In the first five years of the NBA’s collective bargaining agreement (CBA) signed in 2011, teams are allowed to “amnesty” one of their player contracts signed before the 2011-2012 season. In effect, this provision gives teams a one-time chance to get out of “bad” contracts or shed salary to get under the cap and/or lessen their luxury tax bill. The amnestied player’s salary is removed from the team’s books but the team will still have to pay the player over the life of the contract.
Recently, some more teams have used this provision to free up money.
Forward Mike Miller of the defending champions Miami Heat was waived to cut the team’s luxury tax. Miller is owed nearly $13 million over the next two seasons. Before Miller’s waiver, the Heat had $87.1 million worth of guaranteed contracts for the 2013-2014 season way above the $71.7 million luxury tax ceiling.
Under the new set-up in the CBA, teams pay $1.50 per dollar for the first $5 million over the luxury tax, $1.75 per dollar between $5 million to $10 million, $2.50 per dollar between $10 million to $15 million, and $3.25 per dollar if you are $15 million to $20 million over the luxury tax.
With $87 million in payroll, the Heat could be hit with a whopping $50 million in luxury taxes. By dropping Miller and his $6.2 million salary for next season, the Heat save $16 million in luxury taxes.
The Lakers have also used the amnesty provision to cut forward Metta World Peace and save $15 million in luxury taxes. Metta was immediately signed by the New York Knicks after clearing waivers. He is set to earn the $7.7 million the Lakers still owe him for next season plus $1.6 million from the Knicks. He has a player option for the 2nd year of his contract in New York.
The Charlotte Bobcats, meanwhile, waived power forward Tyrus Thomas and now have $18.1 million in salary cap space over the next two seasons. Aside from the salary dump, the move also gives way to former Utah Jazz center Al Jefferson who just signed with the Bobcats. Thomas, the No. 4 pick in the 2006 draft, is an 8-year veteran who never reached his full potential. Injuries and inconsistent playing time has plagued his career.
Other amnesty players for the summer are forward Drew Gooden (Milwaukee Bucks) and Linas Kleiza (Toronto Raptors). Gooden will probably be signed by another team. Despite a dismal performance in Milwaukee last season, Gooden, when healthy, can still put up respectable stats. His rebounding and ability to score around the rim will be valuable for some teams. Kleiza, a known shooter and scorer, announced that he is inclined to play overseas.
As of this writing, a 3rd of the league still has not used their amnesty provision. For instance, Boston’s Rajon Rondo and San Antonio’s Tony Parker are still eligible to be waived next year but of course, their respective teams won’t let them go.