The CBA Glossary

A "buyout" is the common term for what in practice is a renegotiation of the amount of salary a player is owed, concurrent with a waiving. (Not to be confused with a a contract renegotiation, which changes the size of the contract and requires cap space; in this context, itis instead merely a renegotiation of the amount of guaranteed money of the already-signed contract, and it is an agreement to lessen it, while contract renegotiations can only go up,)

In a buyout, a player agrees to give back some of their owed salary in exchange for hitting the free agency market immediately, something usually done in conjunction with their incumbent team allowing them to gauge what offers they would get on the open market before they even hit it. This is a common-enough practice, from both small contracts to large. For instance, Bradley Beal's buyout in July 2025 saw him give up $22 million out of $118 million still owed

"Dead" cap limit

When the NBA's latest Collective Bargaining Agreement came into force on 1st July 2023, it contained several new provisions from the previous edition, one of which pertains to the amount of "dead" salary a team can carry on its books.

Previously, the percentage of a team's salary cap that could be given over to "dead" salaries had no restrictions. Theoretically, a team could sign three maximum salary players, waive them all, rebuild the roster with minimum salaries, and have almost all of their salary payments go to players they cannot play. And while that hypothetical is clearly absurd, it was possible.

It still is possible, as long as said salaries are not "stretched". The latest CBA, however, puts a hard limit on the amount of "dead" salary a team can have when concurrently using the "stretch" provision. A

Right to offset

< Article XXVII ARTICLE XXVII RIGHT OF SET-OFF Section 1. Set-off Calculation. (a) When a Team (“First Team”) terminates a Player Contract (“First Contract”) in circumstances where the First Team, following the termination, continues to be liable for unearned Base Compensation (i.e., unearned as of the date of the termination) called for by the First Contract (including any unearned Deferred Base Compensation), the First Team’s liability for such unearned Base Compensation shall be reduced pro rata by a portion of the compensation earned by the player (for services as a player) from any professional basketball team(s) (the “Subsequent Team(s)”) during each Salary Cap Year covered by the term of the First Contract (including, but not limited to, compensation earned but not paid during such period). The amount of the reduction in the First Team’s liability (the “set-off” amount) shall be calculated for each Salary Cap Year covered by the term of the First Contract as follows: STEP 1: Calculate the total compensation earned by the player (for services as a player) from the Subsequent Team(s) during the Salary Cap Year. STEP 2: Subtract from the result in Step 1 (i) if the player had zero (0) Years of Service at the time the First Contract was terminated, the Minimum Annual Salary applicable to such player for the Salary Cap Year in which the First Contract was terminated, or (ii) if the player had one (1) or more Years of Service at the time the First Contract was terminated, the Minimum Annual Salary applicable to a player with one (1) Year of Service for the Salary Cap Year in which the First Contract was terminated. STEP 3: If the result in Step 2 is zero (0) or a negative amount, there is no reduction in the First Team’s liability for unearned Base Compensation in respect of the relevant Salary Cap Year. If the result in Step 2 is a positive amount, the reduction in the First Team’s liability for unearned Base Compensation in respect of the relevant Salary Cap Year shall equal fifty percent (50%) of such amount. Article XXVII 421 Notwithstanding anything to the contrary in this Article XXVII, a Team shall not be required to enforce its set-off right against a player in respect of compensation earned by the player from any non-NBA Subsequent Team(s). The First Team may require that the player provide the First Team with evidence (such as a copy of the player’s new contract) of the compensation to be earned by the player in connection with his services for any Subsequent Team(s). (b) For the purposes of this Article XXVII, (i) a “professional basketball team” shall mean any team in any country that pays money or compensation of any kind to a basketball player for rendering services to such team (other than a reasonable stipend limited to basic living expenses); and (ii) “compensation” earned by a player shall include all forms of compensation (including, without limitation, any non-cash compensation) other than benefits comparable to the type of benefits (e.g., medical and dental insurance) provided to an NBA player in accordance with Article IV above, travel and moving expenses, and any car and housing provided temporarily by a professional basketball team to the player during the period of time for which the player renders services to such team. Notwithstanding anything to the contrary in this Article XXVII, when a player receives compensation from a non-NBA Subsequent Team on a net-of-tax basis, then for purposes of calculating the amount of set-off to which the NBA Team is entitled pursuant to this Article XXVII, such compensation from the non-NBA Subsequent Team shall be deemed to equal the net-of-tax compensation divided by 0.65 (reflecting a deemed thirty-five percent (35%) tax rate); provided, however, that such adjustment to the player’s compensation from the non-NBA Subsequent Team shall not be made, or shall be modified accordingly, if the player can establish that taxes in respect of the player’s compensation calculated under this provision were not paid, or exceed the actual amount paid, by the player’s non-NBA Subsequent Team. (c) Without limiting any other rights the First Team has, in the event a player’s Compensation is reduced pursuant to this Article XXVII and the Team is unable to effect all or a portion of the reduction through payroll deductions, the NBA shall have the right to direct any Subsequent Team that is an NBA Team to withhold any unrecouped amounts from the player’s Compensation under his new Uniform Player Contract and remit such amounts to the First Team. To the extent such remedy is insufficient to effect a full recoupment of the set-off amount, the NBA and Players 422 Article XXVII Association shall negotiate in good faith to agree on such supplemental measures as are appropriate to effect such recoupment. Section 2. Successive Terminations. In the event of successive terminations by NBA Teams of Player Contracts involving the same player, the Team first to terminate shall be entitled to the right of set-off provided for by this Article XXVII until its Compensation liability has been eliminated in its entirety, and the right of set-off shall then pass in order to the Team(s) terminating any subsequent Contract(s). Section 3. Deferred Compensation. In calculating the amount of set-off to which a Team may be entitled pursuant to this Article XXVII, the unearned Deferred Compensation payable to a player for or with respect to a period covered by the terminated Contract shall be discounted on an annual basis by a percentage equal to the prime rate reported in the “Money Rates” column or any successor column of The Wall Street Journal and in effect at the time the agreement providing for such Deferred Compensation was made. Section 4. Waiver of Set-off Right. A Team and a player may agree in an amendment to an already-existing Player Contract to modify or eliminate the set-off right provided in this Article XXVII, but only pursuant to and to the extent allowed by Article II, Section 3(p). Section 5. Stretched Protected Salary. (a) In the event (i) a Team terminates a Player Contract and the payment of the player’s protected Compensation for any remaining Salary Cap Year(s) under the First Contract is stretched in accordance with Article II, Section 4(k) (the “mandatory stretch provision”), and (ii) the player subsequently earns compensation from another professional basketball team triggering a right of set-off under this Article XXVII, the amount of set-off to which the First Team may be entitled shall be calculated based on the unearned Base Compensation in respect of each Salary Cap Year covered by the term of the First Contract as provided in such Contract (and not with regard to how such protected Base Compensation amounts are payable to Article XXVII 423 the player pursuant to the mandatory stretch provision). The set-off amount in respect of each remaining Salary Cap Year under the First Contract in which the related unearned Base Compensation is stretched in accordance with the mandatory stretch provision shall be allocated such that each of the player’s stretched protected Compensation payments in respect of the applicable Salary Cap Year are reduced on an equal basis over the applicable stretch period (i.e., for the first Salary Cap Year with respect to which a player’s protected Compensation is stretched, over the entire stretch period, and for any subsequent Salary Cap Years, over the remaining stretch period). In no event shall a Team be entitled to set-off under a First Contract in respect of compensation earned by a player (for services as a player) from a Subsequent Team(s) during a Salary Cap Year occurring after the term of the First Contract. (b) In the event the First Team elects to stretch the player’s Salary under the First Contract for Salary Cap purposes in accordance with Article VII, Section 7(d)(6) (or had, prior to the effective date of this Agreement, made such election in accordance with Article VII, Section 7(d)(6) of the 2017 CBA), then the set-off amount in respect of each remaining Salary Cap Year covered by the term of the First Contract that is stretched for Salary Cap purposes in accordance with Article VII, Section 7(d)(6) shall be allocated equally to reduce the player’s re-attributed Salary amounts over the applicable stretch period in the manner described in Section 5(a) above. (c) The following examples are for clarity: (X) Assume (i) a player has protected Compensation of $3 million in respect of the 2023-24 Season and is being paid by the First Team at a rate of $1 million over three (3) Seasons in accordance with the mandatory stretch provision and (ii) the amount of set-off to which the First Team is entitled under this Article XXVII with respect to the 2023-24 Season is $600,000, then (1) the $600,000 set-off amount would be allocated to each of the three (3) Seasons at a rate of $200,000 per Season and (2) the $200,000 set-off amount for each Season would be deducted in equal installments from each of the player’s protected Compensation payments each Season. (Y) Assume: (i) a player has remaining protected Compensation of $9 million ($3 million each for the 2023-24, 2024-25, and 2025-26 Seasons, respectively) under the First Contract; (ii) the First Team requests waivers on the player on September 5, 2023 and the First Contract is terminated on 424 Article XXVII September 7, 2023; (iii) the player later signs a Player Contract with Subsequent Team A that provides for a term covering the 2023-24 through 2024-25 Seasons; and (iv) the set-off amount to which the First Team is entitled under this Article XXVII in respect of the player’s Contract with Subsequent Team A is $600,000 in respect of the 2023-24 Season and $600,000 in respect of the 2024-25 Season. (There is no set-off amount under the First Contract in respect of the 2025-26 Season given these facts because the term of the Contract with Subsequent Team A does not cover the 2025-26 Season.) Under these facts: (1) with respect to the 2023-24 Season, the player’s $3 million of protected Compensation under the First Contract would be reduced by the applicable $600,000 set-off amount and his reduced protected Compensation amount of $2.4 million would be payable in accordance with the payment schedule set forth in the First Contract; (2) the player’s $6 million of protected Compensation under the First Contract in respect of the 2024-25 and 2025-26 Seasons would (absent a right of set-off pursuant to this Article XXVII) be paid by the First Team at a rate of $1.2 million per Season over five (5) Seasons in accordance with the mandatory stretch provision; and (3) as a result of the $600,000 set-off amount to which the First Team is entitled in respect of the 2024-25 Season, the $1.2 million stretched protected Compensation payments described in (2) above would each be reduced to $1.08 million (i.e., by $120,000 per Season over the five-Season stretch period covering the 2024-25 through 2028-29 Seasons). (Z) Assume the same facts as in example (Y) above and that on October 1, 2025, the player signs a Player Contract with Subsequent Team B covering the 2025-26 Season and the set-off amount to which the First Team is entitled under this Article XXVII in respect of such Contract is $500,000. In such case, the player’s aggregate then-remaining protected Compensation would be further reduced by the additional $500,000 set-off amount such that the player’s remaining stretched protected Compensation payments that would (absent this additional right of set-off pursuant to this Article XXVII) be paid by the First Team at a rate of $1.08 million per Season over the remaining four (4) Seasons of the mandatory stretch period would each be reduced to $955,000 (i.e., by $125,000 per Season over the four-Season remaining stretch period covering the 2025-26 through 2028-29 Seasons.

Stretch provision

The "stretch provision" is a salary cap mechanism whereby, if a team cuts a player be it via a buyout or a straight waiver, the outstanding amount is paid out over a longer period of time than the contract initially called for. Payments, quite literally, are stretched over future years, hence the name of the instrument.
Payment of actual salaries (as distinct from salary cap numbers) is something that happens automatically. However, stretching of the relevant player's cap number is also something that a team can opt to strategically do as well. When players are cut and their contracts are reported as being "stretched", it is the latter of these that is being referred to.
Under the stretch provision, if a player is waived between July 1 and August 31 inclusive, any remaining outstanding salary on their contract is stretched over twice the number of remaining years, plus one. A player with two remaining years would thus count against the cap over the course of five. If the player is waived between September 1 and June 30 inclusive, the current year is not stretched, but future ones are. A player with two years remaining would thus get their full salary for the current season, and their second one over the following three.

Retired players

To begin, let us first establish some concepts and some terminology, for the danger of only partly understanding a situation is that misinterpretations and misrememberings can occur. To understand everything applicable involves establishing everything that, rightly or wrongly, might be thought to be. And the best place to start with this is with the word ‘retirement’ itself, which, in accordance with how the NBA’s Collective Bargaining Agreement works, is never as easy to understand as it seems like it should be. In this context, ‘retirement’ can mean a few different things and have a few different outcomes.

When a player retires of their own free will, there is no obligation for the team to pay them any outstanding money on their contract. Self-evidently, then, this only very occasionally happens. When a player who is healthy to play but no longer wants to retires whilst still under a valid contract, rarely do they get any of it. Rasheed Wallace’s retirement while still a Celtic was a small exception to this trend, the team choosing to pay him a somewhat nominal amount of the outstanding millions on his contract, but a couple of years prior to Rasheed’s case, Jason Williams - who had decided to retire very soon after signing with the L.A. Clippers on a minimum salary contract - received none of it. Just like pretty much any employment contract, you cannot just walk away from it and expect the other side to still honour it.

A ‘retirement’, however, is often not nearly done with the finality that the word might suggest. To formally retire, a player must send official retirement paperwork to the league, and not just informally say that they have retired. But players often do not formally retire until they are eligible for their NBA pension, as there is no incentive to do so prior to that (except perhaps in the case of a team being unwilling to let a player walk away from a contract, as was perhaps the case with Williams). If Nash retires at any point in the foreseeable future, as we are hereby assuming he will, it does necessarily not mean he completed this paperwork and retired officially. Indeed, ‘retirement’ very very rarely involves such a procedure. ‘Retirement’ will just mean he has given up trying to come back. And he can always change his mind on that.

Retiring whilst under contract and injured does nevertheless open up the possibility of what is colloquially known as a ‘medical retirement’. In the instance of a player retiring due to a career ending injury, it can be possible for a team to apply to have the salary of that player expunged from their salary cap number, if the injury is deemed to indeed be career ending. If the injury is deemed to be so, then the contract can potentially be completely removed, the only circumstance in which a retired player can still get paid and be exempt from the team’s cap.

To get this, the injured player must be assessed by a physician appointed by the league and the Player’s Association, who must then subsequently determine that it is extremely likely that the player can ever play NBA basketball again. The exact wording used by the Collective Bargaining Agreement, bloviating as ever, specifically defines the threshold for a player’s injury to be such that it:

… (i) prevents him from playing skilled professional basketball at an NBA level for the duration of his career, or (ii) substantially impairs his ability to play skilled professional basketball at an NBA level and is of such severity that continuing to play professional basketball at an NBA level would subject the player to medically unacceptable risk of suffering a life-threatening or permanently disabling injury or illness.

Such determinations of probability are normally not the same as determining with absolute certainty, however, as evidenced by the case of Darius Miles. The Portland Trail Blazers received a medical retirement on Miles due to a knee injury considered extremely likely to end his career, only for him to return with two different teams, play the reinstatement minimum threshold of 10 games played (the threshold by which a comeback could be deemed ‘successful’, and thus the initial physician’s determination incorrect), and have Portland be lumbered once again with his cap number. The Miles case saw the 2011 CBA tighten the criteria for what constituted a successful comeback - a returning player now has to play in 25 games rather than 10, and preseason games no longer count towards that total - but although the practice has not been used once under this CBA (the most likely candidate for it, Brandon Roy, was instead waived via the amnesty clause and never took a medical retirement), it still exists.

Nash’s playig in 15 games last season seems like a useful piece of evidence in establishing how serious his injuries are, for 15 out of 82 games is clear evidence of a big problem. However, neither the amount of games played nor the timing of them is helpful to the medical retirement cause.

Under the 2011 CBA, if a player plays in 10 or less games in a season before their career ending injury occurs, their cap number can be removed from the team’s cap a mere 60 days after the date of the last game in which they played. Although this has yet to ever happen in the league, this provision opens up the possibility of a player retiring early in the season and already being gone from the books by the second half of it. However, if a player plays in more than 10 games in a season before their career ending injury occurs, the contract cannot be removed until the first anniversary of the date of the last game that they played in.

The difficulty with a medical retirement for Nash is that, for the Lakers to see any significant benefit from it, the removal of his cap number will have to come quickly. Nash, it ought be remembered, has a contract that expires in eight months time anyway. For the removal of his salary cap hit from the Lakers’ team salary to have any benefit, it would have to come to fruition before the cap hit would have been removed via its expiration, for otherwise no advantage is gained. But by playing those 15 games, this will barely be possible. Nash played five games down the otherwise meaningless stretch of last season that not only put him over the 10 game threshold, but also pushed back that anniversary date to April 8th, the date on which he played his final game of last season.

It is surely very likely that Nash’s injury is deemed either career ending (i.e. he is unable to physically play again), or a medically unacceptable risk (i.e. he probably could play to some standard, but he really, really should not do so). It is less likely and less certain that this route will be either pursued or successful. And although the April date above factors heavily into this, this is also in no small part due to the other options available. It ought be noted at this point that none of this medical retirement talk thus far is to be confused with the Disabled Player Exception, the salary cap exception that allows teams a certain amount of money with which to replace an injured player.

The Disabled Player Exception is itself a much misunderstood mechanism, as it is often confused with a difference mechanism, one that will hereby termed the ‘roster exemption’. With a roster exemption, teams with so many players injured as to be unable to suit up the eight guys required to play a game are granted as many extra roster spots as it takes to be able to sign new players to make up that eight. It is often misconstrued that the Disabled Player Exception opens up a roster spot for a team, either because it is confused with or assumed to be concurrent with a roster exemption, but this is not true. The two are entirely separate. The DPE is a salary cap exception, and the roster exemption is a roster size exception. Being granted one does not mean being granted the other.

In practice, the Lakers could almost certainly get a Disabled Player Exception for Nash if they applied. If a league and Players Association-appointed doctor determines it “substantially more
likely than not” that the player will not be able to play before June 15th of that season, a DPE can be awarded to facilitate the team’s efforts to replace that player. The DPE can be used to sign free agents, trade for players on other teams or make waivers claims; however, whichever mechanism is used, the player acquired (and it may only be one; the DPE may not be split) must either sign only for one year or be in the final year of their acquired contract. The DPE if granted would be for an amount equal to 50% of the injured player’s salary, or the first year amount of the non-taxpayer mid-level exception for that year, whichever is less. Therefore, a DPE for Nash, if granted, would be for $4,850,500.

It ought be noted, however, that these multiple options are in fact a choice. It is an either/or situation. A team cannot apply for a medical retirement salary exclusion and a disabled player exception for the same player in the same season - to do so would be disingenuous, for both mechanisms are designed to help teams replace severely injured players, and allowing them to do so in multiple ways is excessively remedial. Therefore, should the Lakers apply for a DPE, they cannot have Nash’s contract removed from the books via medical retirement at any point, even if said application is unsuccessful.

Given that the DPE would likely be larger than the amount of cap space that could be - while the cap space is not bound by the one year limitation of the DPE, the Lakers’ future cap space aspirations that disincentivize acquiring any long term salary commitments offsets this advantage - it is perhaps more likely they instead pursue the DPE route. This is especially likely considering a medical retirement would not have any benefit to them until April 8th 2015. There would still be a benefit to having the cap relief at that time, for that amount could be useful in offseason trades (and, if other in-season moves are made prior to then that cut salary, could potentially become a much bigger amount of cap space). It may however be deemed by the Lakers to be a lesser benefit to the team than having the DPE, having Nash’s roster spot, or having his insurance-paid contract (after a player with an insured contract misses 41 games, 80% of any salaries owed for further missed time is covered by the insurance) available to trade at the deadline.

A misconception regarding injured players is that they cannot be traded. This is not true - they can and sometimes are, be those injuries transient or be they career ending. There is a rule which states that a player can only go through a ‘medical retirement’ procedure with the team that he was playing for when he was injured - that is to say, even if Nash and his injury qualify for a medical retirement, only the Lakers’ salary picture can benefit from that, and they cannot trade his contract to another team who can then benefit from the expunging. (That happened once many years ago with Terrell Brandon in Atlanta; the NBA did not like it, and it was subsequently expressly forbidden in the 2005 Collective Bargaining Agreement.) But that provision has no bearing on whether an injured player can be traded. They can, even when said injury is deemed to be season or career ending.

In short, then, the Lakers can trade Nash, who is still a $9.7 million expiring contract, and one who may come cheaper than that due to insurance. He will take up a Lakers roster spot until such time as he is waived or traded elsewhere. They will almost certainly get a Disabled Player Exception if they want one, which will be worth 50% of Nash’s salary this season, and which can be used to acquire another player via free agency or trade for this season only. They will not now be able to carry 16 players. They might be able to get Nash scrubbed from the cap entirely at some point this season, which in theory could open up a modicum of cap room. But they cannot do that and the DPE.

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: