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NBA Salary Cap - Wikipedia

NBA Salary Cap - Wikipedia

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NBA Salary Cap
NBA Salary Cap

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NBA Salary Cap
From Wikipedia, the free encyclopedia
The
NBA Salary Cap
is the limit to the total amount of money that National Basketball Association teams areallowed to pay their players. While this seems simple enough in concept, the salary cap is in actuality extremelycomplex, and contains many obscure rules and loopholes as the NBA has a "soft" cap.The actual amount of the cap varies on a year-to-year basis, and is calculated as a percentage of the League'srevenue from the previous season; for instance, in 2006-07, the NBA's salary cap was approximately US$53.135million per team, and for the 2007-08 season it was $55.63 million
[1]
. Like many professional sports leagues, theNBA has a salary cap to keep teams in larger markets (with more revenue) from buying all of the top players andextending their advantage over smaller-market franchises. The 2008-09 salary cap has been set at $58.68 million.
Contents
1 History2 Soft vs. Hard Caps3 Collective Bargaining Agreement4 Maximum Individual Contracts under the CBA5 Exceptions5.1 Mid-level exception5.2 Bi-annual exception5.3 Rookie exception5.4 Larry Bird exception5.5 Early Bird exception5.6 Non-Bird exception5.7 Other exceptions6 Types of free agency7 Rookie scale salary8 Options9 Sign and trade agreements10 Trading and the Salary Cap10.1 Base year compensation11 Waivers12 Released players13 Luxury tax14 NBA Salary Cap history15 See also16 References17 External links
History
BA Salary Cap - Wikipedia, the free encyclopediahttp://en.wikipedia.org/wiki/NBA_Salary_Cap1 of 96/17/2009 1:14 PM
 
The NBA had a salary cap in the mid-1940s, but it was abolished after only one season. The League continued toplay without such a cap until 1984-85, when the current incarnation of the salary cap was instituted in an attemptto level the playing field among all of the NBA's teams and ensure competitive balance for the League in thefuture. Before the cap was reinstated, teams could spend whatever amount of money they wanted on players, butin the first season under the new cap, they were each limited to $3.6 million in total payroll.
Soft vs. Hard Caps
Unlike the NFL and NHL, the NBA features a so-called soft cap, meaning that there are several significantexceptions that allow teams to exceed the salary cap to sign players. This is done to allow teams to keep theirown players, which, in theory, fosters fan support in each individual city. By contrast, the NFL and NHL capsare considered hard, meaning that they offer relatively few (if any) circumstances under which teams can exceedthe salary cap.
Collective Bargaining Agreement
The Collective Bargaining Agreement, or CBA, is the contract between the NBA (the commissioner and the 30team owners) and the NBA Players Association that dictates the rules of player contracts, trades, revenuedistribution, the NBA Draft, and the salary cap, among other things. In June 2005, the NBA's 1999 CBA expired,meaning the League and the players' union had to negotiate a new agreement; in light of the fiasco that was the2004–05 NHL lockout, the two sides quickly came to an agreement, and ratified a new CBA in July 2005. Thenew agreement will expire following the 2010-11 season, but the League has the option to extend it through the2011-12 season if they wish. If so, the League must exercise its option to extend the agreement by December 15,2010.Little changed in terms of the salary cap between the 1999 and 2005 versions of the CBA. In exchange foragreeing to the controversial player age minimum, the players will receive a slightly higher percentage of theLeague's revenues over the course of the new agreement. Additionally, the League's maximum salary decreasedslightly in comparison to the 1999 CBA.
Maximum Individual Contracts under the CBA
The maximum amount of money a player can sign for is contingent on the number of years that player has playedand the total of the salary cap. The maximum salary of a player with 6 or fewer years of experience is$9,000,000 or 25% of the total salary cap (2008-2009: $13,758,000). For a player with 7-9 years of experience,the maximum is $11,000,000 or 30% of the cap (2008-2009: $16,509,600), and for a player with 10+ years of experience, the maximum is $14,000,000 or 35% of the cap (2008-2009: $19,261,200).
[2]
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Exceptions
Because the NBA's salary cap is a soft one, the CBA allows for several important scenarios in which a team cansign players even if their payroll exceeds the cap. The exceptions are as follows:
Mid-level exception
A team is allowed to sign one player to a contract equal to the average NBA salary, even if the team is over thesalary cap already, or if the signing would put them over the cap. This is known as the Mid-level exception
BA Salary Cap - Wikipedia, the free encyclopediahttp://en.wikipedia.org/wiki/NBA_Salary_Cap2 of 96/17/2009 1:14 PM
 
(MLE). The MLE may be used on an individual free agent or split among multiple free agents, and is available toany team that exceeds the salary cap at the beginning of the offseason. The Mid-Level Exception for the2007-08 NBA season was $5.36 million. The MLE is $5.585 million for the 2008-09 NBA regular season.An example would be the Toronto Raptors' acquisition of Jason Kapono during the 2007 off-season.
Bi-annual exception
The bi-annual exception may be used to sign any free agent to a contract starting at $1.672 million in 2005-06,but cannot be used two years in a row (and if the $1 million exception from the previous CBA was used in2004-05, the bi-annual exception cannot be used in 2005-06). Like the mid-level exception, the $1 millionexception can also be split among more than one player, and can be used to sign players for up to two years, withraises limited to 8% per year. This exception was referred to as the "$1 million exception" in the 1999 CBA,although it was only valued at $1 million for the first year of the agreement.An example of the $1 million exception was the Los Angeles Lakers' signing of Karl Malone to a contract beforethe 2003-04 season.
Rookie exception
The CBA allows teams to sign their 1st-round draft choices to rookie "scale" contracts even if their payrollexceeds the cap.
Larry Bird exception
Perhaps the most well-known of the NBA's salary cap exceptions, it is so named because the Boston Celticswere the first team permitted to exceed the salary cap to re-sign one of their own players (in that case, LarryBird). Free agents who qualify for this exception are called "qualifying veteran free agents" or "Bird FreeAgents" in the CBA, and this exception falls under the auspices of the Veteran Free Agent exception. In anutshell, the Larry Bird exception allows teams to exceed the salary cap to re-sign their own free agents, at anamount up to the maximum salary. To qualify as a Bird free agent, a player must have played three seasonswithout being waived or changing teams as a free agent. This means a player can obtain "Bird rights" by playingunder three one-year contracts, a single contract of at least three years, or any combination thereof. It also meansthat when a player is traded, his Bird rights are traded with him, and his new team can use the Bird exception tore-sign him. Bird-exception contracts can be up to six years in length.
Early Bird exception
This is the lesser form of the Larry Bird Exception. Free agents who qualify for this exception are called "earlyqualifying veteran free agents," and qualify after playing two seasons without being waived or changing teams asa free agent. Using this exception, a team can re-sign its own free agent for either 175% of his salary the previousseason, or the NBA's average salary, whichever is greater. Early Bird contracts must be for at least two seasons,but can last no longer than five seasons.A much-publicized example for this would be Devean George, who vetoed his inclusion into a larger trade duringthe 2007-08 that would have sent him from the Dallas Mavericks to the New Jersey Nets because he would havelost his Early Bird rights.
Non-Bird exception
BA Salary Cap - Wikipedia, the free encyclopediahttp://en.wikipedia.org/wiki/NBA_Salary_Cap3 of 96/17/2009 1:14 PM

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