Say dad, what is the Free Agency? And what is a sign and trade?

Say dad, what is the Free Agency?  And what is a sign and trade?

Tonight at midnight, the Free Agency market will officially open. Starting at 6 p.m. New York time, the NBA world will ignite with signings, player moves, transfers. The dollars will flow freely, as always there will be surprises, in short the night promises to be particularly crazy. For newcomers who want to join in the fun, or simply for those who want to revise before tomorrow’s big event, we wanted to put all the essential notions you need to know here. A kind of “Free Agency for Dummies” what.

Already, what is the Free Agency?

The Free Agency is one of the big events of the NBA offseason. After the great ceremony of the Draft, it is the turn of the free agent market to open. Free agents correspond to players at the end of their contract and who therefore have the possibility of changing teams during the summer. We are not talking about transfers here because in the American Big League, transfers are usually done through player exchanges. During Free Agency, a free agent can leave his franchise without the latter obtaining any compensation, and thus directly strengthen his new team. But as you can imagine, it’s not all that simple.

Two types of free agents

Unrestricted free agent

Unrestricted free agents (unrestricted free agent, UFA) are free as air. They can choose to sign a new contract with their current franchise (if interested of course), or pack up their bags if they want to continue their career with another team.

Restrictive free agent

Here it gets a little complicated. A restrictive free agent (restricted free agent, FRG) can potentially leave but remains under the control of his franchise. Because even if it is at the end of the contract, the team in which it is can align itself with the offers of the competition. In other words, the free agent base franchise has the last word. If she wishes to keep it, she aligns herself with the contract offered by another team. Otherwise, she lets him go.

A good portion of restricted free agents are players who have just completed their fourth NBA season, or players who have played three years or less in the NBA. These guys got a qualifying offer from their franchise, that is to say a one-season offer to transform their player who is at the end of the contract into a restrictive free agent. If the franchise does not submit this qualifying offer to its player, the latter becomes an unrestricted free agent.

How long to line up?

Now that you understand the concept of the restricted free agent, you are bound to ask yourself the following question: how long does a franchise have to decide whether to line up or not? Answer: 48 hours. After an offer made by another franchise on its player, a team effectively has two days of reflection before having to communicate a decision.

Recruitment salary margin

In the NBA, to be able to recruit a restricted or non-restricted free agent, you must have the necessary salary margin below the salary cap imposed by the League. For the 2022-23 season, that salary cap is set at just over $123 million. Thus, if a team wishes for example to sign a free agent asking for an annual salary of 20 million dollars, it must have a total salary mass (that is to say when we take all the salaries of the players who make up the workforce ) of 103 million or less. In other words, it must have sufficient resources to be able to accommodate the salary accompanying the player’s new contract.

However, a team wishing to extend one of his free agents, whether restricted or unrestricted, need not clear salary room to re-sign him. In particular through the Bird Rights, a franchise can extend their free agent even if they exceed or end up above the salary cap. On the other hand, it risks leading him to luxury taxwhich the franchises pay when they have exceeded the amount of the luxury tax, set at 136 million.

Sign-and-trade & Exceptions

So, for teams that are already well-armored financially, are there still ways to be able to recruit free agents? Yes, here are which ones.

Sign-and-trade

If a franchise A is interested in a free agent (restricted or non-restrictive) but does not have the resources to recruit him, it can try to set up a sign-and-trade with the franchise B in which this same player evolved. As its name suggests, it is a signature followed by a transfer. The free agent in question signs his new contract with franchise B (his base franchise), which then trades him directly to franchise A. This allows the latter to recover the targeted player, and the former team of the player to recover a consideration and therefore not to lose his free agent against peanuts. However, it is often complicated to set up because it requires negotiations between the franchises and the agreement of the free agent in question.

Example of a sign-and-trade: In the summer of 2019, the Heat recruited free agent Jimmy Butler via a sign-and-trade. The Miami franchise did not have the salary margin to offer him a maximum contract (four years, 142 million) but managed to set up a transfer with the Sixers to make the transaction possible. Philadelphia was thus able to recover a counterpart, namely the Miami player Josh Richardson.

For more details on the concept of sign-and-trade, it’s this way.

Mid-level exception

Teams that are above the salary cap but below the luxury tax have the mid-level exception to sign free agents. It is an envelope of 10.349 million dollars which can allow the franchises concerned to sign one or more players in order to strengthen themselves.

Taxpayer mid-level exception

The teams being above the luxury tax also have a mid-level exception to recruit free agents, but the envelope is much lower. Indeed, it is worth 6.392 million dollars.

Bi-annual exception

Like the mid-level exception, the bi-annual exception is only available to teams that are above the salary cap but below the luxury tax. For the 2021-22 season, she is worth $4.1 million. You should know that it is usable only one year out of two.

Players with minimum wage

Finally, teams that no longer have financial resources can still recruit players at minimum wage. Obviously, we are talking about players from the 75th zone, little known or in pre-retirement.

To learn more about the different exceptions, it’s over there.

Two types of options to know

Player option

You should also know that some players have a player option on their last year of contract. Basically, it gives them a choice between testing the market or extending an additional year with their team.

team option

Same scenario but in the other direction. A franchise can have a team option on a player, which gives them the possibility of extending the latter for an additional year, or else of letting them slip away to free up the salary margin.

What is the moratorium?

From this night, offers will be made, agreements will be found, players will change stables… But you should know that nothing will be official before July 4th. From the 1st to the 4th, we are officially in a period of negotiations, with agreements in principle, and the signatures cannot take place until next Friday. If you really want to know what the moratorium is for, all the explanations are there.

That’s it, you know everything about the main bases of the Free Agency. Enough to follow this closely and understand everything that will happen in the days to come. We will obviously be at your side to comment on and analyze everything, signature by signature!

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