Kristian Ferrell
The NBA free agency process is a complex one, with many rules and exceptions. Teams and players must navigate a web of qualifying offers, right of first refusal, and matching offers, all while considering salary caps and contract lengths. Free agency in basketball is an exciting time, with the potential for big moves and trades that can dramatically change a team's fortunes. While superstar players rarely become free agents anymore, there are still plenty of talented players available who can make a significant impact on their new teams. This process can be challenging, with many factors to consider, but it also offers opportunities for teams to improve their rosters and compete for championships.
| Characteristics | Values |
|---|---|
| When can teams negotiate with free agents? | Teams can begin negotiating with free agents on June 30 at 6 p.m. ET. |
| When can teams sign free agents to contracts? | Teams can officially sign free agents on July 6 at 12:01 p.m. ET. |
| What is a restricted free agent (RFA)</co: 1,10,11,13,14>? | A player coming off their fourth year of rookie-scale contracts or a non-first-round pick with three or fewer years of experience. |
| Can an RFA sign with another team? | Yes, but the original team has the "right of first refusal," meaning they can retain the player by matching the terms of the new offer. |
| What is the process for an RFA to sign with another team? | The player and the new team sign an offer sheet, which must be for at least two seasons. The terms are given to the original team, which has two days to match the offer and retain the player. |
| What happens if the original team matches the offer? | The player remains under contract with the original team but under the terms of the new offer sheet. |
| What happens if the original team does not match the offer? | The player becomes under contract with the new team. |
| What happens if the player refuses to report for a physical with the original team? | The original team can withdraw its first refusal, and the player becomes an RFA again. |
| What is the qualifying offer for an RFA? | A one-year guaranteed deal that becomes a regular contract if the player signs it. |
| What is an unrestricted free agent? | A player becomes an unrestricted free agent if their team does not issue a qualifying offer. They can sign with any team without restrictions. |
| Are there exceptions to becoming an unrestricted free agent? | Yes, players can decline their team option or have it not extended, making them unrestricted free agents. |
| What is the salary cap for the 2025-26 season? | The NBA's salary cap is expected to rise to $154.6 million, but it is not a hard limit on team spending. |
| Are there exceptions to the salary cap? | Yes, teams are allowed to exceed the cap to sign players to one- or two-year minimum contracts, but hard-capped teams cannot exceed their limit. |
| Are there other exceptions or strategies to sign free agents? | Yes, there are various exceptions, including the Non-Taxpayer Mid-Level Exception, Taxpayer Mid-Level Exception, and Bi-Annual Exception, which provide different spending limits and contract lengths. |
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Restricted free agency
- Following the fourth year of rookie "scale" contracts for former first-round draft picks.
- For all veteran free agents who have been in the NBA for three seasons or less. The exception to this rule is a first-round draft pick following his second or third season if his team doesn't exercise its option to extend his rookie-scale contract for the following season.
- For a two-way player (other than a first-round draft pick whose third or fourth-year option was not exercised) who was on the NBA team's active or inactive list for 15 or more days of the NBA regular season in the last season of such contract, provided the team makes a qualifying offer to the player.
A restricted free agent (RFA) can sign an offer sheet with any team, but the player's original team can retain him by matching the terms of that offer. The original team is said to have the "right of first refusal". The terms of the deal, which must be for at least two seasons, are given to the player's original team, which has two days to match. If the team matches, the player is under contract with his original team, but with the principal terms of the offer sheet. If the team does not match within two days, the player is under contract with the new team. If the player refuses to report for a physical with the original team within two days of the match, the first refusal exercise notice is in play until the player reports. The original team can also withdraw its first refusal exercise notice if the player doesn't report for a physical, in which case the notice and the offer sheet are invalidated and the player becomes a restricted free agent again.
A player can become a restricted free agent if his team submits a qualifying offer to him between the day after the last game of the NBA Finals and June 29. The qualifying offer is a standing offer for a one-year guaranteed deal, which becomes a regular contract if the player decides to sign it. This ensures that the team does not gain the right of first refusal without offering a contract themselves. If a player is coming off a regular (non-two-way deal), he may qualify for a higher or lower qualifying offer depending on whether he met the "starter criteria" in the previous season or the average of the previous two seasons. Starter criteria are based on starting at least 41 games or playing at least 2,000 minutes in the regular season. Qualifying offers expire on October 1, but can be extended until March 1. If the deadline passes and the qualifying offer is neither withdrawn nor accepted, the player remains a restricted free agent. Teams and players are free to negotiate a new contract after the qualifying offer expires as the deadline only affects the player's ability to accept his qualifying offer. Players can always accept the qualifying offer and play the following season under its terms, sometimes doing so to ensure unrestricted free agency in the following offseason.
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Qualifying offers
A qualifying offer does not mean that the team wants to renew it, nor that the player is obliged to sign it. With the qualifying offer, a franchise retains the right to have the final say in the player's future. This ensures that the team does not gain the right of first refusal without offering a contract themselves.
The qualifying offer is binding as a one-year contract. If the player signs, they are under contract for the next season. They could also sign an offer sheet from another team, which their original team could match, and they could agree on a new multi-year contract. The team can also rescind the qualifying offer.
Players who are coming off a dual contract and are not eligible to sign another may receive a qualifying offer for the minimum salary based on years of service. For those who are candidates to continue under the dual contract for one more year, the qualifying offer is $50,000 fully guaranteed.
A player candidate to sign a qualifying offer may earn more or less money depending on the starting criteria. Players who reach 41 starting games and more than 2,000 minutes on the court in the last year or the average of the last two meet the requirements of the starting criteria. The maximum qualifying offer is limited to players coming out of their rookie scale who have played for four years.
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Contract types
There are two main types of free agents in the NBA: unrestricted and restricted. Unrestricted free agents (UFAs) are free to sign with any team without restriction. Restricted free agents (RFAs) are subject to a process that restricts their movement unless their incumbent team allows them to leave.
A player becomes a restricted free agent when their team submits a qualifying offer to them between the day after the last game of the NBA Finals and June 29. The qualifying offer is a one-year guaranteed deal, which becomes a regular contract if the player decides to sign it. If a player does not receive a qualifying offer, they become an unrestricted free agent.
As a restricted free agent, a player can sign an offer sheet with another team, but their original team can retain them by matching the terms of that offer. This is known as the "right of first refusal". The original team must have enough salary cap room to match the offer and cannot match an offer that is greater than its salary cap room.
Players can become free agents when their contract expires, or if they have the option to extend their contract but choose not to. If a player has four or more years of service and does not exercise their option to extend, they become an unrestricted free agent. If they have three or fewer years of service, they become a restricted free agent.
Contracts can also contain an early termination option (ETO), which gives the player the right to end a signed contract after the fourth year. If the player exercises this option, they become an unrestricted free agent. Contracts can also contain a team option (TO), where the team has the option to extend the contract for an additional year. If the team declines to exercise this option, the player becomes a free agent.
There are also a number of salary cap exceptions that allow teams to go over the cap when signing players. These include the minimum salary exception, the non-taxpayer mid-level exception, the taxpayer mid-level exception, and the bi-annual exception.
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Salary cap
The NBA salary cap is the maximum limit on the total amount of money that National Basketball Association (NBA) teams are allowed to pay their players. The salary cap was instituted in the 1984-85 season to level the playing field among all NBA teams and ensure competitive balance in the league.
The salary cap is calculated as a percentage of the league's revenue from the previous season and is subject to a complex system of rules and exceptions. For instance, certain players in the first few months of a new contract are subject to base year compensation (BYC), which prevents teams from re-signing players to salaries specifically targeted to match other salaries in a trade. BYC applies only to players who re-sign with their previous team and receive a raise greater than 20%. It also only applies when the team is over the salary cap.
The NBA has a soft salary cap, which means that teams are allowed to go over the cap but will be subject to reduced privileges in free agency. However, teams that are hard-capped cannot exceed their cap even to add players on minimum contracts. The NBA's salary cap is expected to rise 10% to $154.6 million for the 2025-26 season.
The salary cap can impact a team's ability to sign free agents, as the team must have enough salary cap room for the offer sheet and maintain that room until the offer sheet becomes official. If a team is over the salary cap, they may be limited to offering a veteran's minimum contract.
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Player options
Players have a variety of options when it comes to free agency in the NBA. The first option is to exercise the player option in the final year of their contract, which extends their contract by one more year. If they decline the option, they become free agents. An early termination option is similar, except that when it's exercised, the player becomes a free agent.
Another option for players is to sign with another team as a free agent. This can be done through an offer sheet, which the player's original team can match to retain the player. The original team has the "right of first refusal" and must match the terms of the offer sheet to keep the player. Restricted free agency exists for players following the fourth year of rookie "scale" contracts or for veterans with three or fewer NBA seasons. In these cases, the original team must submit a qualifying offer, a one-year guaranteed deal, to the player to maintain the right of first refusal.
Players can also become unrestricted free agents, who are free to sign with any team. This can occur if a qualifying offer was not issued or if the player declines their team option and the team does not extend a qualifying offer. Unrestricted free agency is more common for superstar players who can make more money by signing with their current team and then forcing a move if they become unhappy.
The NBA also has salary cap exceptions that can impact player options. Teams can exceed the salary cap to sign players to one or two-year minimum contracts, but hard-capped teams cannot exceed their limit. There are also mid-level exceptions for teams above or below certain salary thresholds, allowing them to sign free agents for up to four seasons. These exceptions trigger a hard cap at the respective salary thresholds.
Overall, players have a range of options during free agency, including contract extensions, signing with new teams, and salary cap considerations, all of which can influence their decision-making process.
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Frequently asked questions
A restricted free agent (RFA) can sign an offer sheet with any team, but their original team can retain them by matching the terms of that offer. Restricted free agency exists for players following the fourth year of rookie "scale" contracts and for veteran free agents with three or fewer NBA seasons. Unrestricted free agents can sign with any team they choose.
Teams can begin negotiating with free agents on June 30 at 6 p.m. ET, and most deals can be officially signed after 12:01 p.m. ET on July 6.
Players can become free agents if they decline the option in the final year of their contract. Restricted free agents can become unrestricted free agents if their team chooses not to extend a qualifying offer.
