Cap increases to its highest level ever
Salary Cap for 2004-05 Is $43.87 million
NEW YORK, July 13 -- The National Basketball Association today announced
that the salary cap for the 2004-05 season will be $43.87 million. The new
cap goes into effect at 12:01 a.m. on Wednesday, July 14, when the league's
"moratorium period" ends and teams can begin signing free agents and making
trades.
The salary cap has increased during the current collective bargaining
agreement between the NBA and the National Basketball Players Association
from $26.9 million in 1997-98 to the new level of $43.87 million, the highest
amount since the salary cap was established in 1984. Last season's cap was
$43.84 million.
During the current CBA, total player salaries and benefits have increased
57 percent from $1 billion in 1997-98 to $1.573 billion in 2003-04.
For the 2003-04 season, a tax will be collected from teams equal to the
amount by which their payrolls exceeded $54.6 million. The tax money is
re-distributed to NBA teams.
The 2004-05 minimum team salary, which is set at 75 percent of the salary cap,
will be $32.90 million next season.
The expansion Charlotte Bobcats, who begin play in the 2004-05 season, will
have a salary cap and minimum team salary equal to two-thirds of the salary cap
and minimum salary that applies to the rest of the league. The Bobcats' salary
cap in 2004-05 is $29.25 million and their minimum salary is $21.94 million.
GLOSSARY OF KEY SALARY CAP TERMS
A.) Cap Exceptions
The NBA salary cap is often described as a "soft cap" because teams may
exceed the salary cap using "exceptions." The key cap exceptions are:
The "Bird" Exception:
A team may re-sign its own free agent for any amount up to the
"maximum player salary" if he played for the team for the prior
three consecutive seasons (or, if he changed teams, he did so by trade).
The "Early Bird" Exception:
A team may re-sign its own free agent for the greater of (a) 175 percent
of the player's salary in the last season of his prior contract, or (b)
the average player salary for the upcoming season, if he played for the
team for the prior two consecutive seasons (or, if he changed teams, he
did so by trade).
The Mid-Level Exception:
A team may sign one or more free agents to contracts with first-year salaries
totaling the amount of that season's mid-level exception, an amount based on
the league's average player salary. The amounts of the mid-level exception
since the beginning of the current collective bargaining agreement are:
1998-99: $1.8 million
1999-2000: $2.0 million
2000-01: $2.3 million
2001-02: $4.5 million
2002-03: $4.5 million
2003-04: $4.9 million
2004-05: $4.9 million
Contracts signed using the mid-level exception can cover up to six seasons.
The "$1 Million Exception": A team may sign one or more free agents to
contracts with first-year salaries totaling the amount of that season's
$1 million exception, which may be used up to three times during the term
of the CBA, but not in consecutive years. The $1 million exception increases
$100,000 per year according to the terms of the CBA, as follows:
1998-99: $1.0 million
1999-2000: $1.1 million
2000-01: $1.2 million
2001-02: $1.3 million
2002-03: $1.4 million
2003-04: $1.5 million
2004-05: $1.6 million
Contracts signed using the $1 million exception can cover no more than
two seasons.
B.) Minimum Player Salaries
The collective bargaining agreement provides for minimum salaries that must
be paid to players based on their years of service. The minimum salaries for
the 2004-05 season are as follows:
Years of
NBA Service Minimum Salary
0 (rookie) $385,277
1 $620,046
2 $695,046
3 $720,046
4 $745,046
5 $807,546
6 $870,046
7 $932,546
8 $995,046
9 $1,000,000
10 $1,100,000
A team that is over the cap may nonetheless always sign player contracts
for the minimum salary. In addition, so that teams are not deterred from
signing more experienced players because of their higher minimum salaries,
any amount payable to a player in excess of the four-year minimum salary
amount is subsidized by the league (and does not count toward the team's
payroll for cap or tax purposes).
C.) Restricted Free Agency
If a free agent is "restricted", then his prior team has a "right of first
refusal" that enables it to match any offer made to the free agent by another
team. Thus if a restricted free agent wishes to sign with a new team, he must
first present his prior team with an "offer sheet" that contains the terms of
his proposed contract with the new team. The prior team then has 15 days to
decide whether it will sign the player on the terms contained in the offer
sheet or let the player sign with the new team.
First-round picks are restricted free agents following their fourth season in
the league; all other players are subject to restricted free agency following
their first three seasons.
D.) Maximum Player Salaries
No player in the NBA may sign a contract with a first year salary that exceeds
his applicable maximum salary. A player's maximum salary is based on his years
of service in the NBA and is computed as a percentage of the salary cap as
follows:
Years of
NBA Service Maximum Salary
6 or fewer Greater of 25 percent of the salary cap
($10.968 million this season) or 105 percent
of the player's salary in the last season of his prior contract
7 – 9 Greater of 30 percent of the salary cap
($13.161 million this season) or 105 percent
of the player's salary in the last season of his prior contract
10 or more Greater of 35 percent of the salary cap
($15.355 million this season) or 105 percent
of the player's salary in the last season of his prior contract
Maximum salary contracts signed with a player's prior team may increase
12.5 percent per season and extend up to seven seasons. Maximum contracts
signed with a new team may increase 10 percent per year and extend up to
six seasons.
http://www.nba.com/news/cap_040713.html
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