In the 24 hours since the NBA and its players’ association reached a deal on a new collective bargaining agreement, plenty of information has come out about the pact and its ramifications.
The designated player exception has already led to plenty of confusion. A quick explainer, if you’re wondering whether your favorite player qualifies:
Who can get it?
A player qualifies for the DPE, which can be used to give a player a contract extension or to sign him as a free agent, if he does one of the following:
1. He makes one of the three all-NBA teams or is named either defensive player of the year or most valuable player the previous season.
2. He has made one of the three all-NBA teams or has been named defensive player of the year in two of the prior three seasons or the league’s most valuable player in one of the three prior seasons.
And this crucial stipulation: He has to be on the team that drafted him or has to have been traded on his rookie deal to another team.
That means players like Stephen Curry, DeMarcus Cousins, Russell Westbrook, John Wall and Gordon Hayward are eligible for this exception, while Kevin Durant is not.
Cousins and Westbrook are the only players who are already eligible for this exception next summer, when the Sacramento Kings and Oklahoma City Thunder, respectively, will be able to offer each five-year contract extensions. Paul George, meanwhile, would become eligible if he makes an all-NBA team this season, because he didn’t make it last season. Same with Wall and Hayward, among others.
Can the DPE be given to players who have become free agents?
Yes. Not only can it be given to players still under contract, it can also be given to free agents. This is why Curry will be able to sign a contract under the DPE despite being a free agent July 1. This will allow Curry to make the max at 35 percent of the salary cap (projected to be $102 million) despite only having completed nine seasons in the league. The purpose of the rule is to allow for elite players to be rewarded earlier for playing at an extremely high level — much like the “Derrick Rose Rule” was enacted to do the same for rookies.
Speaking of the ‘Rose Rule’ …
Are rookies impacted by the DPE?
Yes. Teams can now give two players coming off their rookie contracts a five-year max extension. Previously, teams could only sign one of their players to such an extension.
• In addition to all salary cap exceptions (minimum salary, mid-levels, rookie scale contracts, etc.) going up by 45 percent next season and be tied to the salary cap after that, the annual yearly increases in the salary cap will be going up. Currently, players who sign with a new team as free agents will see their contracts increase by 4.5 percent annually, while players who sign with their current team using “Bird Rights” will see their contracts go up by 7.5 percent annually. Those numbers will now increase to 5 percent and 8 percent, respectively.
• Under the current CBA, the luxury tax “apron” — meaning the space teams have to operate between the luxury tax line and the “hard cap,” assuming certain triggers are enacted — is only $4 million, leaving teams little wiggle room if they make themselves hard-capped and jump over the luxury tax threshold. The $4 million number was put in place when the salary cap was in the neighborhood of $50 million (a figure that has nearly doubled).
The apron is increasing to $6 million over the luxury tax line for next season and will then increase by half of the rate of the annual salary cap increase each year after that, allowing for some building in of inflation into the tax system as the luxury tax increases.
• While the rookie scale is shooting up by 45 percent next season, it leads to an obvious question: What about players currently on rookie scale deals who, because of when they came into the league, missed out on the scale’s dramatic increase? The league and union agreed to build in some increases to the current salaries to lessen the difference — though these increases will not be part of the salary cap figures for these players, which will remain as they already were.
In the 2017-18 season, all players under a rookie scale contract from the past three drafts (2014, 2015 and 2016) will see their salary increase for that season by 15 percent. In 2018-19, players still under rookie deals from the 2015 and 2016 drafts will see their salaries increase for that season by 30 percent. Finally, in the 2019-20 season, players in the fourth and final year of their rookie contracts will see their salary that season increase by 45 percent.
• While the number of guaranteed roster spots is increasing from 13 to 14 for teams, the number of roster charges — meaning the number of spots that have to be accounted for in terms of the salary cap as teams are assembling their rosters — will remain at 12. This is a win for a team like Golden State, which could use every bit of cap room it can get when it tries to put its team together next summer when Curry is a free agent and Durant can opt out of the second year of his two-year deal.
• Under the current CBA, cap holds for first-round picks coming off their rookie deal are 200 percent of their previous year’s salary if they are over the average salary for the league and 250 percent if they are not. The new deal has raised those numbers to 250 percent and 300 percent, respectively.
The goal was to try to eliminate — or at least limit — the ability of teams to do what the Detroit Pistons and Washington Wizards did this summer, which was to wait to sign young players getting a huge pay increase like Andre Drummond and Bradley Beal until they signed several other players with cap space because their cap holds were artificially low.
The combination of increasing the rookie scale and increasing cap holds should make it significantly harder for teams to do this in the future.
• While there has been plenty of talk about the designated player extension, there have also been changes to other extension rules, as well. Under the current CBA, players could only have their contract extended by up to three years. Now, players will be able to have them extended by up to four.
Meanwhile, the percentage increase a player can have in the first year of an extension will be 120 percent of the prior salary, which is up from 107.5 percent. This increase may not be enough to drastically changes in the number of extensions being agreed to, but at least makes it more palatable to players to take one by giving them a bigger raise.