What we know about the amnesty provision

December, 8, 2011
12/08/11
9:10
PM ET
Coon By Larry Coon
ESPN.com
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With the countdown to the resumption of NBA business now being measured in hours rather than days, talks between teams and players are reaching a frenzied pace – a pace matched only by the rumor mill and my Twitter timeline.

Get ready. A lot of players are going to be changing addresses in a very, very short period of time.

The new amnesty provision is fueling the fire. Teams will be able to kick one contract to the curb, relieving themselves of the potential tax burden and the hit on their salary cap (while still having to pay the player his actual salary).

The final details of the amnesty provision still aren’t known. In fact, it’s likely that the league itself isn’t exactly sure what the rules will be yet – lawyers for the league and players association probably will be hammering out details until the final minute, before collapsing in a heap from exhaustion.

Here’s what we know so far about amnesty – or at least what we think we know:
  • The NBA utilized an amnesty provision once before, with the 2005 CBA. Since the 2005 CBA changed the tax rules but left the salary cap system relatively untouched, the 2005 amnesty provision provided only tax relief. This year both the cap and tax systems are changing significantly, so the amnesty provision will provide both cap and tax relief. Teams may utilize this provision for various purposes – to get out of a bad contract (Orlando), to avoid paying an exorbitant luxury tax bill (um ... Orlando), or to clear additional room under the salary cap to sign a free agent (New York).
  • Teams don’t have to utilize their amnesty provision this season. For many teams it will make more sense to bank their amnesty for a couple years. In fact, some pundits have predicted that there will be no more than a handful of amnesty cuts this season. One possible strategy for the Lakers will be to hang on to their amnesty for two years (when the new luxury-tax rates kick in) as a hedge against Kobe Bryant (who will make $30.5 million in 2013-14) suffering a bad injury or steep decline in production.
  • Amnesty is a one-time deal. Teams can use it prior to any season under the current CBA, but once they’ve used it, it’s gone forever.
  • Amnesty can only be used on players who are under contract right now. So if the Clippers sign Caron Butler to a three-year contract for $24 million and they don’t use their amnesty this year, they can’t use it on Butler next year when they come to their senses. Since the longest contracts currently in existence last through 2015-16, the amnesty provision will effectively cease to exist when the season starts in 2015.
  • There will be a short window of time during which teams can utilize their amnesty provision each season. This year there will be a seven-day window when teams can amnesty players, but the dates have not yet been finalized. If a team doesn’t amnesty a player by the close of the window, then they have to wait until next season.
  • Teams cannot amnesty players they acquire in trade. While the Lakers would be willing to take on Hedo Turkoglu’s enormous contract as part of a package deal for Dwight Howard, they would have liked it a lot more if they were then able to send him packing via amnesty. No such luck.
  • The salaries of amnestied players will continue to count toward a team’s minimum salary requirement. This season teams will need to spend at least 80 percent of the salary cap, and there was speculation that Washington would be reluctant to amnesty Rashard Lewis and his $21.1 million salary due to this requirement. But with Lewis’ salary counting toward the $46.44 minimum even if they let him go, the team now has no such concerns.
  • Another new rule in the 2011 CBA is what they’re calling the “stretch” provision. When a team waives a player, they have the option of stretching out both the money they owe him and his hit on their salary cap. However the stretch provision can only be utilized with contract signed under the new CBA, so the salaries of amnestied players cannot be stretched.
  • One concern with the concept of amnesty is that every released player would simply pack his bags and head to South Beach to sign with the Heat. The league came up with a clever idea to keep this from happening. Before clearing waivers, the players will go through a “secondary waiver” process where teams under the cap can submit a bid. (That’s right, it’s a silent auction, just like when you bid on that trip to Tahoe at your kid’s school fundraiser.) The highest bidder gets the player. Only players who clear both the regular waiver process and these new secondary waivers will actually become free agents.
  • Teams have to utilize cap room in order to bid for an amnestied player. This means that teams that are over the cap are automatically out of the running. A capped-out team like the Heat or Lakers has to wait for an amnestied player to clear secondary waivers before they have a chance to sign him. It is assumed that all the good players – including possible amnesty cuts Baron Davis and Chauncey Billups – will be snatched-up in the secondary waiver process, and won’t make it all the way to free agency.
  • So which are the teams with cap room, and therefore shoppers in the secondary waiver market? That’s a tough question to answer. Dollars are set aside for “cap holds” to account for exceptions, free agents, draft picks, and empty roster spots – so cap room often isn’t really cap room unless the team renounces their free agents and exceptions. So consider the following a potential list of teams with cap room, subject to the team doing the work necessary to clear its cap holds: Charlotte ($10.4 million), Cleveland ($2.6 million), Denver ($28.4 million), Detroit ($10.2 million), Golden State ($8.9 million), Houston ($9.7 million), Indiana ($21.0 million), LA Clippers ($13.1 million), Memphis ($5.1 million), Milwaukee ($6.5 million), Minnesota ($9.5 million), New Jersey ($17.1 million), New Orleans ($12.6 million), Oklahoma City ($4.4 million), Philadelphia ($3.9 million), Sacramento ($28.1 million), Toronto ($10.9 million), Utah ($1.0 million) and Washington ($18.3 million).
  • Don’t get too excited simply because your team is on the above list. As I explained, this cap room is available only if the team renounces all its available cap holds (and the actual amount will be a little less than what is listed, due to charges for empty roster spots). For example, the Cavs would have to renounce their draft rights to Kyrie Irving and Tristan Thompson – which isn’t about to happen. In addition, the league usually counts verbal agreements against a team’s cap. Even though teams and players aren’t supposed to make verbal commitments before Friday, there already have been several announcements of impending signings. The league may reduce teams’ available cap room as a result of these announcements. However, teams can also increase their available cap room by amnestying their own players, or by making trades in which they take on less salary than they send out. So the money teams will have available for bidding in the secondary waiver market simply can’t be specified at this time with any degree of detail.
  • Since players who are snatched up via the secondary waiver process don’t become free agents, they don’t sign new contracts with the team that claims them. This means that if a player with three years remaining on his contract gets amnestied, the team that claims him gets him for all three years.
  • The details on the bidding process aren’t known yet. It is believed (but not officially confirmed) that teams must bid at least the minimum salary. Also, if a player has more than one year remaining, the team must bid on the full length of the contract – for example, if a player has three years remaining, then a $4 million bid means the team is committing to at least $4 million per year for three years.
  • If a team acquires an amnestied player through secondary waivers, they pay a portion of the player’s salary equal to their bid. If the Knicks waive Billups and the Clippers are the winning bidder at $5 million, then the Clippers pay him $5 million this season, with the Knicks continuing to be responsible for the remaining $9.2 million of his $14.2 million salary.
  • If a team acquires an amnestied player through secondary waivers, then it is likely they will be able to trade the player after 30 days – just like any other player claimed through the waiver process. This is another detail that has not yet been confirmed by the league. Nor is it known what the player’s trade value will be for salary matching purposes, but it will likely be the amount the team is actually paying the player (i.e., the amount of their bid).
  • While this has also not been confirmed by the league, it is likely that teams will not be allowed to re-sign or re-acquire (for example, through a trade) their amnestied player for the length of his amnestied contract. For example, if the Magic, as expected, use their amnesty on Gilbert Arenas – with three years left on his contract – he can’t play for the Magic again for three seasons. This rule also existed in the 2005 amnesty provision.
Larry Coon is the author of the NBA Salary Cap FAQ.

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