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 A More Ideal NBA CBA, Part V - Exceptions in the Current CBA and Why Most Will Be Gone

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PostSubject: A More Ideal NBA CBA, Part V - Exceptions in the Current CBA and Why Most Will Be Gone   Thu Mar 10, 2011 10:35 pm

EXCEPTIONS IN THE NBA RIGHT NOW
Exceptions are instances where an NBA team sings a player to a contract that would either bring a team above the soft cap, or allow a team to sign a player when it's already above the cap.

So far in our education journey, the main exception that was examined was the Larry Bird exception, which currently allows teams to sign players even if it is already above the soft cap or if signing the player would bring the team above the soft cap. In my era with a hard cap, the Larry Bird exception is eliminated and changed into simply Larry Bird rights since they allow a team to offer larger increases a year and an extra year on the contract. Now we will hit the many other exceptions NBA teams use and which one will actually stay with a hard cap.


1. MID LEVEL EXCEPTION (a/k/a MLE)
This is potentially the most lucrative exception a team has in its disposal if it's above the cap. This is where a team is allowed to give a contract to a player in the amount of the average salary of an NBA player the previous season. Another thing about the MLE is that it can be used every year. The actual MLE amount is determined before the free agency period in July. The exception can be broken up to more than one player as well, but the total amount of salary between the players can be no more than the MLE. In addition, the contract can be no more than five years long, and annual increases can be no more than 8% of the 1st year's salary a year. The mid level exception this year is $5,765,000.00, once all of this money is used, that's it. This is the amount of a maximum MLE deal to one player starting this season with maximum salary increase of $461,200.00:

Year 1 $5,765,000.00
Year 2 $6,226,200.00
Year 3 $6,687,400.00
Year 4 $7,148,600.00
Year 5 $7,609,800.00

$33,437,000.00

With a hard cap, this exception is moot, so RIP, MLE. At least these contracts are reasonable in price in and of themselves.


BI-ANNUAL EXCEPTION
The bi-annual exception allows teams to sign a free agent up to a certain salary amount which is considerably lower than the MLE. Contracts may only be up to two years in length with a salary increase of no more than 8% of the 1st year's salary. The amount is specified each year at a set figure, this year it is $2,080,000.00. A maximum bi-annual exception contract is below with a salary increase of $166,400.00.:


Year 1 $2,080,000.00
Year 2 $2,246,400.00

$4,326,400.00

If a team uses this exception in one season, the team may not use this exception the following season, but may use it the year after. Teams typically sign older veterans to this exception. An example is Fabricio Oberto, who was signed to the Washington Wizards with the exception in 2009-2010. In the 2010-2011 season, the Wizards cannot use this exception, but in 2011-2012, the Wizards may use it again if the CBA were still the same. Like the MLE, this exception is moot with a hard cap.


ROOKIE EXCEPTION
In the NBA Draft, all first round picks are guaranteed a contract for two years, plus options for the third and fourth seasons, and a fifth year qualifying offer which will be 130%-150% of the fourth year salary. All teams are therefore allowed to sign their 1st round picks even if doing so brings them above the soft cap.

We will get to the rookie scale in another section. But with a hard cap, rookies cannot be signed to bring a team above the cap. Teams will either have to do one of the following:


  • Trade other players on their teams to open up room to sign the rookie
  • Trade the rookie to another team with room to sign the player.
  • The team renounces draft rights to the rookie, allowing the player to sign with another team as a free agent.
  • The team retains the rookie's draft rights, but the player must either play in another professional league until the team has money for him or he must go back to college if he was from a college (I know that isn't allowed right now - we'll hit this in the rookie section which will be later).....
That's what happens in the NHL.

TRADED PLAYER EXCEPTION
This allows trades among teams above the soft cap. If a team is above the cap, all trades can only acquire salary up to 125% plus $100,000.00 of what it had before the trade. If a team is above the cap and ends up getting less salary in return, then the team acquires what is colloquially known as a "trade exception", or essentially, phantom space that can allow that team to get additional players in trades up to the amount of that phantom space. Teams have only up to one year after the trade to use the exception.

It's kinda hard for me to explain this, but in these trades, one team may view a transaction as one trade, but the other team will view the same thing as two or more trades depending on the circumstance...

With the hard cap, no trades can be conducted to allow a team to go above the cap obviously, so this exception is also gone.


MINIMUM CONTRACT EXCEPTION
In the current CBA, NBA teams above the soft cap may use this exception as many times as they want to sign free agents, but can sign them only to minimum contracts, which vary depending on their experience. Again this exception is moot with hard caps.


DISABLED PLAYER EXCEPTION/INJURY EXCEPTION
If a player is out for the remainder of a season between July 1 and November 30 of a calendar year, a team may elect a disabled player exception that allows the team to go over the cap to sign another player or players to replace the injured player. The amount of this exception is the MLE or the injured player's salary, whichever is less. Houston used this exception in 2009-2010 when Yao Ming was out for the year. The Wizards in 2007-2008 and 2008-2009 however could not use this exception because they never stated that their star player, Gilbert Arenas would be out for the season.

This exception is something that will stay. Again, we're going to use the NHL's salary cap rules as the example. If an NHL player is injured and will be out for the rest of the season, his team is allowed to get a player or players for up to the amount of the salary that the injured player is making, if the amount of cap room the team has left is not as much as the total cap hit/salary of the injured player. In layman's terms:

Washington Capitals Forward Alex Ovechkin tears his ACL in October 2011 and is out for the season. Ovechkin makes a salary of $9 million for the 2011-2012 season. If the Washington Capitals have $8 million of cap room, that's less than Ovechkin's salary, so the Caps are allowed to go over the salary cap to acquire players for up to the amount of money Ovechkin makes. If the Capitals have $10 million of cap room, they cannot elect the disabled player exception and must use whatever room they have left because that amount is more than Ovechkin's salary. I don't want Ovechkin injured by any means, but this is an easy example for you guys.

I believe the NBA should use the same rules for a disabled player exception as the NHL with a hard cap by allowing a team to elect the exception if it doesn't have remaining cap room that is more than that particular player's cap hit.
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A More Ideal NBA CBA, Part V - Exceptions in the Current CBA and Why Most Will Be Gone
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