View Full Version : Free Agency 101 in 2002

07-24-2002, 08:46 PM
07/23/2002 - Updated 12:03 AM ET

Free agency 101 in 2002

By David DuPree, USA TODAY

The lower salary cap and an impending luxury
tax have given this NBA free agent season a
unique spin.

Teams have been able to sign free agents for a week now, but no one has
signed for more than the $4.5 million mid-level exception. Only 11 free agents
have signed, leaving 134 still unsigned. Of the 11, five re-signed with their old
teams and six signed with different teams.

The salary cap this season will be $40.271 million, down from $42.5 million a
year ago, and the luxury tax, which no team had to pay last season, will be
assessed this season. Teams will have to pay a dollar-for-dollar tax if their total
player salaries exceed $50 million. More than half of the league's teams are
faced with the prospect of paying the tax.

"Things have been so conservative because a lot of teams want to stay away
from the tax," says Washington general manager Wes Unseld, whose team
signed free agent Larry Hughes, but is still expected to be well under the cap.

With the tax staring them in the face and with many owners suffering losses in
their other businesses because of a down economy, there haven't been a flurry
of trades or signings. It hurts both the good players and the marginal ones. The
good players will come cheaply and the marginal ones will be left out.

"Because of the cap coming in so low and the luxury tax hurdle looking like it
could be under $50 million, there will be a bunch of great players who might
become great bargains," says Dallas owner Mark Cuban, whose team will pay
a luxury tax this season.

With all that in mind, here's a 10-point primer to help you wade through the
world of escrows, Larry Bird exceptions and contract extensions:

Salary cap: Set up to maintain a competitive balance in the league, it sets the
amount teams can spend on player salaries. The cap is 48.04% of projected
basketball related income (BRI) for the coming season, divided by 29.

Bird exception: It allows teams to exceed the salary cap to re-sign their own
free agents. To qualify, a player has to have played at least three seasons
without being waived or changing teams as a free agent during that period. Bird
rights are traded when a player is traded. (It's known as the Larry Bird
exception because Boston was the first team permitted to exceed the cap when
they first re-signed Bird.).

Options: Allows a contract to be extended one year past when it is scheduled
to end. It is negotiated into the contract and can be either a team option,
meaning the team can invoke it, or a player option, allowing the player to invoke

Sign-and-trade: If a team doesn't have enough money under the cap to sign a
free agent, the player's former team can sign him, without cap restrictions, and
then trade him to the new team for players whose salaries equal his. (That's
how Houston was able to pay Scottie Pippen the maximum when he left

Escrow: If player salaries and benefits total 55% of BRI, players have to give
the overage back to owners. As a result, 10% of all salaries were withheld last
season, but the players got half of it back.

Restricted free agent: A player's original team has the right to match an
offer sheet from another team and retain the player's services or they can sign
him to any amount up to the maximum allowable. Mike Bibby of Sacramento
and Raef LaFrentz of Dallas are examples of restricted free agents.

Mid-level exception: The collective bargaining agreement allows a team to
sign a player or players to amounts equaling the average salary each year, even
if the team is over the cap. The 2002-03 mid-level exception is $4.5 million. This
is what the Lakers used to re-sign Devean George.

Maximum salary: The most any player can be paid under a new contract is
determined by experience in the league. A player with six years experience, for
example, can be paid a maximum of $9 million a season or 25% of the cap,
whichever is greater. This season 25% is greater ($10.068 million).

Minimum salary: Based on experience. Any player can be signed for the
minimum, no matter what it does to the salary cap. This season, a player with
10 or more years of experience is paid a minimum of $1.07 million. (That's what
Washington will pay Michael Jordan if he plays).

Contract extension: Contracts can only be extended at certain times. A six-
or seven-year contract can be extended after at least four years have passed.
That's how the Lakers were able to extend Shaquille O'Neal's contract two
years ago and how they are able to offer Kobe Bryant an extension that would
go into effect the 2003-04 season.

Copyright 2002 USA TODAY, a division of Gannett Co. Inc.