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The NBA Free Agency Glossary: A Beginner’s Guide to Key Terminologies

1. Unrestricted Free Agent (UFA) – An Unrestricted Free Agent (UFA) in the NBA is a player whose contract has expired and is now free to sign with any team they want without any restrictions. The player’s former team has no right to match any offer the player receives from another team or get any compensation if the player leaves.

2. Restricted Free Agent (RFA) – A Restricted Free Agent (RFA) in the NBA is a player whose contract has expired. However, their original team still has some control over them. The player can negotiate with any team and sign an offer sheet, but their original team has the right to match that offer and keep the player on their team. The original team has to make a qualifying offer to the player to retain this right. If the original team doesn’t match the offer, the player can sign with the new team. But if the original team matches, the player has to stay with that team.

3. Qualifying Offer – A Qualifying Offer in the NBA is a special contract that a team can offer a Restricted Free Agent (RFA) to maintain the right to match any offer a player receives from another team.

Essentially, it’s the team’s way of saying, “We want to keep you, so we’re making you this offer to keep your rights.” The qualifying offer is usually for a one-year contract at a set minimum salary. If the RFA accepts the qualifying offer, they remain with that team for one more season. If they reject it, they become a true free agent who can sign with any team, but their original team still has the right to match any offer sheet they receive.

4. Offer Sheet – An Offer Sheet in the NBA is a contract signed by a Restricted Free Agent (RFA) with a new team. However, the original RFA team can match this offer and keep the player on their team.

For example, if Miles Bridges signs a 4-year, $133 million offer sheet with the Detroit Pistons as an RFA, the Charlotte Hornets have 48 hours to decide if they want to match that offer and retain Bridges on that same contract. If the Hornets match, Bridges remains their player. If they decline to match, Bridges joins the Pistons on that 4-year deal.

5. Mid-Level Exception (MLE) – The Mid-Level Exception (MLE) in the NBA is a special rule that allows teams over the salary cap to sign free agents to a contract starting at a set salary. It’s like a team spending a little extra money on a free agent, even if they’re already over the cap.

The value of the MLE depends on whether the team is a taxpaying team or not. For example, in 2024-25, the non-taxpayer MLE is projected to be around $12.4 million, while the taxpayer MLE is projected to be around $6.5 million. So teams can use this exception to sign a free agent to a multi-year deal starting at that salary amount, even if they don’t have the regular cap space to do so.

6. Salary Cap – The NBA salary cap is a limit on how much money teams can spend on their players’ salaries each season. It’s like a budget that teams have to follow.

The league sets the salary cap based on the previous season’s revenue. For the 2023-24 season, the salary cap is projected to be around $134 million. This means that teams can only spend up to $134 million on their entire roster of players.

However, the NBA has a “soft” salary cap, which means teams can exceed the cap by using certain exceptions and rules. This allows teams to keep their star players, even if it means going over the cap and paying a luxury tax penalty.

7. Free Agency Moratorium – The NBA Free Agency Moratorium is a short period when teams cannot officially sign free agents or make trades, but they can negotiate deals.

It’s a “quiet period” that happens right when free agency starts. From June 30 to July 6, teams and players can talk and agree to contracts. Still, those deals can’t be finalized and signed until the moratorium ends on July 6.

This gives teams time to figure out the exact salary cap situation and ensure everything is in order before officially signing players. It prevents teams from making under-the-table deals before free agency opens. Once the moratorium ends, teams can officially sign the free agents they’ve been negotiating with.

8. Player Option – A Player Option in the NBA is a special clause in a player’s contract that allows them to choose whether to stay with their current team for one more season or become a free agent.

Essentially, it gives the player the option to “opt-out” of the final year of their contract and test the free agent market, or “opt-in” and play that final year with their current team. This gives the player more control over their future.

For example, if LeBron James has a $47 million player option for the 2024-25 season, he can choose to opt-out and become a free agent or opt in and play that year with the Lakers. Player options provide flexibility for star players.

9. Team Option – A Team Option in the NBA is a clause in a player’s contract that allows the team to keep the player for an additional year or let them become a free agent.

It allows the team to decide if they want to retain the player for one more season at a predetermined salary. If the team exercises the option, the player has to stay. If the team declines the option, the player becomes a free agent.

10. Rookie Scale Contract – A Rookie Scale Contract in the NBA is a predetermined contract for first-round draft picks that lasts four years, with team options for the 3rd and 4th seasons. It sets a fixed salary for each draft position, allowing teams to plan their budgets. Rookie scale contracts provide structure for rookie deals and prevent lengthy negotiations

11. Supermax Contract – A Supermax Contract in the NBA is a special contract that allows a team to offer their star player a 5-year deal worth up to 35% of the salary cap. This allows the team’s best players to earn significantly more money by staying with their current team. It’s a way for teams to reward and retain their top talent.

12. Non-Bird Rights – Non-Bird Rights in the NBA allow a team to re-sign their free agent to a contract starting at 120% of their previous or minimum salary, whichever is greater. This exception applies to players who don’t qualify for the full Bird exception, such as those who have been with the team for less than three seasons. Non-bird rights allow teams to retain their players without using valuable salary cap space.

13. Early Bird Rights – Early Bird Rights in the NBA allow a team to re-sign their free agent to a contract starting at the average player’s salary or 175% of their previous salary, whichever is greater.

This is a less restrictive version of the full “Larry Bird” exception. Early Bird Rights apply to players with the same team for two consecutive seasons rather than the three seasons required for the full Bird exception. This gives teams more flexibility to retain their players who haven’t been with the team as long.

14. Minimum Player Salary – The Minimum Player Salary in the NBA is the lowest amount a team can pay a player for that season. It varies based on the player’s years of experience in the league.

For example, the minimum salary for a player with 0-2 years of experience in 2024-25 is projected to be around $1.3 million. For a player with 10+ years of experience, the minimum is projected to be around $3.1 million. The minimum salary rule ensures all players make a certain amount, even if they are end-of-bench players.

15. Maximum Player Salary – The Maximum Player Salary in the NBA is the highest amount a team can pay a player per year. It depends on two factors:

– The player’s years of experience in the league

– The current salary cap amount

For example, a player with 0-6 years of experience can earn up to 25% of the salary cap. A player with 7-9 years can earn up to 30%, and a player with 10+ years can earn up to 35%. This ensures star players are paid market value while preventing teams from offering unlimited salaries.

16. Disabled Player Exception – The Disabled Player Exception in the NBA is a rule that allows a team to sign a free agent or acquire a player in a trade to replace a player on their roster who has been ruled out for the season due to injury or illness.

It gives the team extra flexibility to add a player to their roster if one of their key players suffers a season-ending injury. This helps teams stay competitive when they lose an important player for the year. The value of the exception depends on the salary of the injured player.

17. Hardship Exception – The Hardship Exception in the NBA allows a team to sign a replacement player if four players miss three consecutive games due to injury or illness.

Essentially, it gives teams extra roster flexibility if they deal with many injuries. This lets them sign a new player to fill in, even if they are already at the maximum roster size or over the salary cap. It helps teams stay competitive when they have multiple key players out for an extended period.

18. Two-Way Contract – A Two-Way Contract in the NBA allows players to split time between the NBA team and their G League affiliate. Players on two-way deals can spend up to 50 days with the NBA team and spend the rest of the season in the G League.

It’s a way for teams to develop young talent and have extra players available if needed without using a full roster spot. Two-way players get paid a prorated NBA salary for their days with the NBA team.

19. Exhibit 10 Contract – An Exhibit 10 Contract in the NBA is a one-year minimum salary deal that can include a bonus of up to $50,000. The bonus is paid if the NBA team waives the player and then plays for their G League affiliate for at least 60 days.

It’s a way for teams to incentivize players to join their G League team if they still need to make the NBA roster. The bonus money helps compensate the player for their time in the G League. Exhibit 10 deals are non-guaranteed contracts.

20. Amnesty Clause – The Amnesty Clause in the NBA was a rule that allowed teams to waive a player and remove their salary from the team’s luxury tax calculation. However, it still counted against the salary cap.

It gave teams a one-time opportunity to get out of a bad contract by waiving a player without paying the full luxury tax penalty on that salary. This provided financial relief for teams stuck with an underperforming, overpaid player. However, the Amnesty Clause was not included in the most recent NBA Collective Bargaining Agreement, so it is no longer in effect.

21. Stretch Provision – The Stretch Provision in the NBA allows teams to waive a player and spread their remaining guaranteed salary over a longer period, reducing the annual cap hit.

For example, suppose a player has $18 million left on their contract. In that case, the team can waive them and stretch that $18 million over three years instead of having the full amount count against the cap in one season. This gives teams more flexibility to move on from bad contracts.

22. Designated Veteran Extension – A Designated Veteran Extension in the NBA allows a team’s best players to earn a higher maximum salary. To qualify, a player must have 7-8 years of NBA experience and be an elite performer, such as making an All-NBA team, winning MVP, or being Defensive Player of the Year. This extension can be up to 5 years long and pay the player up to 35% of the salary cap. It helps teams retain their star players by offering them a lucrative contract.

23. Sign-and-Trade – A Sign-and-Trade in the NBA is a way for a team to keep a free agent player by signing them to a new contract and trading them to another team.

The original team signs the player to a new deal and then immediately trades them to the new team. This allows the player to go to their preferred destination. At the same time, the original team gets something in return instead of losing the player for free. The new contract must be for 3-4 years and can be worth up to the player’s maximum salary.