The CBA Glossary

Restricted free agency

Restricted free agency is only available in a couple of circumstances, both of which involve young players. Like Bird rights, it's a vehicle used to make it easier for teams to keep their own players, particularly the younger ones.

When a player is a restricted free agent, if they want to sign with another team, they have to go through a process involving offer sheets. They negotiate the contract with the new team, and sign an offer sheet. The original team then has 7 days to decide whether to match the offer sheet signed by the new team (assuming of course they have enough available cap space, or the appropriate salary cap exception). If they choose to match, the player is re-signed to the former team for the terms of the offer sheet, whether they like it or not. If they choose not to, they join the new team for the same terms.

Qualifying offer

The key to the above. In essence, a qualifying offer is a base contract that a team gives to a player whilst negotiations for a larger contract take place. It has to be given by June 30th. It is best described with a few examples.

The two main circumstances in which restricted free agency is an option are as follows:

In summer 2005, Vladimir Radmanovic's fourth year of his first round rookie contract expired. His team, Seattle, extended a qualifying offer to him, making him a restricted free agent. He and the team negoiated over a new contract, but could not come to an agreement over a contract. Radmanovic then had a choice - sign a contract with a new team elsewhere which Seattle, having full Bird rights, would be able to match, or accept the qualifying offer as his contract for the next season, play that season with Seattle, and then become an unrestricted free agent the following season (at which point, he would be off his rookie contract and have 5 years of experience, thus Seattle would be unable to make him restricted again). He chose to do the second one.

Also in summer 2005, Jannero Pargo of the Chicago Bulls became a free agent. The Bulls tendered him a qualifying offer, and Jannero entered restricted free agency. Unable to get an offer from another team that surpassed the qualifying offer, he accepted the QO and returned to the Bulls for the following season.

Essentially, it's like having first dibs on someone. Or the basketball equivalent of calling shotgun. Teams can rescind qualifying offers before they are accepted if they wish.

If a player thinks a team’s qualifying offer is not valid: He must object in writing within 10 days. He must explain what is wrong with the offer. The team has 5 business days to fix it. If they fix it properly, the player can no longer claim it’s invalid. ⓘArticle X (Player Eligibility and NBA Draft) Section 8 (General):

(d) Any claim by a player that a Contract offered as a Required Tender pursuant to this Article X fails to meet one or more of the criteria for a Required Tender shall be made by written notice to the Team (with copies sent to the NBA and the Players Association), no later than ten (10) days after the receipt of such Contract by the Players Association. Such notice must set forth the specific changes that the player asserts must be made to the offered Contract in order for it to constitute a Required Tender. Upon receipt of such notice, if the requested changes are necessary to satisfy the requirements of a Required Tender, the Team may, within five (5) business days, offer the player an amended Contract incorporating the requested changes. If the Team offers such an amended Contract, the player and the Players Association shall be precluded from asserting that such Contract does not constitute a timely and valid Required Tender.

MAXIMUM QUALIFYING OFFER

Arenas provision

Across successive NBA Collective Bargaining Agreements, instruments have been put in place to protect teams against the threat of losing their best young talents to free agency, theoretically correcting a situation brought about by years of travel in the opposite direction.

Where once all free agency was essentially restricted - and thus barely even possible - the growth of the union, the liberation of player movement, the demystification of "loyalty" (particularly when enforced) and the sharp growth of the concept of player power have all aggregated to create a new market, one in which players can and do leave the teams they were once told they were on. This became particularly true of the younger types, who had the audacity to actually use the freedom they were given that their forebears never had. And this came to a head way back in the 2003 offseason.

That summer, then-Golden State Warriors sophomore guard Gilbert Arenas hit free agency. Their second-round pick of 2001 had broken out across his first two NBA campaigns and had been an 82-game starter in 2002-03, returning averages of 18.3 points and 6.3 assists per game in an unexpected yet most intriguing breakout. However, due to the specifics of the contract that the Warriors had given him, Arenas hit free agency after two years.

As above, all free agents with three years or less of NBA experience can be made into restricted free agents, whether they like it or not, if their incumbent team extends a qualifying offer. [The sole exception is if a first-rounder had a team option year on his rookie scale contract declined, which did not apply here.] That was true then and is still true today. The Warriors, then, might perhaps have felt safe in the knowledge that even though Arenas could sign big offer sheets with other teams, they in theory had the ability to match them.

However, they did not have that ability in practice. Because Arenas had only been with the team for two years, the Warriors had only early Bird rights on him, and, as an over-the-cap team, they did not have cap space. The restricted free agency instrument did not give them carte blanche to simply match any contract Arenas signed with another team; it merely gave them the right to match any contract Arenas signed with another team, as long as it was one the Warriors were able to give Arenas themselves

Put simply, then, they could still be outbid. And they were. The Washington Wizards signed Arenas to a six year, $64,020,000 contract that started at $8,536,000 in the first season; by having neither full Bird rights nor cap room, the most that Golden State could offer in that first season was an amount equal to the league's average salary in the previous season, as is the maximum allowable starting amount for early Bird free agents. That amount was a mere $4,917,000. The Warriors, then, could not match after all.

The entire enterprise was compounded the following year, when Carlos Boozer did essentially the same thing, signing an unmatchable offer sheet with the Utah Jazz that the Cleveland Cavaliers could not match without pulling out some extraordinarily contrived salary dump of Zydrunas Ilgauskas, which they declined to do. In that case, the loss was made worse by the fact that Cleveland had declined Boozer's team option for the minimum salary, sending him to free agency by choice, hoping to tie him down long term. Boozer, it seems, had other ideas and better offers.

The two moves gave rise to what is often referred to colloquially as the Arenas provision (which could just as easily be called the Boozer provision, but Arenas got the label for getting there first). Starting with the 2005 CBA, the loophole has been effectively shut, as teams are no longer able to sign other team's one- or two-year veteran free agents to contracts with first year cap numbers larger than the value of the full Mid-Level Exception (although the amount of money can be larger, and the cap hit spike in the back end of the deal, via means explained below). And by and large, that has stopped the already extremely rare practice.

Since the advent of the Arenas provision, the situation has rarely cropped up again. The provision's limitations, plus the increased regularity of second-round picks (or coveted undrafted players) receiving three- or four-year contracts through either cap space or portions of the Mid-Level Exception, has meant a pincer movement of less viability and fewer candidates. By way of example, of the second-round picks in the 2001 draft class, only three (Trenton Hassell, Terence Morris and Jamison Brewer) signed three-year deals, as opposed to nearly all of them today.

However, the Arenas provision did crop up one summer in the relatively recent past, when, in the summer of 2012, the Houston Rockets sought to test it with their new contracts for both Omer Asik and Jeremy Lin, who did not sign three-year deals in their first contracts. Similarly, the Toronto Raptors gave Landry Fields an amount in their offer sheet to him that same summer that could have triggered use of the Arenas provision, had the New York Knicks matched it. They did not. In fact, none of the three were matched. And that, then, has been the entirety of the Arenas provision to date.

That is, until next summer, when the Chicago Bulls will have to do something with Ayo Dosunmu.

Contrary to the new norm, the Bulls did not give Dosunmu, their 2021 second-round pick, a three-year deal. It is unclear from this distance whether this was at the team's discretion, or Dosunmu's - the NBPA advises agents to steer clear of three- and four-year contracts to non-first round rookies, yet, as can be seen above, the advice is not often heeded. Nevertheless, whatever the reason, Dosunmu received only two years, and thus is headed to free agency next summer.

While the rules regarding extensions were liberalised in the 2017 CBA - allowing those self-same players who had signed three-year non-rookie scale first contracts the option of extending them and bypassing free agency altogether, further incentivising signing such deals and further diminishing the likelihood of the Arenas provision coming into play - there is still no such mechanism for two-year veterans. Dosunmu is heading to free agency next summer, whether he and the team like it or not. The only way it does not happen is if he is waived before then.

Of course, there is no chance of that happening, because Ayo has become a hugely important player for the Bulls.

Taking advantage of the extended absence of Lonzo Ball, Dosunmu has gone from bench player to key bench player to fill-in starter to important starter over the course of his first season and a quarter. In 19 appearances (all starts) this season, he is averaging 10.6 points, 3.5 rebounds and 3.0 assists per game on 50.4% shooting, numbers which belie the fact that he does his best work on the defensive end, where, in the best possible way, he has been all over the place.

Far from being on the outs, then, Dosunmu might be in line to be the first player in quite some years to test his team's resolve when it comes to the Arenas provision.

The new parameters of the post-2005 CBA Arenas provision specifically limit the first year salary of any offer sheet to an eligible player to nothing greater than the full amount of the Non-Taxpayer Mid-Level exception. This limitation means the player's current team can match the offer sheet by using the Early Bird exception (which as seen in Arenas's case above has the same starting amount as the Non-Tax MLE), the Non-Tax MLE itself, or an equivalent amount of cap space. Thereafter, the second-year salary is limited to the standard 5% raise.

It is after that that things can get weird. The third-year salary is allowed to be as high as it would have been had the first-year salary not been limited, and salary in the fourth year may increase by up to 4.5% of the third year salary rather than the first. These big bumps are only possible if the full limited amount is given in the first two years, but if it is, then the huge potential bumps may come into play.

While any team signing Dosunmu to any such backloaded deal must be able fit the average salary for the entirety of the contract under their cap, and not just the MLE-sized first year - so for example, a team that is $17.5 million under the cap is limited to offering a total of $52.5 million over three years, or $70 million over four - this is something that might not be too big of a problem, considering the big salary cap spikes coming up in the near future. That same team with that same hypothetical $17.5 million in 2023/24 cap space could therefore (using a hypothetical Non-Taxpayer MLE amount of $11,368,000, in accordance with the current NBA projection) sign Dosunmu to a deal that works out as:

2023/24: $11,368,000
2024/25: $11,936,400
2025/26: $22,834,034
2026/27: $23,861,566
Total: $70 million

Not exact, but highly illustrative.

Bear in mind also that the Bulls would need to be in a position where they are eligible to use the full value of their Non-Taxpayer Mid-Level Exception if they to be able to match it. If they are suitably burdened with payroll that they can only use the Taxpayer version, a Non-Taxpayer MLE offer would outbid them, regardless of Dosunmu's restricted status. As above, restricted free agency only conveys matching rights as long as it the team has the means.

Note also that the Bulls (or any applicable re-signing team) cannot pre-empt the process by negotiating a beyond-MLE deal with the relevant player and bypassing the offer sheet stage entirely. The Arenas provision and these particular circumstances come about only in an offer sheet scenario. If the Bulls want to re-sign Dosunmu without another team's involvement, they are limited to the full value of the Non-Taxpayer MLE or the early Bird exception, with no big back-end jumps.

Starter criteria

Offer sheets and matching rights

Cap counting

Compensation

Two-way contracts

Two-way contract players can also enter restricted free agency.

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