The CBA Glossary

What cap holds are

NBA team's free agents have what is called a "cap hold." This is an amount of money that is charged to a team's salary cap number, even though the player is not under contract. This is a deliberate ploy that exists to close a loophole; if cap holds did not exist, it is theoretically possible for a team to have its entire roster become free agents at the same time, have their entire cap to spend on other team's free agents, and then use Bird rights to re-sign their own ones afterwards. This way, free agents eat into cap room, forcing teams to prioritise a bit better.

Cap holds can be "renounced", i.e. gotten rid of. But it comes at the expense of the aforementioned Bird rights. See below for more.

If you waive a player, they are automatically renounced, and so will not have a cap hold. If a player signs with another NBA team, they also no longer have a cap hold to their former team. Similarly, if a player's contract with an NBA team expires without him going through waivers, and he then signs with a non-NBA team, he will continue to have a cap hold until he is renounced. And if a player retires (that is to say, properly retires, sending official retirement paperwork to the NBA, not just informally saying that they have retired), then their free agent amount is removed too.

However, the last of these very rarely applies. Players often do not formally retire until they are eligible for their NBA pension. And because of that, the penultimate one can mean some longer-term cap holds sticking around.

(Back in the day, before having cap room was as common as it has been since 2016, this would lead to extremely dusty cap holds for players long past their NBA careers stockpiling up. In bygone days, a reason for keeping them on the books is that, as long as they were still alive, players could still be incorporated into sign-and-trades as salary filler for trades, no matter how past their playing career they were. It would be an extremely impossible thing to imagine had it not happened twice: at the 2007 trade deadline, Aaron McKie and Keith Van Horn were both signed and traded to complete deals while being unofficially retired, earning them seven figures worth of free money, and all they had to do was not file the retirement paperwork. This loophole was largely closed in the 2017 CBA - since then, only players who finished the previous season with a team can be signed-and-traded, getting rid of the final remaining value of these remnant deals. Still, good for Keith and Aaron. Must have been a nice phone call to get.)

When teams have set themelves up for cap room, they renounce these functionally-useless free agent amounts to maximize how much room they have. For example, also in the summer of 2007, Milwaukee, Orlando and Memphis all figured to have cap room, and so they renounced all their free agents who were not under contract. These included many players from previous years; Orlando renounced Darko Milicic, Grant Hill, Andrew DeClercq, Stacey Augmon, Jaren Jackson, Mark Jones, Shawn Kemp, Sean Rooks, Bo Outlaw and Olumide Oyedeji; Milwaukee renounced Reece Gaines, Jermaine Jackson, Ervin Johnson, Toni Kukoc, Jiri Welsch, Ruben Patterson, Brian Skinner, Jared Reiner and Earl Boykins; and Memphis renounced Mahmoud Abdul-Rauf, Junior Harrington, Lawrence Roberts, Mike Batiste, Antoine Carr, Kevin Edwards, Antonis Fotsis, Dahntay Jones, Will Solomon and Doug West. The randomness of those players should help illustrate the fact that, when a team has not had cap space for a while, the cap holds can stockpile.

For all functional purposes, unless a team is pursuing salary cap space, cap holds mean nothing, especially in light of the closing of the Van Horn Exploit (as absolutely no one has ever called it). To a team over the salary cap, cap holds only add to a number they were not concerned with anyway, as they do not equal salary.

To a team under the salary cap, however, cap holds and their management are of vital importance in calculating spending power. And it is not only free agents that have them.

Free agent cap holds

The size of the cap hold that a free agent has varies, largely dependent on how much the salary in the final year of their last NBA contract was. Their individual cap hold is a percentage of that salary, and is also dependent on what kind of free agent rights the team has on that player. Listed in the "type" column is a brief description of the cap hold that that player has, and a fleshed out description of what those terms mean follows this colon:

300%: The player is a Larry Bird free agent, coming off of a rookie scale contract, and the last year of his previous contract was lesser than the average salary.

250%: The player is a Larry Bird free agent, coming off of a rookie scale contract, and the last year of his previous contract was greater than the average salary.

200%: The player is a Larry Bird free agent, NOT coming off of a rookie scale contract, and the last year of his previous contract was lesser than the average salary.

150%: The player is a Larry Bird free agent, NOT coming off of a rookie scale contract, and the last year of his previous contract was greater than the average salary.

130%: The player is an Early Bird free agent.

120%: The player is a non-Bird free agent.

Min: The player's previous salary was a minimum salary contract, and therefore so is their cap hold. Note that if the player has one year of experience, the second year minimum is used, but if the player has more experience than that, the third year minimum is used instead, even if they're like a 28 year veteran. This is due to the league's rebate policy thing that sees all players with two or more years experience signed to a one year (or rest of the year) minimum salary contract are charged to their team's salary cap as being only third year players, with the league making up the balance between that and their actual minimum salary, so as to not deter teams from signing older players just because they cost more.

Max: If the player had used the correct one of the percentages used above, their contract would have exceeded the maximum salary; therefore the maximum salary is used instead.

3rd year: The player is a free agent after only three seasons of their rookie contract, having had their fourth year option declined. Their cap hold becomes what the value of their fourth year option would have been. Note: such players are NOT eligible for restricted free agency,

2nd year: Same as 3rd year, but a year earlier (i.e. they had their third year option declined).

QO: The player is a restricted free agent, but NOT coming off of the rookie salary scale; their cap hold is for the value of their qualifying offer.

Offer sheet: The player currently has an offer sheet pending; if the first year's salary of that offer sheet is greater than the QO, then the value of the first year of the offer sheet is used as the cap hold.

Draft picks

Until they are signed, first-round draft picks also have a cap hold. It is equal to 120% of whatever the rookie salary scale amount for that pick that season is, no matter which year the player was drafted in. (If for example a first-rounder drafted with the #7 pick in 2023 was still unsigned in 2026, their cap hold would be equal to 120% of the amount of the #7 pick on the 2026/27 scale.)

It used to be the case that first-round pick cap holds only counted against the cap at 100% of the rookie salary scale, leading to cap space teams not signing their rookies to the customary 120% until after their other cap space machinations had been completed, as the smaller cap hold led to a small cap space increase. This is no longer the case, however, as the cap hold is now 120% and has been since the 2017 CBA.#

These cap holds stay on the books until one of three things happens. Firstly, . Teams can agree with their unsigned

Unsigned second-round picks have no cap hold. This can therefore be advantageous to cap space teams, who might for example rather have the #31 pick than the #30.

Unsigned first round pick is removed from team salary if the team and player both agree in writing not to sign any contract through the following 30th June. The scale amount is returned to the team salary the following July 1. If the team renounces its draft rights, the player's scale amount is removed from the team salary permanently, and the team relinquishes its draft rights to the player (see question number 52).

If a first round pick signs with a non-NBA team, his scale amount is excluded from the team salary on the date he signs his non-NBA contract or the first day of the regular season, whichever is later. The scale amount goes back onto the team salary on the following July 1 or when his non-NBA contract ends, whichever is earlier. In other words, these cap holds are removed for players playing outside the NBA, but only during the regular season.

Salary cap exceptions

It is important to note that salary cap exceptions also have cap holds.

"Renouncing"

WHAT THE CBA ACTUALLY SAYS

1. What the salary cap is From why we're even here, to the difference between a hard cap and soft cap.
2. Fundamental salary basics Guarantees, proration, maximum raises/decreases, 10-day contracts, roster sizes, etc

MAIN TAKEAWAYS: