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CBA School: Article 50 – Team Payroll Range System (part 3, Odds and Ends)
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Photo credit: Candice Ward-USA TODAY Sports
Ryan Pike
Apr 26, 2020, 14:00 EDTUpdated: Apr 26, 2020, 13:49 EDT
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As we head towards the end of CBA School, we finish off Article 50. We’ve gone through revenue. We’ve gone through expenses. Now to sift though the weird stuff.
It’s Part 3 of Article 50: Team Payroll Range System – Odds and Ends.

Cap recapture penalty

When a player retires with years left on their contract, their club can be dinged with the cap recapture penalty. So when does this happen? Well, when their combined actual salary paid is larger than their combined cap hit at that point. In that case, you take the difference and divide by contact years left and that’s the recapture penalty.

Buyouts

The cap and salary of buyouts is pretty simple:
  • For players younger than 26, they receive 1/3 of their remaining salary over twice the years remaining on their deal.
  • For players 26 and older, they receive 2/3 of their remaining salary over twice the years remaining on their deal.

Retained salary

Teams can create payroll room by retaining up to 50% of a departing player’s salary in a trade. The percentage retained on a deal can’t change from year to year.
But there are restrictions:
  • Teams can’t have more than three retained salaries at any time
  • Retained salaries cannot make up over 15% of the cap for any team in a given season
  • Teams can’t reacquire a player whose salary they retained for one calendar year
Retained salary transactions impact cap recapture penalties and buyouts proportionately. (You retain 30%? You get 30% of the penalty or buyout.)

Contract extensions and cap “tagging”

A team can only sign a player to a contact extension with a cap hit of: the AAV of the player’s current contract plus the team’s current cap space plus the AAV of any other expiring contracts, minus any extensions that have previously been signed.

Rules for long-term deals

There are a couple broad restrictions for long-term contracts.
For “front-loaded” deals – defined as contacts where the average salary in the first half of the deal is larger than in the whole contract – the salary and bonuses can’t vary from year-to-year by more than 35%.
For deals that aren’t front-loaded, they have to adhere to the “100% rule.” Basically, after the first two years the salary cannot go up by more than the lower salary from the first two years or go down by more than 50%.

LTIR exception to the upper limit

Finally, the long-term injury reserve list. So here’s the gist: if a player has someone go on LTIR, they are allowed to exceed the salary cap’s Upper Limit by up to the amount of that player’s cap hit.
When LTIR is invoked, the new Upper Limit for a team is the difference between the replaced player’s cap hit and the team’s available cap space when the player is put on LTIR. (Teams usually wait until they have virtually no cap space remaining before they use it.)

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