Basketball Bux Bafflement: Several GQs

[RickJay]

I cannot understand the NBA’s salary cap requirements, nor can I find a place that explains them, so I’m going to ask a number of questions here.

When my beloved Raptors were recently eliminated from the playoffs, Mrs. RickJay and i began to discuss their offseason moves. Toronto has three free agents-to-be: Antonio Davis, Jerome Williams, and Alvin Williams (no relation.) In the dizzying discussion that ensued, I soon realized that I just don’t get the salary rules.

1. All teams have a salary cap. But the cap seems to differ from team to team. Why? How is a team’s cap determined?

2. What happens if a team exceeds its salary cap? Does it have to actually release players or do they pay a penalty or lose future cap room?

3. Some players appear to be subject to something called a “Larry Bird exemption.” Vince Carter, for instance, could be signed for mucho money because Toronto holds his “Larry Bird” rights and he’s either not counted under the cap, or counts for less. How does this work? Is a Larry Bird player’s entire salary discunted for cap, or just some of it?

Also, I gather that the Bird exemption is to encourage teams to keep their own draftees, so it makes sense that Carter falls under this rule (Toronto got him on draft day.) But some people seem to think that Davis and the two Williamses apply, too. How can that be? Where is there a list of who counts and who doesn’t? What exactly ARE the rules around this?

4. NBA players have maximum salaries. How high? How do they work, and can teams get around this by offering signing bonuses or deferred payments?

[Protesilaus]

*Originally posted by RickJay *
1. All teams have a salary cap. But the cap seems to differ from team to team. Why? How is a team’s cap determined?

It seems to differ because of the “Larry Bird rule”.

**3. Some players appear to be subject to something called a “Larry Bird exemption.” Vince Carter, for instance, could be signed for mucho money because Toronto holds his “Larry Bird” rights and he’s either not counted under the cap, or counts for less. How does this work? Is a Larry Bird player’s entire salary discunted for cap, or just some of it?

Also, I gather that the Bird exemption is to encourage teams to keep their own draftees, so it makes sense that Carter falls under this rule (Toronto got him on draft day.) But some people seem to think that Davis and the two Williamses apply, too. How can that be? Where is there a list of who counts and who doesn’t? What exactly ARE the rules around this?**

The “Larry Bird rule” deals with a team resigning its own free agents. (Thus Davis and the Williamses are also covered by this rule.) These players’ salaries do not count against the cap. Here’s a example of how it works that I hopefully remembered correctly. The Knicks are over the cap limit even without counting Allan Houston’s salary. Houston is going to be a free agent very soon. The Knicks can re-sign him, even though they’d be (even further) over the cap if they do. However, if Houston leaves, they cannot sign another team’s player with the money they could have given Houston, as they are over the cap, and cannot spend any more on players from other sources.
This rule allows teams to retain as many of their old players as they can entice to stay. It also encourages teams to keep their own players, since if Houston leaves as a free agent, the Knicks get nothing for him.