Exceptions
Because the NBA's salary cap is a soft one, the CBA allows for several important scenarios in which a team can sign players even if their payroll exceeds the cap. The exceptions are as follows:


[edit] Mid-level exception
A team is allowed to sign one player to a contract equal to the average NBA salary, even if the team is over the salary cap already, or if the signing would put them over the cap. This is known as the Mid-level exception. The Mid-Level Exception for the 2007-08 NBA season is $5.36 million. Only teams that are over the Salary Cap can use the mid-level exception to sign free agents. The MLE as it is often called is $5.585 million for the 2008-09 NBA regular season

An example would be the Toronto Raptors' acquisition of three-point specialist Jason Kapono during the 2007 off-season.


[edit] Bi-annual exception
The bi-annual exception may be used to sign any free agent to a contract starting at $1.672 million in 2005-06, but cannot be used two years in a row (and if the $1 million exception from the previous CBA was used in 2004-05, the bi-annual exception cannot be used in 2005-06). Like the mid-level exception, the $1 million exception can also be split among more than one player, and can be used to sign players for up to two years, with raises limited to 8% per year. This exception was referred to as the "$1 million exception" in the 1999 CBA, although it was only valued at $1 million for the first year of the agreement.

An example of the $1 million exception was when the Los Angeles Lakers signed Karl Malone to a contract before the 2003-04 season.


[edit] Rookie exception
The CBA allows teams to sign their 1st-round draft choices to rookie "scale" contracts even if their payroll exceeds the cap.


[edit] Larry Bird exception
Perhaps the most well-known of the NBA's salary cap exceptions, it is so named because the Boston Celtics were the first team permitted to exceed the salary cap to re-sign one of their own players (in that case, Larry Bird). Free agents who qualify for this exception are called "qualifying veteran free agents" or "Bird Free Agents" in the CBA, and this exception falls under the auspices of the Veteran Free Agent exception. In a nutshell, the Larry Bird exception allows teams to exceed the salary cap to re-sign their own free agents, at an amount up to the maximum salary. To qualify as a Bird free agent, a player must have played three seasons without being waived or changing teams as a free agent. This means a player can obtain "Bird rights" by playing under three one-year contracts, a single contract of at least three years, or any combination thereof. It also means that when a player is traded, his Bird rights are traded with him, and his new team can use the Bird exception to re-sign him. Bird-exception contracts can be up to six years in length.


[edit] Early Bird exception
This is the lesser form of the Larry Bird Exception. Free agents who qualify for this exception are called "early qualifying veteran free agents," and qualify after playing two seasons without being waived or changing teams as a free agent. Using this exception, a team can re-sign its own free agent for either 175% of his salary the previous season, or the NBA's average salary, whichever is greater. Early Bird contracts must be for at least two seasons, but can last no longer than five seasons.

A much-publicized example for this would be Devean George, who vetoed his inclusion into a larger trade during the 2007-08 that would have sent him from the Dallas Mavericks to the New Jersey Nets because he would have lost his Early Bird rights.


[edit] Non-Bird exception
Free Agents who qualify for this exception are called "non-qualifying free agents" in the CBA, meaning they do not qualify under either the Larry Bird Exception or the Early Bird Exception. Under this exception, teams can re-sign a player to a contract beginning at either 120% of his salary for the previous season, or 120% of the league's minimum salary, whichever amount is higher. Contracts signed under the Non-Bird exception can last up to six years.


[edit] Other exceptions
Minimum Salary Exception: Teams can sign players for the NBA's minimum salary even if they are over the cap, for up to two years in length. In the case of two-year contracts, the second-season salary is the minimum salary for that season. The contract may not contain a signing bonus. This exception also allows minimum-salary players to be acquired via trade. There is no limit to the number of players that can be signed or acquired using this exception.

Traded Player Exception: If a team trades away a player with a higher salary than the player they acquire in return (we'll call this initial deal "Trade #1"), they receive what is called a Traded Player Exception, also known colloquially as a "Trade Exception". Teams with a trade exception have up to a year in which they can acquire more salary in other trades (Trade #2, #3, etc) than they send away, as long as the gulf in salaries for Trade #2, #3, etc are less than or equal to the difference in salary for Trade #1. This exception is particularly useful when teams trade draft picks straight-up for a player; since draft picks have no salary value, often the only way to get salaries to match is to use a trade exception, which allows trades to be made despite unbalanced salaries. It is also useful to compensate teams for losing free agents as they can do a sign and trade of that free agent to acquire a trade exception that can be used later. Note this exception is for single player trades only, though additional cash and draft picks can be part of the trade.

Disabled Player Exception: Allows a team that is over the cap to acquire a replacement for a disabled player who will be out for either the remainder of that season (for in-season injuries/deaths) or the next season (if the disability occurs during the offseason). The maximum salary of the replacement player is either 50% of the injured player's salary, or the average salary, whichever is less. This exception requires an NBA-designated doctor to verify the extent of the injury.

Note that while teams can often use one exception to sign multiple players, they cannot use a combination of exceptions to sign a single player.