The Larry Bird exception, also known as the Bird exception and Bird rights, is aA special clause in contracts signed between NBA teams and players that ignores the team's salary cap., which is also the key rule that players must know when renewing their contract.
Further reading:
A 3-minute analysis of the NBA’s two-way contract FAQs
What is the NBA’s 38-year-old clause? Why is it called the LeBron James clause?
Table of Contents
What are bird rights? and the impact on contract renewal
The Bird Rights are named after Celtics star Larry Bird. When the salary cap first appeared in the NBA, it was originally intended to be a hard cap, which meant that the combined salary of all teams could not exceed a jointly set cap. But the NBA developed a special case for Larry Bird, allowing him to sign a seven-year, $15 million contract to stay in Boston in 1983. This was a sky-high contract at the time.
After the contract of a player with Bird rights expires, the parent team can renew him for a five-year contract with a maximum annual salary increase of 8%, and can ignore the salary cap. Other teams in the league can only offer him a contract with a maximum of 4 years and a maximum annual salary increase of only 5%.
How to own bird rights?
No matter how much a player's salary is, as long as the team holds the Bird Rights, it can exceed the salary cap to renew the contract. Players can have bird rights as long as they play for the player for more than three years.
The importance of bird rights
The biggest advantage of the Bird Rights to the parent team is that it gives them one more year of money. When Klay Thompson signed with the Warriors in 2018, other teams could only offer Thompson a maximum of $142 million over four years, but the Warriors could offer him $190 million over five years. The difference between the two contracts was $48 million!
In addition to providing one more year of money, the Bird Rights also have a huge advantage, which is that they can ignore the salary cap. For example, in 2018, the Warriors can give Thompson a five-year contract of 190 million. After the contract extension, it does not matter if the team's total salary exceeds the upper limit. However, other teams cannot offer more than the salary upper limit if there is not enough salary space. , it would be impossible to give Thompson a four-year maximum salary contract of 142 million.
Further reading:What is the NBA luxury tax/luxury tax? How to calculate?
This is also the NBA's mechanism to protect small-market teams from competing with wealthy teams, allowing them to attract stars and maintain the NBA's balance of strength.
Bird rights will not expire due to transactions
Bird rights remain valid after a trade occurs, as long as the player is traded during the three-year contract period. But if a player signs with another team in the same season he is waived, that season can also be counted as the first year of the Bird Rights.
