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17. Are there exceptions to the salary cap?
Yes. Here is what they are:
LARRY BIRD EXCEPTION -- This is the best known one. Players who qualify for this exception are called "Qualifying Veteran Free Agents" in the CBA. This exception allows teams to exceed the salary cap to re-sign their own free agents, up to the player's maximum salary. The free agent in question must have played for three seasons without being waived or changing teams as a free agent. This means a player can obtain "Bird rights" by playing under three one-year contracts, a single contract of at least three years, or any combination. It also means that when a player is traded, his Bird rights are traded with him, and his new team can use the Bird exception to re-sign him. These contracts can be up to seven years in length. A player can receive 12.5% raises using this exception. This exception is known as the Larry Bird exception because the Celtics were the first team allowed to exceed the cap to keep their own free agent, and the player happened to be Bird.
There is one more limit to the maximum salary that can be given using the Larry Bird exception. If the player was a first round draft pick and just completed his three-year rookie scale contract, but his team did not exercise their option to extend the contract for the fourth season (see question number 38 ), then this exception cannot be used to give him a salary greater than he would have received had the team exercised their fourth year option. For example Devean George was selected by the Lakers with the 23rd pick in the 1999 draft. He finished his three-year rookie scale contract in 2002. The Lakers had the option to extend him for the 02-03 season for $1,415,722 until October31, 2001, but did not do so. So while the Lakers were allowed to use the Larry Bird exception to re-sign George, they were limited to a first-year salary (using this exception) of $1,415,722. They instead used their mid-level exception to re-sign him, which allowed them to give him more money.
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