements are guaranteed, and the third and fourth year are team options, despite the majority of picks in each draft class having those options exercised.
Zaccharie Risacher, the No. 1 pick in the 2024 NBA Draft, will earn a four- year contract worth roughly$ 57 million, while the No. 30 pick, Baylor Scheierman, can sign a deal for up to$ 12.8 million.
Teams must offer at least 80 % of the “rookie scale contract” and no more than 120 %. In practice, almost every deal is completed at the maximum 120 %. Even if teams are over the salary cap, the NBA allows teams to sign their draft picks to rookie scale contracts.
Second- round picks do not have any salary restrictions, but the players often sign deals for the league’s minimum salary.
A player with fewer than four years of NBA experience can split time between an NBA team and a G League team under a two-way contract. The player has the option of playing in up to 50 regular-season NBA games, is ineligible for the postseason, and can practice with the team or join the G League when not ready to play.
Two-way players are paid half of the league’s starting salary and are subject to termination at any time. Two- way contracts, however, can be converted to regular contracts during the season, after which the player will receive the league’s minimum salary, prorated for the remainder of the season. Up to three two-way players can play in a team at once, and their salaries do not factor into the salary cap.
The NBA limits how much teams can pay individual players, in contrast to MLB and the NFL. The salary cap is always based on percentages of the salary cap, which fluctuates depending on several factors affecting the player.
After the signing of their rookie contract, players with less than seven years of service can receive up to 25 % of the cap. However, according to the” Derrick Rose Rule,” a player may re-sign with his team for up to 30 % of the cap after four years of service if they meet at least one of the following “higher maximum criteria”: being named to the All-NBA first, second, or third team, or winning Defensive Player of the Year, in the previous season or in two of the previous three seasons.
winning NBA MVP in any of the previous three seasons
Players can receive a maximum of 30 % of their cap after at least seven or ten years of service. The” Supermax” rule, or the” Designated Veteran Player Extension”, however, states that a player can re- sign with their team for up to 35 % of the cap after their eighth or ninth season if they meet at least one of the aforementioned higher max criteria. Additionally, the team proposing the extension must have either signed the player in a trade or traded them while they were still on their rookie contract.
Players with at least 10 years of service can receive up to 35 % of the cap.
The highest base salary in the NBA for the 2024- 25 season belongs to Stephen Curry at$ 55.8 million. The largest active contract by average annual value, however, is Jaylen Brown’s deal, which pays him an average of$ 57.1 million per year, with his salary increasing in each year of the contract. Jayson Tatum recently signed a contract that begins with the 2025-26 season and pays him an average annual salary of$ 62.8 million.
A team may agree to a 10-day contract with a player to add bench depth or fill gaps left by players injured. It lasts for 10 days or three games, whichever is greater. It is worthwhile for the player to receive their minimum salary, which varies based on their years of NBA experience. In the 2023- 24 season, 10- days were worth somewhere between$ 64, 000 and$ 184, 000 based on whether the player being signed had zero or 10- plus years of service, respectively.
An NBA contract is a legally binding contract that specifies the amount of money a player will make and guarantees his employment with the team for a predetermined amount of time. In the event that a player breaks the organization’s rules or engages in reckless behavior that impairs his ability to play basketball, the team is also protected.
How much money a player is paid in each year of the agreement is specified in contracts. They frequently also contain rewards or incentives for achieving certain statistical milestones or obtaining awards. Other stipulations may be included in them, such as rules for offseason activities or endorsement deals.
For the most part, yes, NBA contracts are fully guaranteed. Once a deal is made, the player will receive full compensation regardless of whether they are hurt, perform poorly, or no longer desired by the team.
However, some contracts offer a “team option” for the final year or two, which enables the team to decide whether to let the player become a free agent or to try to negotiate a new contract.
Lastly, any bonuses for performance or achievements are inherently not guaranteed.