Understanding What a Hard Cap Is in the NBA

The NBA's flexible maximum-salary rule is really a 'soft cap.'

Basketball through a hoop

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The NBA has an official cap on salaries, but that "cap" is more like a suggestion. A tentative collective bargaining agreement was reached in late 2016 that will be in effect through the 2023-24 season, according to "USA Today." It does not contain a hard cap but rather an overall salary cap and a series of maximum salary levels.

The 'Bird Rights'

Under previous agreements, there were a wide variety of exceptions that could be used to circumvent the maximum salary, including the "Larry Bird Exception" that allowed NBA teams to exceed the salary cap to resign their own players. Players eligible to be signed under the Bird exception were said to have "Bird Rights."

Players had to spend three years with a team to earn full Bird Rights and two years for "Early Bird Rights." For players, having these rights meant a lot more flexibility in contract negotiations. In most cases, players would make more money resigning with their own teams, rather than leaving for free agency.

Soft Cap

By contrast, the NBA's current agreement has a soft cap, notes salary-cap expert Larry Coon: "A hard cap cannot be exceeded for any reason. A soft cap like the NBA's contains exceptions which allow teams to sign players or make trades that exceed the cap under certain conditions."

Unlike the "Bird exception," the current agreement sets an overall salary cap that includes maximum salary levels, according to the number of years a player has been in the league, notes ESPN's Brian Windhurst and Albert Nahmad of Heat Hoops. A new salary cap will be set each year on July 1, but as of 2017, it is nearing $100 million a year, according to the "Washington Post."

Under the current CBA, players with zero to six years of experience in the league could sign contracts worth up to 25 percent of the salary cap. Those with seven to nine years could receive up to 30 percent and those with 10 or more years could earn up to 35 percent.

Higher Salaries

NBA.com notes that far from a hard cap, players will make more across the board. In terms of salary caps, the NBA says, the new agreement includes:

  • Significant increases across the board in player contracts, including for players who sign under the midlevel exception.
  • A maximum salary for players with between seven and nine years experience of $31 million.
  • A maximum salary in 2017-18 for players with 10 or more years of service, including superstars like LeBron James, Kevin Durant, and Chris Paul, of $36 million, allowing a player to sign a five-year deal with his existing team for around $210 million.  

Indeed, Stephen Curry of the Golden State Warriors could make about $207 million over five years under the new contract if he stays with his current team, notes BBall Breakdown. Because of complicated salary cap rules, other teams could only pay Curry only about $135 million. Maybe they'll eventually call this the "Stephen Curry" exception.