There will be plenty of players hitting the open market when free agency kicks off on Friday, but massive contracts may be in short supply.
Only a few teams will enter the offseason with significant cap space, limiting opportunities for free agents to find big paydays. Still, there are some mechanisms that will allow contenders to improve their rosters ahead of the 2023-24 campaign.
Before the crazy spending commences, it's worth running through some of the key terms that you will be hearing and reading over and over again. Let's call this the 2023 free agency glossary.
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What is the salary cap for the 2023-24 NBA season?
- Expected salary cap: $136 million
The NBA hasn't revealed the official salary cap numbers for next season, but The Athletic's Shams Charania reported in late June that the salary cap is projected to be $136 million. The salary cap was set at $123.655 million for the 2022-23 campaign.
The salary cap is simply how much each team can spend on its roster.
What is the luxury tax for the 2023-24 NBA season?
- Expected luxury tax: $165 million
Charania reported that the luxury tax is projected to be $165 million. The luxury tax level was $150.267 million last season.
If a team goes past that line, it is subject to fines and other potential penalties. Some teams may work to get under the tax line, but others don't seem to care about the extra checks. (Hello, Warriors!)
Unrestricted free agency vs. restricted free agency
An unrestricted free agent can sign a contract with any team, and a restricted free agent is able to sign an offer sheet with any team. However, the player's original team is able to retain him by matching the offer sheet.
For example, Lakers guard D'Angelo Russell is an unrestricted free agent. He can sign with any team of his choosing, and Los Angeles can't prevent him from leaving.
Austin Reaves, on the other hand, is a restricted free agent, so the Lakers could match any offer sheet and keep him on the roster.
What is an offer sheet?
If a restricted free agent decides that he wants to join another team, then he signs an offer sheet with the team. The original team is then presented with the terms of the deal and has two days to match the offer sheet.
If the original team matches the offer sheet, then the player stays with the original team under the terms of the offer sheet. The team making the offer must maintain enough salary cap space to acquire the player until the offer sheet is signed or the original team matches.
What is a max contract worth in the NBA?
The maximum amount of money a player can earn in a single season is based on multiple factors, including years of service.
In general, here are the limits on max contracts, which apply to the first season of any new max contract or extension:
- 0-6 years of service: Eligible for 25 percent of the salary cap
- 7-9 years of service: Eligible for 30 percent of the salary cap
- 10 or more years of service: Eligible for 35 percent of the salary cap
Those numbers can change depending on a specific player's circumstances. For example, a player could be eligible for a different type of max contract if he meets certain performance criteria (making an All-NBA team, winning the Defensive Player of the Year award or winning the NBA MVP award).
What is a qualifying offer?
A qualifying offer is essentially a standing one-year guaranteed deal submitted by a team that ensures a player will become a restricted free agent. The offer then converts into a regular contract if the player agrees to sign it.
Some players may accept the qualifying offer and play out the following season so they can later enter unrestricted free agency.
What are Bird rights?
Bird rights, named after Celtics legend Larry Bird, give teams the ability to exceed the salary cap in order to retain their own players. (Boston was the first team permitted to use this exception.)
There are different ways for players to earn Bird rights, but the most basic path is to play for the same team for three consecutive seasons. It is also possible for a player's Bird rights to transfer with him to another team.
What is the mid-level exception?
The mid-level exception allows teams to sign a player (or multiple players) even if they have gone over the cap. The mid-level exception won't get your favorite team an All-Star, but it is quite helpful for the biggest spenders.
Teams can use different types of exceptions based on their financial situations. For example, the non-taxpayer mid-level exception is projected to be $12.4 million, while the taxpayer mid-level exception is much lower at $5 million, per Spotrac.
What if I want to be an NBA salary cap expert?
Go for it! If you really want to dig into cap minutiae, you can check out the most recent Collective Bargaining Agreement here.
