In the 2014-2015 NBA season, each team will be limited by a $63 million salary cap (or maximum). The league has a host of exceptions, which allow teams to exceed the cap and to be competitive, usually means going over the cap.
The largest impediment to a team picking up valuable free agents is the cap holds a team might have for players from last year’s team. When a team’s player goes to free agency a percentage of that player’s salary is held on the team’s cap until, they resign the player and the contracted amount is added to the salary cap while the hold is removed, or the team renounces rights to the player.
Why would a team want rights to a player? Of the many exceptions is the Larry Bird exception. The Bird exception allows a team to resign a player which they have rights to even while they are at or over the salary cap. A player and team have Bird rights after that player has played for the team for three years.
This is where it gets a little tricky. Many times the cap hold is more money than the contract the player will sign with the team. If a player made above the league average salary, about $5.3 million, than the cap hold for that player is 150 percent of the player’s previous salary or the league’s maximum salary. Take Chris Bosh for instance, he made just over $19 million last season and his cap hold is the maximum salary ($20.6 million). If a player made less than the league average, the cap hold is 190 percent of the player’s previous salary. Take Udonis Haslem for instance, he made $4.3 million last season and his cap hold is about $8.3 million.
Using the Bird exception to sign both players will not give the Heat maximum benefits of the exceptions. When the Heat sign (in this hypothetical) Udonis Haslem for nearly $2 million their salary would reduce by over $6 million. If that reduction brings the team below the salary cap the team must add the salary towards their cap without using an exception. On the other hand, if a player’s expected salary is greater than their cap hold the Bird exception is a great way to surpass the cap. Take the Miami Heat’s Chris Andersen (Birdman), he has a cap hold of just under a million dollars, but the contract he is expected to sign is thought to be in the $5 million range. The Heat may sign his using an “early Bird exception” (similar to the Bird exception just slightly less money) for $5 million and exceed the cap by $4 million.
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