NBA Salary Cap Exceptions
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Why are birds so discriminated against that they need Bird Rights?
If you've ever programmed in Java, exceptions can be your worst nightmare (hello NullPointerException!). But in the world of the NBA Salary Cap, they are a common way in which teams sign players or absorb their contracts in trades. When teams have cap room, they can sign players or take on their salary in trades outright, up until they reach the cap. However, the cap is known as a soft cap because there are exceptions which allow teams to go over the cap. In fact, it's Charmin soft because there's a ton of exceptions. There are levels of financial and team building restriction penalties, which we outlined here, which do function more like a hard cap. Today we'll explore all the different types of exceptions. Something to know before we dive in is that all the exceptions below can be used to sign multiple players, so long as their combined contracts' value is within the exception's amount. Multiple exceptions, though, cannot be used to sign one player.
Room Mid-Level Exception
The first three exceptions are all called Mid Level Exceptions (MLE). The MLE for Room Teams, as it's called in the Collective Bargaining Agreement (CBA), is for teams who started off the league year under the salary cap. Once these teams use up their cap space, they can use this exception to sign a contract starting at 5.678% of the cap for up to 3 years. Also, once a team uses this exception, they cannot use the Non-Taxpayer Mid-Level Salary Exception, the Taxpayer Mid-Level Salary Exception, or the Bi-annual Exception for the league year.
Non-Taxpayer MLE
The Non-Taxpayer MLE is more juicy, it goes up to 9.12% of the salary cap for up to 4 years and is available to teams below the first apron, even if they're above the luxury tax threshold and are paying the tax. Why wouldn't a team under the cap use this one instead of the MLE above since it's higher? The NBA didn't want to give too much of an advantage to teams going under the cap, so you actually become ineligible for this exception if you go under the cap. It's a weird but interesting way that the NBA actually somewhat favors teams over the cap signing lower end veterans.
Taxpayer MLE
The Taxpayer MLE is ~$6 million and grows linearly with the salary cap each year and is available to only teams above the first apron. Deals signed with the Taxpayer MLE can only go up to 2 years. You won't get amazing players at this price range, but it's still something. It's one of several tools teams lose when going over the second apron, which goes to show just how much of a death knell that darn apron can be. Read our breakdown of the different salary cap levels here.
BAE
The Bi-Annual Exception (BAE) is the bae of teams over the cap but under the first apron. It allows such teams to sign players to 3.32% of the salary cap in addition to using the Non-Taxpayer MLE. The only catch is that it's available every other year, as implied by the name. It's much smaller than its MLE cousin, so it's more of a way to just help fill out the roster than sign major impact players.
Rookie
A team can always sign its first round draft picks to their salary slot based on their draft position. Second round picks don't have a salary scale, but can be signed to 3 or 4 year contracts so long as their salaries are the rookie minimum for that year. For example, the Memphis Grizzlies were over the cap last year but were still able to sign rookie Jaylen Wells to a 4 year, $7,895,796 contract. He took up ~1.5% of the cap and averaged 10 points, providing a great ROI for the capped out Grizz.
Minimum Salary
As you might imagine, the NBA wouldn't want a team to only field 4 players, even if it was dumb enough to sign 4 players to $50 million dollar a year contracts each. Wait, don't tell Matt Ishbia about this, he might get ideas! So a team is always allowed to sign a player for the minimum amount for their years of experience. This is how teams in the Big 3 era of team building would add aging big names to their roster. A prime example is David West, who was a solid backup big for the Golden State Warriors as they went back-to-back. Unfortunately, a lot of other ring chasers signed for the MLE (looking at you Ray Allen), so they aren't true Veteran Minimum Dawgs.
Disabled
Next up comes the Disabled Player Exception. Teams can use this for players who are injured and will be out through June 15th, i.e. the whole season. When an independent doctor verifies the injury, teams get an exception for 50% of the player's salary or the Non-Taxpayer MLE, whichever is less. The only catch is that if they're signing a player, the deal must be for one year, or if they're trading for a player, he must have one year left on his contract. Keep an eye on the Boston Celtics potentially using this next year with Jayson Tatum out for the year. He of course makes more than double the Non-Taxpayer MLE, so at best they'll get a rotation player to help fill the gap.
Traded Player
When a team receives less salary then it sends out, it generates a Traded Player exception equal to the difference plus $250k. It's a way for teams to maintain their salary levels, if they so choose, but only lasts for 12 months from the date of the trade. The Celtics again have a prime example of this. They created the largest TPE ever, $28 million when they sign-and-traded Gordon Hayward to the Charlotte Hornets for just a second round pick. They later used this to absorb Evan Fournier's contract.
Veteran Free Agent Extension (Bird Rights)
This exception is also called Bird Rights. It's not because of any recent advances in bird law, but rather because Larry Bird was the first free agent to sign an extension using this exception. It allows teams to sign players already on the team to extensions that will take them over the cap (or keep them over the cap if they're already there). How flexible the exception is depends on how long the player has been on the team.
Teams get Full Bird Rights on a player if the player has been on the team for at least 3 consecutive seasons. If so, they can sign a deal up to 5 years for 175% of their previous salary or 105% of the average league salary, whichever is greater. If a player has only been on the team for 2 consecutive seasons, a contract can be the same value, but the length must be between 2-4 years. If a player has been on a team for less than 2 years, then the team can only offer up to the greatest of 120% of their previous salary or 120% of the league minimum.
While Bird Rights often allow a team to pay him as much as any competing teams are willing to, there are times when it doesn't suffice. The Knicks got boinked by this rule in the summer of 2024, when Isaiah Hartenstein was a free agent for them and had only been with the team for 2 years. Because of this, they could only offer about $16.2 million per year. Instead, the Oklahoma City Thunder swooped in with their cap space and signed him for an average of ~$29 million per year.