The amnesty provision was initially included in the 2011 CBA as an arrangement for NBA clubs to ease their salary cap status during that year’s lockout. It was a one-time rule but has only been invoked a few times since then. This is because teams have become more frugal with their expenses and are generally hesitant to remove players who can still contribute. So, what does amnesty mean in the NBA context?
Please continue reading and find out how it remains an important tool for teams looking to free up cap space and build a competitive roster.
What is the NBA Amnesty Clause?
The NBA amnesty clause is a provision in the league’s collective bargaining agreement (CBA) that allows teams to waive a player and remove his salary from the team’s salary cap. This means that a franchise can cut a player without having to pay the total amount of their contract, and the player becomes a free agent who can sign with another team. The provision was first included in the 2005 and 2011 CBA to help out teams with their finances following that year’s lockout.
One of the conditions of the NBA amnesty rule is that a team may only use it once during the CBA’s term. The amnestied player must also be committed to the team when the collective bargaining agreement is in effect. The player’s pay is still paid in full, but it no longer counts towards the team’s salary cap.
The amnesty provision may be an extremely helpful tool for clubs in need of salary cap space since it allows them to get rid of a player’s contract without needing to trade him or pay his entire salary. However, amnestying a player without a good reason may also give the impression that a team is not taking care of its players, possibly deterring potential free agents. Therefore, the amnesty clause must be used with caution.
The Amnesty Clause is otherwise known as the Allan Houston rule. His bloated $100 million contract signed in 2001 served as the inspiration for the clause in the 2005 collective bargaining agreement.
Why Do NBA Teams Consider Using Amnesty?
NBA teams consider using amnesty because sometimes, they give out bad contracts, or the player could be injured and out for a long time. Whatever the reason was, it was mainly due to salary cap issues, to which the team wants more flexibility going forward.
Apart from the amnesty clause, there is also the stretch provision. The stretch provision enables teams to waive a player and then distribute that player’s cap hit across many seasons at a lower yearly value.
Teams are not required to employ the stretch provision if they want to maintain the player’s complete cap hit and let the contract expire on time, but it is sometimes the preferred choice because it offers teams cap relief sooner. However, the stretch clause can only be used with contracts signed under the 2011 CBA; therefore, amnestied players’ earnings cannot be stretched.
NBA Salary Cap and Luxury Tax
The NBA stretch provision and amnesty clause are directly tied to the salary cap, so it’s best to briefly explain the salary cap.
The NBA has a salary cap to encourage parity and competitive balance among teams. The salary cap limits the total amount of money a team can pay its players. The league’s basketball-related revenue determines the cap amount and is adjusted annually.
As is the case now, the NBA’s salary cap is trending upwards. The salary cap for the 2022-2023 NBA season is set at $123.6 million, up from $112.4 million the previous season. This means teams can only pay their players that amount for the season.
However, billionaires do not give up easily, do they? Teams are allowed to exceed the cap in certain circumstances, such as by using exceptions like the mid-level exception, the bi-annual exception, or the veteran’s minimum exception.
Now, while teams are allowed to go over the cap with these exceptions (and re-sign their own players), they are subject to a penalty called the luxury tax. The amount of the luxury tax is based on a team’s payroll and increases with each additional dollar over the salary cap. Teams pay the luxury cap if they exceed a specific threshold, which is set at $143 million for this season.
The penalty rules do not stop there. The tax rate increases as a team’s payroll goes up, starting at $1.50 for every dollar over the threshold and increasing up to $3.75 for every dollar over $233.3 million. The NBA collects the luxury tax money and distributes it equally among clubs that do not pay the tax.
But then again, owners must pay the price for a winning team. Golden State had the highest payroll last year, which paid off with a championship. Meanwhile, the OKC Thunder had the lowest in the 2021-22 season, and it got them to the lottery, eventually landing the No. 2 overall pick.
Which NBA Players Were Amnestied?
There are a handful of NBA players, along with some big names, who were amnestied. The currency CBA no longer honors amnesties, but that era was part of the history of the NBA and is interesting to know more about. Even Mark Cuban suggested that the Lakers use the amnesty clause on Kobe Bryant, to no avail, of course. Here are some of the NBA players who got the amnesty treatment:
- Baron Davis. Davis had fun All-Star years, but he eventually succumbed to weight issues, a bad back, and a myriad of health issues toward the end of his career. He signed a hefty deal with the Clippers in 2008 and got traded to Cleveland in February 2011. The Cavs got amnestied him in December 2011 as he was still owed $27 million over two years.
- Luis Scola. The Rockets made the decision to get rid of Scola and the $21 million remaining in his contract to pursue Dwight Howard. They did eventually get D12, but the Argentinian would have been a great complement to Howard’s inside game.
- Gilbert Arenas. Arenas signed that massive contract with the Wizards in 2008, which he deserved at the time. However, with his subsequent injury issues, he was traded to the Orlando Magic, which dumped him via the amnesty clause in 2011. He was still owed over $60 million over three seasons.
- Elton Brand. The Sixers decided to amnesty Brand in the final year of his contract in 2012 worth over $18 million. He signed that deal with Philly in 2008 for five years and $82 million.
- Brandon Roy. Possibly the biggest “What if” case in NBA history, Roy was one of the league’s premier players before knee injuries did him in. The Blazers amnestied him with still three years remaining in his contract, to which he was owed around $16 million annually.
Wrapping Things Up: What Does Amnesty Mean in the NBA?
The NBA’s collective bargaining agreement has undergone various revisions and inclusions over the years, including the amnesty clause. It was a rule which allowed NBA teams to escape the clutches of a bad contract and have financial flexibility going forward.
So, what does the NBA amnesty rule mean? The clause permits clubs to waive a player and eliminate his salary from the salary cap. The team still pays the entirety of the salary, but that will no longer be reflected in the cap. This rule has only been invoked a few times, but more often than not, it is well-deserved and done with the team’s best interests in mind.
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