An introduction to player acquisition in the NBA
Player movements in the NBA are often perceived as complicated, and this can be traced to a simple source: the salary cap. The cap sets a limit on the total salaries that NBA teams can pay to players, although this is considered a ‘soft’ cap with exceptions in place. In adding talent and building a title contender, franchises adhere to the cap and thus face restrictions in signing and trading players. This maintains parity by not allowing cash-rich teams to stack their rosters with top-tier talent.
The three main ways of adding players are through the annual NBA Draft, by signing free agents and through trade. First round draftees qualify for the rookie exception that allows them to be signed to a scaled salary in order of draft position. For free agents, these are players whose contracts have expired, and there are two types: restricted and unrestricted.
Teams are able to offer players one-year qualifying deals at higher salaries. Players who accept this offer become unrestricted free agents after the contract period and are free to sign with any team, while those who reject the offer become restricted free agents. Current teams have right of first refusal for the latter and are able to match the offers of other teams within seven days. Under the Larry Bird exception, teams can exceed the salary cap even at maximum salary to re-sign their free agents if they have played at least three seasons for the team, to encourage loyalty among players.
Finally, trades allow teams to exchange players and other assets. Trades can take place between two or more teams before the trade deadline, although the salary cap still has to be adhered to. Every team in a trade must give up and receive assets, including players, draft picks, draft rights or cash considerations. As most teams are usually near or above the salary cap, exceptions are often required to complete trades and salary-matching usually has to take place.