The NBA salary cap is a soft cap. A soft cap means that there is a cap maximum, but there are a lot of ways that teams can go over the cap. However, if teams go over the cap too much, they have to pay a luxury tax for having spent too much money on players. I’m not going to get into the specific details of the luxury tax, but essentially the more your are over the luxury tax, the bigger tax you have to pay, so most owners try to avoid it. However, here are some of the ways teams can go over the cap:

Bird Rights: If a player has been with a team for 3 consecutive years or more, the team has his bird rights, meaning they can re-sign the player and go over the cap. Say the cap is 60 million and John Smith is a free agent. He has played for the Knicks for 3 straight seasons, and the Knicks cap is at 59 million. He can sign a 20 million dollar a year deal and put the Knicks cap at 79 million and everything would be fine with that. Basically, Bird Rights were created so teams would have an easier time keeping their own players.

Early Bird Rights: Same idea as Bird rights, but it’s for a player who has been with a team for 2 years. The team can re-sign the player to 175 % of his old salary or the average salary in the NBA, whichever is higher.

Non Bird Rights: If a player doesn’t qualify for bird or early bird rights, they can re-sign with the team for 120% of his previous salary or 120% of the league minimum salary. Again, whichever is higher.

Mid Level Exception: Teams can use the mid level exception to sign a player without that players salary contributing to the luxury tax. The MLE is a same amount of money for every team if they are under the cap “apron,” which basically means as long as they are under the luxury tax, they can use the full, 5.4 million dollar MLE. MLE can be for a four year contract and can be used every single year by a team. So if the cap is 60 million, the luxury tax is 65 million and the Wizards player salaries are 64 million, they can use the 5 million dollar MLE to sign Phillip Johnson. Or, they can split up the MLE, and sign Bo Francis to a 2 million dollar deal and Jerry Sims to a 3 million dollar deal. If a team is above the luxury tax, the MLE is smaller but still useable. Right now it’s 3.3376 million.

Bi-Annual Exception: Same idea as MLE, but it can only be used every two years. It is also much less money (it’s at 1.6 million dollars right now). Can also be split up between multiple players.

Trade Exception: This one, in my opinion, is the most complicated way. Say the Cavaliers traded Bill Dingleberry’s 10 million dollar contract to the Sixers for a euro stash player. The Sixers would be taking on a 10 million dollars contract, and the Cavs would be taking in none because they wouldn’t sign the euro player. In turn, the Cavs would get a 10 million dollar trade exception, which they could use to sign or trade for someone who’s contract is up to 10 million dollars. They can do this within one year of the trade. They would use the trade exception to probably trade for a player near the trade deadline to help them contend in the playoffs, or sign someone in free agency next year. Usually used by good teams who are over the salary cap who want to get over the hump. A question you might have is why would the Sixers do this? Well, the Cavs would most likely give up other assets besides Bill Dingleberry to convince the Sixers to take on his contract. So, the trade would most likely look like this:

Cavs Receive: 2020 second round pick or some random euro stash player who will never play in the NBA, 10 million dollar trade exception they can use within the next year.

Sixers Trade: Bill Dingleberry, future first round pick.

Minimum Salary Exception: Teams can sign a player for the minimum salary no matter how much they are over the cap. So, if the cap is 60 million, the Cavs’ player salaries are 300 million, they can still sign players to the minimum salary for up to two years.

Disabled Player Exception: IF a player for a team is injured early on in the year and is out for the season, that team can apply for a disabled player exception. If the commissioner grants it, that team can spend the MLE or 50 % of the injured players contract to sign a player, whichever is lower.

Rookie Exception: A team can sign their first round pick even if his salary makes the team’s payroll go over the salary cap.

If you really wanna know these cap rules, read over this post a few times because it takes a while to learn. Also, this is a very small portion of the salary cap, and I’ll be posting other articles in the future about it. Until then, peace.