Ah, the Collective Bargaining Agreement (CBA). The CBA was the cause for a lockout-shortened 2011-12 NBA season and continues to cause many a headache for fans desperately trying to work out trades and free agent signings. I am one of those people who thought they could take on the CBA without help and come out with a pretty solid understanding of Bird Rights, Mid-Level Exceptions, and cap holds. As it turns out, I was dead wrong. While I learned a lot from my six-hour perusal of the CBA last Sunday afternoon (one could argue it counts as scripture study) I ended up getting a lot of my facts wrong.
Lucky for me, Dan Clayton, Ron Boone’s counterpart for the Utah Jazz’s Spanish station (1600 AM), decided to take the time to help me figure out the many-headed beast that is the CBA. Dan has covered the Jazz for more than 10 years for a variety of Spanish media outlets, and is currently in his third season working the play-by-play. I sat down with him and he graciously answered all my questions about the salary cap, exceptions, cap holds, and everything else NBA-salary related.
Spencer: So first off, Big Al was traded to Utah and he was signed here using his Bird Rights. He can’t have them again until next season correct?
Dan: That’s not how Bird Rights work. Al’s Bird Rights have been intact since 3 years in the league because he has never moved as a free agent. He has re-upped as a free agent and he has been traded, but neither activity resets his Bird Rights.
Spencer: So is it possible for a player to renounce their Bird Rights?
Dan: Technically a player doesn’t forfeit his rights (they’re not his to forfeit) but he can accept less than the full Bird max deal. Now, a team can renounce Bird Rights to a free agent but not a guy under contract. Usually, they’d only do it to free the cap hold and sign someone else. If they renounce Al’s rights, they have to use cap space or something like the mid-level exception (MLE). So the only reason to do it is if you know you’re not signing.
Spencer: So what about Mo and Marvin Williams? Do they still have Bird Rights?
Dan: Yes, their Bird Rights are intact because, like Al, neither of them has moved in free agency for more than three years.
Spencer: But they were both signed on their Bird Rights, and haven’t played 3 or more years here in Utah. So how are the qualified for Bird Rights?
Dan: They have both played their 3 or more years. Their rights don’t reset when they sign a new deal (with their current team), only if they sign elsewhere. For example, Mo Williams was last signed as a free agent in 2004. He was then traded to the Cavaliers, Clippers, and then here. So his Bird Rights have been intact since 2007. You only have to start over his year count when he leaves his team as a free agent.
Spencer: That makes a lot more sense now, thanks. So if the Jazz wanted to sign Mo next year, they’d have to sign him to at least a $12.75 million deal according to his cap hold, right? And couldn’t they also use their MLE on him?
Dan: No, no, and no. A) A cap hold is different than a max salary. Mo’s cap hold is $12.75 million, as you mentioned, but his max salary is the same as any player with his experience – 35% of the salary cap. Cap hold doesn’t have any effect on max salary. B) You don’t need the MLE to sign your own Bird free agent. The Jazz can sign Mo, Marvin, Paul, and Al to any amount up to their full Bird max amount, without using a separate exception. This leaves their MLE intact. Even if they signed Mo for $5 million, they’d be using the Bird exception to do it, not the MLE.
Spencer: That makes sense. So what is a cap hold exactly? From how I understand it, it’s the amount of money a player holds against his team’s salary cap for the following season, correct?
Dan: Yes, correct. Mo’s cap hold is 150% of his 2012-13 salary, the $12.75 million you mentioned. That is the number the Jazz have to count until either a) Mo signs for a different amount (with the Jazz or another team), and then they use that number, or b) they renounce his rights so that those 12.75 million dollars aren’t keeping them from signing someone else or having cap space for an uneven trade. Most likely, they would keep his rights until they had to clear him off their books to make a deal go through.
Spencer: So a cap hold is basically a ballpark figure used to hold a player’s salary against his team’s cap until he signs for less, more, or leaves?
Dan: Yes, it keeps teams from signing a bunch of free agents and then saying, “Ok, now we’re gonna re-sign our guys too,”.
Spencer: Ah! I understand! So cap holds prevent an abuse of Bird Rights on free agents?
Dan: Right, they prevent a team from using cap space that they really don’t have by manipulating the order of who signs first.
Spencer: So basing next year’s contracts off a cap hold is a safe practice? Assuming of course that the player will agree to sign for that amount?
Dan: No, the new salary isn’t necessarily even in the same ballpark. Mo’s cap hold is $12.75 million, but the market says he’s probably worth $8-10 million.
Another example is Wesley Matthews. As a non-first round pick coming off a one-year minimum deal, his cap hold didn’t even break a million bucks. But obviously the open market dictated a very different salary for him.
Spencer: So what about Randy Foye? His cap hold is $3 million, will he merit more than that?
Dan: Foye’s a little different because he doesn’t have his Bird Rights, by coincidence, so his cap hold is the same as the non-Bird exception: 120% of this year’s salary. The Jazz could offer him more than $3 million, but they’d have to use their MLE to do so, or clear cap room by renouncing other guys.
Spencer: So you can’t offer a player more than his cap hold unless you first clear other player’s cap holds?
Dan: You can offer a player any amount up to his maximum salary. The cap hold isn’t a restriction at all, so once you sit down to negotiate with the player, the cap hold doesn’t matter at all in that conversation — it’s completely separate from the set of rules and restrictions that dictate what you can offer your guy.
What I meant with the Randy Foye example is this: the max they can offer him as a non-bird free agent is a deal starting at 120% of his current salary: $3M. That has nothing do with his cap hold (except that in Randy’s case, his cap hold happens to be the same number). They can offer him up to the $3M non-bird max, but if the market for Foye is north of $3M, they can do one of two things. 1) They can dip into the mid-level exception and pay him up to the 5-and-change that the new MLE will allow. Or 2) since the Jazz only have about $26M in salaries committed for next year, they could use cap space to sign him. BUT, because of the cap holds associated with all the other free agents, they don’t really have cap space until they rescind some of those rights or sign guys to lesser salaries.
So let’s say they re-sign a couple of their main FAs… let’s just say Paul and Mo for the sake of argument, at 18M. Add in 3-4M for cap holds for two mid-first round picks, plus 1M for two minimum roster cap holds. They’d be at 49M, so if they renounced everybody else at that point, they’d have about 9M to spend however they saw fit — bring back Foye, sign a second-tier free agent, etc.
Spencer: Ah, that makes sense now. Those cap holds have been hurting my head for the past few days. So let’s talk about the MLE now. Let’s say the Jazz are over the salary cap by $3 million. They can use the non-taxpayer MLE because it won’t put them over the apron, correct?
Dan: You’re correct on that one, unless the transaction would put the Jazz $4 million above the tax line, in which case they’d have to use the taxpayer MLE rules.
Spencer: But a team only has to use the taxpayer MLE rules if they’re $4 million or more over the tax threshold, not the actual salary cap itself, right? Even if they were over the cap but under the tax threshold they can still use the non-taxpayer MLE can’t they?
Dan: Yes, they can use the non-taxpayer MLE if they’re over the cap, just not if they’re over the tax line, or if using the non-taxpayer MLE would put them $4 million over the tax threshold.
Spencer: So what’s the difference between a Room MLE and a Bi-Annual MLE?
Dan: The bi-annual exception isn’t an MLE at all. It is in addition to the MLE and can be used to sign any free agent (yours or another team’s) to a 1- or 2-year deal starting around $2M. But it can’t be used in consecutive years.
The MLE is a different animal altogether, and every team can use it every year, but with different restrictions based on their cap situation. The regular MLE is set around the average salary ($5M this year, $5.15M next year) and can be used on a player or split between multiple players. Teams above the apron (4M above the tax line) or teams whose use of the full MLE would put them over the apron can’t use the full amount; instead, they have to use the taxpayer MLE which runs about $2 million lower and can only be used to sign a guy for 3 years (instead of four). The room MLE is another category of the same exception, and it’s for teams who drop below the cap and in so doing lose their full MLE and their bi-annual exception. Basically it says that you can go under the cap, use that cap space to sign guys, but still have $2.652M (the 2013-14 figure) to sign somebody beyond their cap room. This didn’t exist in the old CBA, so once a team went under the cap and then spent all of its cap space, it was restricted to signing only minimum-contract guys to fill out its roster.
Spencer: What is a traded player exception?
Dan: A “traded player exception” is actually a bit of a misnomer, because the way the CBA treats it is just as a simultaneous trade. Don’t get me wrong, TPE is the term we all use, so it’s correct: but really it’s just the CBA giving a team a little extra time to get full value back in a trade.
In a simultaneous trade — the regular kind: we’ll give you player X for player Y — you can take back 150% of the outgoing salary plus 100K (rules are slightly different for high-dollar trades, but just play along). The logic of a non-simultaneous trade is that there was nothing available right at that moment for you to get full value in the trade, so you get a sort of credit so you can complete that trade later (within one year), but now you can only take back 100% plus 100K.
So if you traded Al Jefferson for a draft pick, you’d have a year to “finish” the non-simultaneous trade by bringing in up to $15.1M in salary. The Jazz use that trade exception (or non-simultaneous trade) to acquire a $12M player from Team X, and now Team X has its own $12.1M trade exception that lasts a year. TPEs cannot be used to acquire a free agent — they can only be used in trades.
I should also probably mention that I wouldn’t know what I know about cap rules if guys like Larry Coon weren’t so generous with their knowledge. Three CBAs ago, I set out to make myself a cap maven as the Jazz were about to have some cap space; if it weren’t for Coon’s site (now at cbafaq.com), I would have failed miserably.
Spencer: Thanks for doing this Dan, I really appreciate this.
Dan: No problem.
There you have it folks. While this isn’t a completel in-depth review of the CBA, it does shed some light on the more complicated parts of the CBA that become very pertinent during the trade season. Dan is a highly recommended follow on Twitter, @Jazz1600AM.