NBA Free Agency Glossary: Bird Rights, luxury tax, max contracts and more explained

NBA Free Agency is a chaotic process dictated by a web of rules and restrictions affecting teams and players differently. To understand what your favorite team can and can not do, it helps to understand all the rules. Below you'll find a simple definition for most of the key NBA Free Agency terms, along with a link to a detailed description.

What is restricted and unrestricted free agency?

Restricted and unrestricted free agency are two different categories of free agency NBA players can enter. Unrestricted free agency happens when a player finishes the terms of a previous contract. At that point, they can sign with any team at any contract that is legal under the rules of the Collective Bargaining Agreement.

Restricted free agency happens when a player is coming off their rookie contract and is triggered by their previous team extending them a qualifying offer. That gives their previous team the opportunity to match any contract offer they receive from a new team. For more on the rules, restrictions and timelines around unrestricted and restricted free agency, read more in the full NBA Free Agency Glossary entry.

Why are some contracts not guaranteed?

Some player contracts include provisions for a final year that is non-guaranteed or only partially guaranteed. These provisions are negotiated at the time the contract is signed and remove risk for teams while giving players the opportunity to try and lock in a salary potentially higher than they would have earned with strong play over the life of the contract. For more on the rules and rationale for non-guaranteed contracts, read more in the full NBA Free Agency Glossary entry.

What are player and team options?

Options are provisions added to the final year of a player's contract, negotiated at the time the contract is signed. A player option gives the player the option of playing out the final year of the contract or of opting out and joining unrestricted free agency early. A team option gives the team the option of keeping the player for the final year of the contract or sending them to unrestricted free agency early. For more on the guidelines around player and team options, read more in the full NBA Free Agency Glossary entry.

What is a maximum contract?

The Collective Bargaining Agreement sets rules the maximum amount of money and years a player can receive on a new contract. The rules for a max contract vary depending on years of service and a player's career accomplishments. For more on the rules and guidelines for a max contract, read the full NBA Free Agency Glossary entry.

What are Bird Rights?

Bird Rights are a provision that allows NBA teams to exceed the salary cap in certain situations to re-sign their own free agents. The technical name for Bird Rights is the Veteran Free Agent Exception. For more on how Bird Rights work and which teams and players are eligible, read the full NBA Free Agency Glossary entry.

What is the luxury tax?

The luxury tax is a system put into place in the Collective Bargaining Agreement that imposes financial and sometimes functional penalties on teams who dramatically and/or consistently exceed the salary cap. They are a mechanism to promote parity, ensuring that wealthy teams and owners aren't able to create a competitive imbalance by simply outspending smaller teams. For more on the luxury tax, penalties, luxury tax aprons and more, check out the full NBA Free Agency Glossary entry.

What is the mid-level exception?

The mid-level exception is one of several exceptions built into the Collective Bargaining Agreement that allows teams, in certain circumstances, to exceed the salary cap to sign certain contracts. For more on the eligibility requirements for players and teams, as well as the limits on the dollar amounts for these contracts, check out the full NBA Free Agency Glossary entry.