For NBA groups seeking to open up cap room, merely waiving a participant isn’t as efficient as it’s within the NFL, the place salaries are sometimes non-guaranteed and most or all of a participant’s cap cost can ceaselessly be wiped from a crew’s books. Nonetheless, the NBA’s Collective Bargaining Settlement does function a rule that enables groups to unfold a participant’s cap hit over a number of seasons. That is referred to as the stretch provision.
The stretch provision ensures that any participant waived with greater than $500K in assured wage remaining on his contract may have the cost schedule of that cash unfold throughout a number of years. That schedule is set as follows:
- If a participant is waived between July 1 and August 31, his remaining wage is paid over twice the variety of years remaining on his contract, plus one.
- If a participant is waived between September 1 and June 30, his current-year wage is paid on its regular schedule, with any subsequent years unfold over twice the variety of remaining years, plus one.
- If a participant within the remaining yr of his contract is waived between September 1 and June 30, the stretch provision doesn’t apply.
Whereas the brand new cost schedule for a waived participant is non-negotiable, groups get to determine whether or not or to not apply the stretch provision to that participant’s cap prices as nicely. A crew can stick with the unique schedule for cap hit functions, if it so chooses.
Phrase broke on Wednesday that the Suns are waiving and stretching Nassir Little, offering a helpful real-life instance for a way the stretch provision capabilities. Little’s cap hits previous to his launch are $6.75MM in 2024/25, $7.25MM in ’25/26, and $7.75MM in ’26/27.
Right here’s what that contract would seem like if it have been waived with out making use of the stretch provision to the cap hits; if it have been stretched earlier than August 31; or if it have been stretched after August 31:
| Yr | Waived with out stretching |
Stretched by 8/31/24 |
Stretched after 8/31/24 |
|---|---|---|---|
| 2024/25 | $6,750,000 | $3,107,143 | $6,750,000 |
| 2025/26 | $7,250,000 | $3,107,143 | $3,000,000 |
| 2026/27 | $7,750,000 | $3,107,143 | $3,000,000 |
| 2027/28 | – | $3,107,143 | $3,000,000 |
| 2028/29 | – | $3,107,143 | $3,000,000 |
| 2029/30 | – | $3,107,143 | $3,000,000 |
| 2030/31 | – | $3,107,143 | – |
As this chart exhibits, it sometimes is sensible to waive and stretch a participant’s contract in July or August if the crew is seeking to generate instant cap flexibility for the present season and isn’t as involved in regards to the influence in future seasons.
By waiving and stretching Little now, the Suns will trim over $3.6MM from their 2024/25 cap, producing vital short-term financial savings in projected luxurious tax penalties, since they’re working to this point into tax territory. Nevertheless, Little will stay on their books via 2031 as an alternative of 2027.
Phoenix is using the stretch provision with a view to create wage and tax financial savings. In different circumstances, stretching a number of gamers can permit a crew to duck beneath the luxurious tax line or to create extra cap room.
Again in the summertime of 2022, for instance, the Path Blazers waived and stretched Eric Bledsoe and Didi Louzada, which allowed them to sneak beneath the tax line. The Pacers, in the meantime, waived and stretched Nik Stauskas, Juwan Morgan, and Malik Fitts with a view to carve out just a little further cap room with a view to signal Deandre Ayton to a maximum-salary provide sheet.
If a membership waiving a assured contract in July or August isn’t looking for instant cap aid, it typically makes extra sense to use the participant’s full present wage to the present salary-cap yr, quite than stretching it.
The Hornets took that route once they waived Davis Bertans in July, making use of his remaining $5.25MM in assured cash totally to the 2024/25 cap. In the event that they’d stretched it, they may’ve carried $1.75MM for every of the following three seasons, creating an additional $3.5MM in cap room this summer season, however that they had no instant use for that cap room and determined it’d be higher to clear Bertans from their books in a single yr, quite than in three years.
There are a couple of extra key guidelines associated to the stretch provision value noting.
First, whereas the stretch provision regulates when cash is paid out, it doesn’t forestall groups and gamers from negotiating a diminished wage as a part of a buyout settlement.
As an illustration, let’s say a participant who has an $18MM expiring contract for 2024/25 agrees in August to surrender $3MM in a buyout. Because of that buyout settlement, his crew may stretch his remaining wage and find yourself with cap hits of $5MM for 3 seasons (via ’26/27) quite than $6MM.
Second, non-guaranteed cash isn’t topic to the stretch provision, since a crew isn’t obligated to pay the non-guaranteed portion of a contract as soon as it waives a participant.
This rule can turn out to be useful when a membership decides to waive a participant who has one or two non-guaranteed years tacked onto the top of his contract. When the Blazers waived Louzada in August of 2022, he had three years left on his deal, however solely his 2022/23 wage of $1,876,222 was assured — the $4,023,212 owed to him for the 2 seasons past that one was totally non-guaranteed.
That signifies that once they waived Louzada, the Blazers solely owed him simply $1,876,222 however have been capable of stretch that determine throughout seven seasons (twice the three years remaining on his contract, plus one). Because of this, Portland is carrying tiny $268,032 cap prices for Louzada on its books via the 2028/29 season.
Lastly, it’s necessary to make clear that when a crew applies the stretch provision to a participant’s cap hits, that crew turns into ineligible to re-sign the participant for the unique remaining time period of his contract.
For instance, after they stretch Little’s contract, the Suns gained’t have the ability to re-sign him till July 2027, which is when his contract initially would’ve expired. That restriction doesn’t apply when a crew waives a participant and doesn’t stretch his remaining assured wage.
Notice: It is a Hoops Rumors Glossary entry. Our glossary posts will clarify particular guidelines referring to trades, free company, or different points of the NBA’s Collective Bargaining Settlement. Larry Coon’s Wage Cap FAQ was used within the creation of this publish.
Earlier model of this publish have been printed in 2013, 2017, and 2023.
