Kori Ellis
07-25-2005, 12:39 PM
Allan Houston Rule FAQ
http://sports.espn.go.com/espn/print?id=2112912&type=story
By Marc Stein
ESPN.com
You've heard about the NBA's new "amnesty" clause, also known as the Allan Houston Rule.
Now you want to know how it works.
The following FAQ explains every aspect of the rule currently known to the league's 30 teams . . . and we say currently simply because a tweak or two is still possible before lawyers from the NBA and the Players' Association finalize their new labor agreement in time for Thursday's scheduled unveiling at 6 p.m.
Q: What is the Allan Houston Rule?
A: More formally known as the "amnesty" rule, this provision grants teams a one-time exception to waive a player without paying any further luxury tax on the player's contract, regardless of how long or how rich the contract is.
Q: What is the deadline for capitalizing on this provision?
A: The window for releasing an amnesty player opens when the new labor agreement takes effect Thursday and was originally scheduled to close Oct. 1. Yet sources close to the final bargaining sessions tell ESPN.com that there is a growing movement -- with nudges coming from the union and a handful of teams -- to move up the deadline for releasing "amnesty" players.
Two front-office executives told ESPN.com over the weekend that they expect the Oct. 1 deadline to be brought forward, mainly so amnesty players aren't shut out of the free-agent market all summer and left scrambling for a new team two days before training camps start.
Q: Can teams save this one-time exception for later in the season or future seasons?
A: No. NBA front-office sources told ESPN.com that multiple teams have pushed for the rule to be tweaked to allow teams to be able to save the one-time provision for use during any of the six seasons in the new labor agreement. The league, however, apparently isn't budging there.
Q: Do teams have to waive a player?
A: No. The league-wide consensus actually suggests that fewer than half of the NBA's 30 teams will make use of the amnesty provision.
Q: Does the contract of an amnesty player drop off a team's payroll?
A: No. And the provision provides only luxury-tax relief, with no salary-cap relief. So a team can't release a player to gain cap space.
Q: But any player on a team's roster can be released?
A: Yes. Any player who appears on a team's 2005-06 payroll list is eligible -- except those acquired after June 21.
That includes players who are no longer with a team but whose salary still appears on the payroll. One prominent example is Alonzo Mourning, whose contract was bought out by Toronto for an estimated $11 million in March. Mourning has since signed with the Miami Heat, but the Raptors can still make Mourning their amnesty player to avoid paying the luxury tax on what they still owe him.
Q: When will we start seeing players released under this provision?
A: Most executives and player agents expect teams to wait as long as they possibly can, which is what sparked the movement to bring the Oct. 1 deadline forward. Delaying an amnesty waiver gives the team involved as much time as possible to explore trade options, limited as they tend to be for players with big salaries, and thus take every precaution against losing an asset without compensation. That strategy also keeps the player off the open market as long as possible, setting up teams interested in signing an amnesty player to potentially miss out on most other free agents if they have to wait until October.
Q: Can a team re-sign its own amnesty player at a later date?
A: No. Amnesty players are prohibited from re-signing with the team that released them for the life of the terminated contract.
Q: Can one team sign multiple amnesty players?
A: Yes. Let's say, hypothetically, that Houston and Finley both wanted to sign with Detroit. Both would become unrestricted free agents after being released by the Knicks and Mavericks, so the Pistons would indeed have the right to sign both.
Q: Who does this rule benefit the most?
A: Teams with extremely high payrolls. New York and Dallas can save roughly $40 million and $50 million, respectively, in luxury-tax payments by releasing Allan Houston and Michael Finley. But Houston and Finley get the biggest benefit by far. Not only is Finley guaranteed to receive every penny of the $52 million left on his Mavericks contract, he also becomes an unrestricted free agent who can sign a separate long-term contract.
Q: Is there a reduction in a team's financial obligation to an amnesty player once he signs a new contract with another team? Or can a player double-dip?
A: The league says no, there's no reduction, and yes, double-dipping is permissible. That's why the biggest beneficiaries of the amnesty clause are the players released under this provision. They don't lose any money from the team that waives them and they have the opportunity to fully double-dip.
Q: Is there any way for a potential amnesty player to convince his team to release him sooner than Oct. 1 and thereby increase his free-agent options?
A: Besides begging, the only apparent means is consenting to a buyout in which the player agrees to reduce the amount of guaranteed money left on his contract in exchange for the immediate right to find a new team.
Q: Can a team that doesn't have a payroll more than the luxury-tax threshold exercise the amnesty option?
A: Yes. Non-taxpayers can make an amnesty waiver for tax relief in future seasons provided that the player is released before Oct. 1.
Q: Why was this rule adopted and what are teams really gaining if releasing an amnesty player results in no cap relief and doesn't stop the player from collecting all of his checks?
A: Taxpaying teams have long complained that the NBA's financial system offers no mechanism for teams to undo or recover from a contract mistake. This is a one-time chance for teams to at least free themselves of the tax consequences of what is deemed a bad contract.
Sources indicate that some of the league's smaller-market (and more fiscally responsible) teams fought the implementation of the Allan Houston Rule, arguing that the league's big spenders already have big advantages when it comes to player acquisition. Those appeals were denied.
Q: Besides Finley and Houston, who is likely to be released under the Allan Houston Rule?
A: Brian Grant of the Los Angeles Lakers and Philadelphia's Aaron McKie are widely considered the only other locks. See Chad Ford's team-by-team breakdown for other candidates. (http://spurstalk.com/forums/showthread.php?t=22383)
http://sports.espn.go.com/espn/print?id=2112912&type=story
By Marc Stein
ESPN.com
You've heard about the NBA's new "amnesty" clause, also known as the Allan Houston Rule.
Now you want to know how it works.
The following FAQ explains every aspect of the rule currently known to the league's 30 teams . . . and we say currently simply because a tweak or two is still possible before lawyers from the NBA and the Players' Association finalize their new labor agreement in time for Thursday's scheduled unveiling at 6 p.m.
Q: What is the Allan Houston Rule?
A: More formally known as the "amnesty" rule, this provision grants teams a one-time exception to waive a player without paying any further luxury tax on the player's contract, regardless of how long or how rich the contract is.
Q: What is the deadline for capitalizing on this provision?
A: The window for releasing an amnesty player opens when the new labor agreement takes effect Thursday and was originally scheduled to close Oct. 1. Yet sources close to the final bargaining sessions tell ESPN.com that there is a growing movement -- with nudges coming from the union and a handful of teams -- to move up the deadline for releasing "amnesty" players.
Two front-office executives told ESPN.com over the weekend that they expect the Oct. 1 deadline to be brought forward, mainly so amnesty players aren't shut out of the free-agent market all summer and left scrambling for a new team two days before training camps start.
Q: Can teams save this one-time exception for later in the season or future seasons?
A: No. NBA front-office sources told ESPN.com that multiple teams have pushed for the rule to be tweaked to allow teams to be able to save the one-time provision for use during any of the six seasons in the new labor agreement. The league, however, apparently isn't budging there.
Q: Do teams have to waive a player?
A: No. The league-wide consensus actually suggests that fewer than half of the NBA's 30 teams will make use of the amnesty provision.
Q: Does the contract of an amnesty player drop off a team's payroll?
A: No. And the provision provides only luxury-tax relief, with no salary-cap relief. So a team can't release a player to gain cap space.
Q: But any player on a team's roster can be released?
A: Yes. Any player who appears on a team's 2005-06 payroll list is eligible -- except those acquired after June 21.
That includes players who are no longer with a team but whose salary still appears on the payroll. One prominent example is Alonzo Mourning, whose contract was bought out by Toronto for an estimated $11 million in March. Mourning has since signed with the Miami Heat, but the Raptors can still make Mourning their amnesty player to avoid paying the luxury tax on what they still owe him.
Q: When will we start seeing players released under this provision?
A: Most executives and player agents expect teams to wait as long as they possibly can, which is what sparked the movement to bring the Oct. 1 deadline forward. Delaying an amnesty waiver gives the team involved as much time as possible to explore trade options, limited as they tend to be for players with big salaries, and thus take every precaution against losing an asset without compensation. That strategy also keeps the player off the open market as long as possible, setting up teams interested in signing an amnesty player to potentially miss out on most other free agents if they have to wait until October.
Q: Can a team re-sign its own amnesty player at a later date?
A: No. Amnesty players are prohibited from re-signing with the team that released them for the life of the terminated contract.
Q: Can one team sign multiple amnesty players?
A: Yes. Let's say, hypothetically, that Houston and Finley both wanted to sign with Detroit. Both would become unrestricted free agents after being released by the Knicks and Mavericks, so the Pistons would indeed have the right to sign both.
Q: Who does this rule benefit the most?
A: Teams with extremely high payrolls. New York and Dallas can save roughly $40 million and $50 million, respectively, in luxury-tax payments by releasing Allan Houston and Michael Finley. But Houston and Finley get the biggest benefit by far. Not only is Finley guaranteed to receive every penny of the $52 million left on his Mavericks contract, he also becomes an unrestricted free agent who can sign a separate long-term contract.
Q: Is there a reduction in a team's financial obligation to an amnesty player once he signs a new contract with another team? Or can a player double-dip?
A: The league says no, there's no reduction, and yes, double-dipping is permissible. That's why the biggest beneficiaries of the amnesty clause are the players released under this provision. They don't lose any money from the team that waives them and they have the opportunity to fully double-dip.
Q: Is there any way for a potential amnesty player to convince his team to release him sooner than Oct. 1 and thereby increase his free-agent options?
A: Besides begging, the only apparent means is consenting to a buyout in which the player agrees to reduce the amount of guaranteed money left on his contract in exchange for the immediate right to find a new team.
Q: Can a team that doesn't have a payroll more than the luxury-tax threshold exercise the amnesty option?
A: Yes. Non-taxpayers can make an amnesty waiver for tax relief in future seasons provided that the player is released before Oct. 1.
Q: Why was this rule adopted and what are teams really gaining if releasing an amnesty player results in no cap relief and doesn't stop the player from collecting all of his checks?
A: Taxpaying teams have long complained that the NBA's financial system offers no mechanism for teams to undo or recover from a contract mistake. This is a one-time chance for teams to at least free themselves of the tax consequences of what is deemed a bad contract.
Sources indicate that some of the league's smaller-market (and more fiscally responsible) teams fought the implementation of the Allan Houston Rule, arguing that the league's big spenders already have big advantages when it comes to player acquisition. Those appeals were denied.
Q: Besides Finley and Houston, who is likely to be released under the Allan Houston Rule?
A: Brian Grant of the Los Angeles Lakers and Philadelphia's Aaron McKie are widely considered the only other locks. See Chad Ford's team-by-team breakdown for other candidates. (http://spurstalk.com/forums/showthread.php?t=22383)