The NBA's collective bargaining agreement is strict, but can be manipulated. The Mavericks signed Vince Carter to a three year-contract in December, but will likely release him to clear salary cap space this offseason.(AP Photo/Jim Mone)
Sunday, Feb 12 at 5:10 PM
Picture this scene at a local sports bar. Bill, guzzling down five fingers of Old Crow, says to Jim, “You hear the Mavs signed Vince Carter using their mid-level exception? Heard that on the news.” Jim responds, “Yeah that’s awesome man. Wait, what is a mid-level exception anyway”? Bill……..“Uhhhhhh”.
I used to be in that same situation. I assumed I knew enough about basketball to not care about the business side. A lot of sports writers include terminology like “mid-level exception” and “Bird rights” in their NBA articles -- without explaining it. While that is fine, I’m going to attempt to explain five of these mystery phrases as simply as possible.
Bear in mind that the word “exception” is used quite a bit, and because the NBA has a salary cap, these exceptions are made to allow teams which are over the cap to still maneuver.
Mid-Level Exception (MLE) – Once per year, each team that is over the salary cap and did not pay the luxury tax in the previous season may sign a player or players to the MLE. The MLE is valued at exactly $5MM in the first year of the new Collective Bargaining Agreement (CBA). The MLE can be divided between multiple players, but teams generally use their MLE to sign a single player. The duration of a contract signed using the MLE can be no more than four years. So, the first year contract of one player signed to the MLE would be $5MM and go up at a rate of three percent in each subsequent year.
An example -- Jamal Crawford was a free agent this offseason, and the Portland Trailblazers (who were over the cap, but did not meet the luxury threshold last year) opted to use their full MLE on him. He signed a two-year contract and makes $5MM this season.
Mini Mid-Level Exception (mini-MLE) – Teams that were over the salary cap and did pay the luxury tax in the previous season may sign a player to the mini-MLE. The value of the mini-MLE is $3MM in the first year of the new CBA. Again, teams may again use the mini-MLE on more than one player. The duration of a contract signed using the mini-MLE can be no more than three years. Just like the full MLE, the mini-MLE increases at a rate of three percent.
An example -- Vince Carter was a free agent this offseason and the Mavericks (over the cap and paid luxury tax last year) used their mini-MLE to sign him to a three-year deal in which he makes $3MM this season.
Bird Exception (Bird Rights) – This is a way for a team to keep their free agents even if the team is over the salary cap. Named after Larry Bird, who years ago chose to stay in Boston upon entering a free agent season, the new CBA allows teams to resign players who have played on their team for three consecutive years. Bird Rights transfer to a new team if said player is traded, but are not applicable if the player signs a free agent contract with a new team (he must play three years with the new team to become eligible again). Players signed using Bird Rights may receive contracts of up to five seasons and up to the maximum salary allowed depending on years of service and/or if they qualify for certain rules (see Rose Rule).
An example – Marc Gasol of the Memphis Grizzlies was coming off his third straight season in Memphis and therefore eligible for an extension by virtue of his Bird Rights. He signed a four year contract (it could have been five if the two sides had agreed to it) worth approximately $57MM.
Derrick Rose Rule – This rule applies to young superstars. If a player, on the last year of his rookie contract, has 1) Won an MVP, 2) Twice been voted an All-Star game starter or 3) Twice been voted a member of the All-NBA 1st, 2nd or 3rd team – This player is now eligible to sign an extension (for a max of five years) worth 30 percent of the salary cap. The namesake of this rule, Derrick Rose, won last year’s MVP and signed an extension of five years for $94MM. Kevin Durant is the only other player signed via the Rose Rule.
Amnesty Clause – This one is actually pretty easy to understand. The new CBA allows any of the 30 teams in the NBA to “amnesty” one player at any point before the 2015/16 season. By amnestying a player, the team will lose that player’s contract only as it counts towards the salary cap or luxury tax. This player still gets paid in full. When a player is amnestied, he becomes a free agent, enters a waivers process and any cap-eligible team can sign him (likely to a much smaller contract).
The difference in the two contracts is paid by the former team, but again, does not count against the salary cap or luxury tax. Essentially it is a provision which allows teams to rid themselves of an undesirable contract signed under the previous CBA. This provision may not be used on anybody signed under the new CBA.
An example – Baron Davis had a very undesirable contract and the Cleveland Cavaliers were quick to amnesty him. Davis was due $30MM over the next two seasons. The Knicks signed Davis to a one-year, roughly $1.35MM contract, after winning a bidding war. Cleveland will pay Davis the full amount owed minus the Knicks’ offer, but that money will not count one cent towards the cap.
I hope that all made sense.
***If you want to learn more about the NBA and its Collective Bargaining Agreement, check out these sites -- Storyteller Contracts and CBA FAQ ***
Alex Collins is a legendary overnight board-op at Sportsradio 1310 The Ticket and covers college basketball for rotowire.com. Let’s all help to get him over 80 twitter followers by checking out @ABCollins1010