CBA Dictionary: Bi-Annual Exception

2017-2018 Value: $3,290,000
 
Available:

• When TEAM is below Tax Apron ($125.266 mil) after exception is used.
  • At time of exception use, TEAM must have salaries totaling no more than the difference between the Tax Apron and the BAE value = must be equal to or below $121,976,000.
• When TEAM has not used either Taxpayer Mid-Level Exception or Room Mid-Level Exception, or both.
  • If TEAM has used either exception, the BAE is unavailable during that season.
• Only once every two years.
  • If TEAM doesn’t use it this year and remains over the Salary Cap, it will be available next year so long as the other conditions are met.

 
Not Available:

• When TEAM pays out salaries totaling less than the yearly salary cap ($99.093).
• When TEAM uses either Taxpayer Mid-Level Exception or Room Mid-Level Exception during the current season.

 
Deal Structure:

• TEAM can offer a two-year contract with the starting salary of $3,290,000 in Year 1 and a limit of a 5% increase of Year 1 salary in Year 2 ($3,454,500).
• TEAM can divide the exception between multiple players.
• If a TEAM uses the BAE, it cannot exceed the Tax Apron ($125.266 mil) for the remainder of the year.
  • TEAM becomes hard-capped at the Tax Apron for the current season. (Note: the CBA calls for a specific set of rules to calculate the Tax Apron. Those are available here.)

Summary:
The Bi-Annual Exception allows teams over the cap to have flexibility in signing players to contracts worth more than the minimum amount. However, it imposes a hard cap at the Tax Apron and removes the ability for a team to be flexibility to go above that number. It is a great option for a team that maintains salaries that exceed the Salary Cap, that don’t exceed the Tax Apron, and hasn’t used the BAE the previous year. Because the combination of these criteria is rare, the BAE becomes a not-oft used way for teams to sign players to contracts that will exceed the Salary Cap.

Current NBA Usage:
In 2017-2018, only 5 NBA teams are using the BAE: Charlotte, Detroit, Houston, Memphis, and Washington. The contracts can be seen below: