Salary Cap 101

Blazers.com created a comprehensive FAQ concerning the NBA's salary cap several years ago.

This article can be found at:
http://www.nba.com/blazers/news/Salary_Cap_101-147720-41.html

What is a salary cap?
The salary cap is simply a limit on the amount of money that NBA teams are allowed to pay their players. The salary cap varies from year-to-year as it is calculated as a percentage of the League's revenue from the previous season. If the League did not have a salary cap, the teams in larger markets with more revenue streams would have an even larger advantage over the smaller market clubs.

Has there always been a salary cap?
The League had a cap in the mid-1940s, but the modern NBA instituted a salary cap prior to the 1984-85 season, striving to level the playing field for all teams and to maintain competitive balance throughout the League. Prior to the salary cap, teams were allowed to spend whatever they desired on players. The salary cap that first year was $3.6 million. The 2004-05 salary cap was the highest in history, $43.87 million.

Does the NBA have a "soft" cap or a "hard" cap and what is the difference?
The NBA has a soft cap meaning there are certain significant exceptions that allow teams to exceed the salary cap in order to sign players. Having a soft cap also helps teams keep their current players. A hard cap would not allow teams to exceed the salary cap in any circumstance. The NFL has a hard cap with very limited exceptions.

What is the Collective Bargaining Agreement (CBA)?
The CBA is a contract between the NBA and the Players Association that dictates the rules by which they operate. The current CBA, which is up at the end of this month, has been in effect since 1999. Both parties have been working on a new agreement since last year.

Are there exceptions to the salary cap and what are they?
Yes, there are several exceptions to the salary cap. These exceptions allow teams to sign players even if a team is over the cap. The exceptions are listed below:

Mid-Level Exception
A team is allowed to sign a player to a contract equal to the NBA average, even though the team is over the salary cap. The mid-level exception, which can be used each season, can be used on one player or split between many players. Contracts can be signed for up to six years. The mid-level exception last season was $4.9 million. Example: The Golden State Warriors signed guard Derek Fisher to a multi-year contract using the entire mid-level exception prior to the 2004-05 season.

$1 Million Exception
This exception, which was actually worth $1.6 million last season, cannot be used in consecutive seasons. The $1 million exception can also be split among more than one player. Example: The L.A. Lakers signed forward Karl Malone using the $1 million exception prior to the 2003-04 season.

Rookie Exception
Teams are allowed to sign their first round draft selections to rookie "scale" contracts even if the club is over the salary cap. Example: Even though the Trail Blazers were over the salary cap prior to the 2004-05 season, the team was allowed to sign both Sebastian Telfair and Viktor Khryapa to rookie contracts.

Larry Bird Exception
Free agents who qualify for this exception are called "qualifying veteran free agents" or "Bird Free Agents" and must have played under one or more contracts covering all of part of the three preceding seasons without changing teams as a free agent or being waived. If such a player is traded, his "Bird" rights transfer to his new team. The team holding the Bird rights can use this exception to sign him to a contract up to seven years in length with annual raises of up to 12.5%. If a first round draft pick finishes his three-year rookie scale contract (or four-year contract if the team exercises its option for a fourth season) the team will have full Bird rights. This exception is known as the Larry Bird Exception because the Boston Celtics were one of the first teams permitted to exceed the salary cap to re-sign their own free agent. That free agent was Larry Bird. Example: Damon Stoudamire and Shareef Abdur-Rahim both qualify as Bird players.

Early Bird Exception
Free agents who qualify for this exception are called "early qualifying veteran free agents" after playing only two seasons without changing teams as a free agent or being waived. A team may use this exception to resign a player for 175% of his salary the previous season or the average player salary whichever is higher. Contracts using this exception can be between two and seven years with annual raises of up to 12.5%. Example: Joel Przybilla will qualify for this exception after the 2005-06 season. He signed a two-year deal with the Trail Blazers after completing his rookie scale contract, which he originally signed with Milwaukee and was later traded to the Atlanta Hawks.

Non-Bird Exception
Free Agents who qualify for this exception are called "non-qualifying free agents" meaning they do not qualify under either the Larry Bird Exception or the Early Bird Exception. Under this exception, teams can resign a player to a contract beginning at 120% of his salary the season before or 120% of the minimum salary whichever is higher. Contracts can be signed for up to six years with annual raises of up to 10%.

Can a team use more than one exception to sign a player?
No. Teams can specify which exception they would like to use, but teams cannot combine exceptions in order to sign a player.

What types of free agency does the CBA allow?
There are two types of free agents in the NBA; unrestricted and restricted. An unrestricted free agent is free to sign with any team while a restricted free agent is subject to his current team's Right of First Refusal. This means that the player can be signed to an offer sheet by another team, but his current club can match the offer and keep the player. For a first round draft pick, restricted free agency is only allowed after a team exercises its option for a fourth year and the team makes a Qualifying Offer at the Rookie scale amount after the fourth year is completed. For all other players to be a restricted free agent, he must be in his first three years in the NBA and his team must have made a Qualifying Offer for 125% of his previous season's salary, or the minimum salary plus $150,000, whichever is higher.

What is an offer sheet?
An offer sheet is at least a two-year contract offer to a restricted free agent. The original club has 15 days to match the offer or loses the player to the new team. Example: Prior to last season, the Trail Blazers signed Minnesota Timberwolves guard Trenton Hassell to an offer sheet. The T-wolves matched the offer and kept Hassell.

Does a team get compensated when they lose a free agent to another club?
No, the team just loses the player.

What is a rookie "scale" contract?
First round draft picks are slotted in salaries according to their draft position. The first pick receives more than the second pick, the second more than the third, and so on. Each contract is for three-years with a team option for a fourth season. For a fourth season, the team must exercise the option by October 31st following the second season.

What is a sign-and-trade?
Simply put, it is when a team signs one of its free agents and immediately trades that player to another team. A sign-and-trade is beneficial to both players and teams; the player receives more money than they might ordinarily get from a team they would like to play for while the trading club gets something in return for a free agent.

What are player and team options?
Player options give the player the right to invoke an option year while a team option allows the team that right. NBA contracts only allow for one option year and the option year salary cannot be lower than the previous year.

Are there salary restrictions for players?
Players have minimum and maximum salaries, based upon the amount of seasons a player has been in the NBA. The more years a player has played, the higher the salary.

How does the salary cap affect trades?
The total salaries of the players being traded must end up within 115% of each other plus $100,000. The NBA's salary cap is an amazingly complex piece of work that requires a ton of homework, and in some cases, a law degree. It's easy to understand why so few major trades actually take place. The cap restricts player movement, and is designed to give some measure of equality from the teams in the large markets to the teams in the smaller cities. Obviously, it has been successful, but challenges remain. If you've ever wondered why certain players, or teams, make the moves they do, or don't make any moves, it's helpful to educate yourself. If this were offered as course in college it would easily take more than one term to master the cap. Most fans don't have the time, the means, or the drive to full understand the inner workings of the legalities of everything in the NBA's salary structure. But, hopefully this has helped answer some of the basic questions.

Bibby Heading East?

Rumors coming out of Miami have the Heat and the Kings discussing a trade to bring Mike Bibby to the Eastern Conference. Bibby would add the steady point guard that the Heat have been searching for.

To make this trade logical for both teams, a handful of other players would need to be included. Here is the trade that would allow the Heat to acquire Bibby:

Sacramento trades Mike Bibby and Kenny Thomas to Miami for Jason Williams, Udonis Haslem, Wayne Simien, Michael Doleac, Dorrell Wright, and a first round pick.

With Bibby being the top talent in ths trade, the Heat would certainly be acquiring the better talent. However, the Kings would see a great deal of cap relief from doing this trade.

2007-08 Salaries
Dorrell Wright $2,040,746
Jason Williams $8,937,500
Michael Doleac $3,120,000
Wayne Simien $997,800
Udonis Haslem $6,050,000 (3 years remaining)

Kenny Thomas $7,875,000 (3 years remaining)
Mike Bibby $13,500,000 (2 years remaining)

In 2007-08, salaries almost match.
In 2008-09, Sacramento saves almost $16,000,000.
In 2009-10, Sacramento saves almost $1,500,000.

Additionally, Haslem is only 27 years old and has a great deal of experience already. Haslem has developed a nice mid-range shot. He shoots especially well from the baseline and has shown a knack for aggressive offensive rebounding. Haslem needs to add some post moves, possibly a jump hook or an improved drop stop. He plays with a great deal of energy, moves his feet well, and plays physical defense. In Sacramento, Haslem and Hawes would be nice building blocks for the Kings rebuilding.

Dorrell Wright has shown some flashes of his potential, but needs more playing time. The Kings would likely consider releasing Michael Doleac and Wayne Simien.

Another possibility for this trade to work would simply be removing the first round pick and including Shareef Abdur-Rahim. However, it is widely believed that Abdur-Rahim is a better player than Thomas and the Kings would certainly try to hang on to him.

By going ahead with this trade, the Kings would be able to gain a great deal of cap flexibility after this season. With potentially Gilbert Arenas, Shawn Marion, and Jermaine O'Neal all becoming free agents the Kings could have the cap room to sign one of these guys. For Miami, Pat Riley would finally land a reliable point guard to play alongside of Wade. Kenny Thomas could step into Haslem's role at the power forward, while only seeing a small dropoff in scoring and rebounding. However, with available spots on the roster after this trade, the Heat would be able to persue an available big man. Melvin Ely, Corliss Williamson, Danny Fortson, and especially P.J. Brown would all fill in nicely here.

With Brown, Thomas, and an additional free agent joining the mix of Wade, Walker, Mourning, Parker, O'Neal, and Hardaway would have a strong enough nine man rotation to compete for the finals. If the Kings go ahead with this trade, it would jump start their rebuilding process with a great deal of roster and cap flexiblity.

Does a Big Man Guarantee Success?

From the 2000-01 to 2006-07 seasons, 14 traditional post players (excludes Dirk Nowitzki, Kevin Garnett, etc.) have scored 20.0 points per game or more in more than one season. Shaquille O’Neal (6 times), Tim Duncan (6), Elton Brand (5), Chris Webber (4), Jermaine O'Neal (4), Amare Stoudemire (3), Karl Malone (3), Chris Bosh (2), Shareef Abdur-Rahim (2), Pau Gasol (2), Zach Randolph (2), Carlos Boozer (1), and Antonio McDyess (1) have reached this feat. So how does having a big time scorer in the post affect a team’s success? Let’s take a look at each player, the year they reached the feat, the team they were on, their key teammates, and the success of the team.

Shaquille O'Neal
2000-01, Lakers, Kobe Bryant, 56
2001-02, Lakers, Kobe Bryant, 58
2002-03, Lakers, Kobe Bryant, 50
2003-04, Lakers, Kobe Bryant, 56
2004-05, Miami, Dwyane Wade, 59
2005-06, Miami, Dwyane Wade, 52

Tim Duncan
2000-01, Spurs, David Robinson, 58
2001-02, Spurs, David Robinson, 58
2002-03, Spurs, David Robinson/Tony Parker, 60
2003-04, Spurs, Manu Ginobili/Tony Parker, 57
2004-05, Spurs, Manu Ginobili/Tony Parker, 59
2006-07, Spurs, Manu Ginobili/Tony Parker, 58

Elton Brand
2000-01, Bulls, Ron Artest/Ron Mercer, 15
2003-04, Clippers, Corey Maggette, 28
2004-05, Clippers, Corey Maggette, 37
2005-06, Clippers, Sam Cassell, 47
2006-07, Clippers, Corey Maggette, 40

Chris Webber
2000-01, Kings, Peja Stojakovic, 55
2001-02, Kings, Peja Stojakovic/Mike Bibby, 61
2002-03, Kings, Peja Stojakovic/Mike Bibby, 59
2005-06, 76ers, Allen Iverson, 38

Jermaine O'Neal
2002-03, Pacers, Ron Artest, 48
2003-04, Pacers, Ron Artest, 61
2004-05, Pacers, Stephen Jackson/Reggie Miller, 44
2005-06, Pacers, Stephen Jackson, 41

Amare Stoudamire
2003-04, Suns, Shawn Marion, 29
2004-05, Suns, Steve Nash/Shawn Marion, 62
2006-07, Suns, Steve Nash/Shawn Marion, 61

Karl Malone
2000-01, Jazz, John Stockton/Donyell Marshall, 53
2001-02, Jazz, John Stockton/Donyell Marshall, 44
2002-03, Jazz, John Stockton/Matt Harpring, 47

Chris Bosh
2005-06, Raptors, Mike James/Morris Peterson, 27
2006-07, Raptors, T.J. Ford, 47

Shareef Abdur-Rahim
2000-01, Grizzlies, Mike Bibby, 23
2001-02, Hawks, Jason Terry, 33

Pau Gasol
2005-06, Grizzlies, Mike Miller/Eddie Jones, 49
2006-07, Grizzlies, Mike Miller, 22

Zach Randolph
2003-04, Trail Blazers, Damon Stoudamire, 41
2006-07, Trail Blazers, Brandon Roy, 32

Carlos Boozer
2006-07, Jazz, Deron Williams, 51

Antonio McDyess
2000-01, Nuggets, Nick Van Exel, 40

So what does this mean? Of the seven seasons examined, six of them ended with the champion having one of the big men listed above. The one exception is the 2003-04 season, which ended with the Detroit Pistons beating Shaquille O'Neal and the Los Angeles Lakers. Additionally, here are the results broken down by number of regular season wins:

0-19 wins: 1 time
20-29 wins: 5
30-39 wins: 4
40-49 wins: 11
50-59 wins: 15
60-up wins: 5

So, it's obvious that having a big man who can score twenty points a night greatly increases your chance of winning the championship. But what about the players around that big man? How does that effect your chance for success?

Recently, after the announcement that the Magic were going to add Rashard Lewis to the mix with Dwight Howard and the rest of the group in Orlando, head coach, Stan Van Gundy said: "I don't know if the formula of a great perimeter player and a great inside guy has failed very often. Those are always very good teams. There may be other ways to do it, but the most tried-and-true formula in this league is to have one great perimeter player and one great inside player."

Well, let's take a look and see how strong inside-outside duo's have done:

Shaquille O'Neal: Playing with Bryant in Los Angeles and Wade in Miami, he has won at least 52 games each season, while winning three championships during that period.

Tim Duncan: From the 2002-03 season to now, Duncan has teamed with Tony Parker. From 2003-04 to now, Manu Ginobili has also been in the mix. During that time, Duncan has won three championships and at least 57 games per year.

Elton Brand: Brand has only played with a legitimate outside threat once in his career. In teh 2005-06 season, Sam Cassell was traded to the Clippers and they won 47 games and made it to the second round of the playoffs. In Brand's other four seasons where he reached the twenty point per game mark, he was paired with players such as Ron Artest, Ron Mercer, and Corey Maggette. Because of inexperience or the inability to score efficiently, I would not consider these players to be real outside threats or at least at the same ability of Rashard Lewis today.

Chris Webber: Each year he has reached the twenty point per game mark, Webber has had the fortune of playing with a great outside game. First, it was Peja Stojakovic in Sacramento, then in the 2001-02 season, Mike Bibby was added to the Kings roster. From 2000-01 to 2002-03, the Kings won at least 55 games per season. The one mark on Webber's history, is his 2005-06 season with the 76ers where he teamed up with Allen Iverson. That season, Philadelphia was only able to win 38 games, which clearly was a disapointment.

Jermaine O'Neal: O'Neal has had the good fortune in playing with some really intriguing wing players during his career. In 2002-03 and 2003-04, a seasoned Ron Artest led the way with O'Neal for the Pacers. Both of those years were a great success as they were clearly a competitor for the championship. In 2004-05, the Pacers season was disrupted early by the malaee in Detroit. Artest was suspended for the season, and Stephen Jackson and Reggie Miller had to provide support from the outside for O'Neal. However, Indiana was still able to win 44 games. The 2005-06 was not successful for the Pacers who were led by O'Neal and Jackson. The Pacers only won 41 games and lost in the first round of the playoffs.

Amare Stoudemire: Stoudemire has had a great deal of success during his time with the Suns since point guard, Steve Nash, joined the squad. Unfortunately, before Nash joined the team in 2004-05, the Suns did have their struggles. In 2003-04, Stoudemire scored more than twenty points per game, but the Suns only won 29 games. After 34 games, guard Stephon Marbury was traded away from the team and Shawn Marion and Joe Johnson were the consistent outside prescence for the Suns. This season was a stepping-stone for the Suns, but a failure at the time for the Suns and Stoudemire.

Karl Malone: Malone had great success in Utah during his career as the inside of the greatest inside-outside combination in NBA history. In the 2000-01, 20001-02, and 2002-03 seasons, Malone reached the twenty point per game mark each year and the team won 53, 44, and 47 games each season. Although they lost in the first round of the Western Conference playoffs each year, the Jazz were still a success each year with Malone in the post.

Chris Bosh: This past season, Bosh teamed with T.J. Ford to create a strong inside-outside game for Toronto. The Bosh-Ford duo led to the best year in franchise history with 47 wins and their first division title.

Shareef Abdur-Rahim: Although Mike Bibby and Jason Terry did become great outside threats later in their careers, when Abdur-Rahim played with them, I do not consider them to be strong enough players.

Carlos Boozer: Boozer teamed with Deron Williams this past season in Utah to win 51 games and reach the Western Conference finals. The Boozer-Williams team was the perfect inside-outside duo and suprised many teams throughout the season.

Pau Gasol, Zach Randolph, Antonio McDyess: By my estimation, none of these players were teamed with a great outside threat during the season they reached twenty points per game. Therefore, like Abdur-Rahim, they will not be considered in this.

So what does this all mean? At the end of the day, only Webber in 2005-06 (Iverson), Jermaine O'Neal in 2005-06 (Jackson), and Stoudemire in 2003-04 (Marion) played with a great outside threat and did not have success. At the same time, 24 guys during the 2000-01 to 2006-07 season were apart of a great inside-outside duo and in fact did experience success.

So, after looking at this, we can now prove that Magic head coach, Stan Van Gundy, was correct when he made his comments recently. As long as Rashard Lewis can continue his production, the Magic should have big success coming. With a perimeter player who can score twenty points per game every night, and a post player in Dwight Howard, who will score twenty points per game every night, the Magic will have success - at least if you look at recent history.