Table of Contents

    Waivers

    Waiver is the process of terminating a Player Contract before the term expires. A Waived Player’s Contract can be claimed by another Team, or the Contract will be terminated and he will become a UFA. If the Contract is terminated and the Player had Protected Compensation outstanding, then it becomes Dead Salary the Team is responsible to pay to the Player. They may elect to Stretch the Dead Salary over a longer period of time for Team Salary purposes.

    The Waiver Process

    Below is a summary of how the Waiver process works:

    1. Team requests Waivers for a Player;
    2. Player is on Waivers for 48 hours, when another Team can claim his Contract;
    3. Player is either claimed (and Contract is assigned to the Claiming Team) or the Contract is terminated and he becomes a UFA;
    4. If the Player clears waivers (i.e. no one claims him) then he is due any amount of Protected Compensation remaining on his Contract, unless a different amount was agreed to in a Buyout.

    Waiver Requests and Claims

    Waiver Requests

    A Waiver Request cannot be withdrawn during the 48-hour Waiver process. He is either claimed or the Contract is terminated.

    Both the Roster Spot and the Non-Guaranteed Salary are freed up immediately upon request . This allows Teams to effectuate trades without having to wait the 48 hours.

    July Moratorium does not prohibit Requests or Claims.

    10-Day Contracts do not go through the Waiver Process and are terminated immediately.

    Playoff Eligibility and Waiver

    A Player must have been requested to be waived by March 1st to remain eligible for the Playoffs in the current Season when signed by another Team.

    • Exception – Player is acquired by a Team whose Active List was reduced to 8 Players due to injury/illness.

    Waiver Claim

    Requirements

    The Team must have an open Roster Spot and Room to sign the Player.

    The Team must pay a fee to the League when making a claim.

    Waiver Order

    If multiple Teams claim a Player, the Team with the worst record wins the claim.

    In the offseason and through November 30th of the Regular Season, use the prior Season’s record.

    If Teams have an equal winning percentage, then the tiebreaker goes to the Team with the worst winning percentage among the tied Teams in regular season games played. If still tied, a coin toss determines the tiebreaker.

    Effect of Claim

    The Claiming Team assumes the entire Contract, similar to a Trade.

    The Claiming Team cannot Trade the Player for 30 days during the season, or the first 30 days of next season if claimed in the offseason.

    Partial Waivers

    Partial Waivers-where a Team will claim a Player but only agree to pay a certain portion of his guaranteed Salary-is only permitted as part of the Fitness-to-Play Panel process.

    Re-Signing After Waivers

    If a Player is Traded and subsequently waived, the Sending Team cannot sign or claim the Player until the earlier of (i) 1 year following the date all conditions of the Trade were satisfied and (ii) July 1st following the last Season of the waived Contract.

    If a Player and Team agree to a Buyout, then the Team cannot re-sign the Player until the later of (i) 1 year after the Contract was terminated and (ii) July 1st following the last Season of the Contract.

    Dead Salary

    Calculating Dead Salary

    Base Compensation

    If he clears waivers, the Player is still owed his Protected Compensation for the remainder of the Contract (subject to any Buyout agreed to, discussed below).

    Unearned/unprotected Base Compensation and any Bonuses are not due to the Player.

    The Universal “Cutdown” Date

    Any Contract that is terminated for “lack of skill” from January 10th to the end of the Season is entitled to his full Base Compensation for the Season.

    Therefore, if a Team seeks to terminate the Contract prior to the Salary being fully guaranteed for the Season, the Team must allow the Player to clear waivers prior to January 10th (i.e. he must be cut on January 7th).

    Options and ETO’s

    1. ETO’s – Counted as guaranteed salary;
    2. Team Options – Not owed to the Player if cut prior to exercising Team Option;
    3. Player Options – Depends on language in the Contract. See Compensation Protection page for details.

    Salary Calculation During Season

    If the Player is waived during the Regular Season (before the universal guarantee date of January 10th), his Current Season’s salary is calculated as follows:

    Calculating Dead Salary Midseason

    Step 1 – Divide Base Compensation by the number of days in the Regular Season to obtain Per-Day Salary.

    Step 2 – Multiply the Per-Day Salary by the number of days that have elapsed since he cleared waivers. This is the Player’s Earned Compensation.

    Step 3 – If his Earned Compensation is greater than his Protected Compensation for the Current Season, then the Earned Compensation is the Team’s Dead Salary. If it is less, then the Team’s Dead Salary is the amount of his Protected Compensation.

    Base Compensation and the Minimum Salary Subsidy

    Note that Base Compensation does not factor in the subsidization for a 1-Year Minimum Salary Player. Use the Minimum Salary applicable for the Player’s YOS. In other words, a Player with 6 YOS who signs a 1-Year Minimum Contract will be subsidized to the 2 YOS Minimum Salary for Cap/Apron/Tax purposes. However, if he is waived you use the full amount of his Minimum Salary.

    🏀 Waiving a Minimum Salary with Compensation Protection
    During the 2024-25 Season, the Timberwolves waived P.J. Dozier on December 28th, clearing waivers on December 30th. Dozier’s Base Compensation was $2,613,120 and his Contract was guaranteed for $1 million. 70 days had elapsed as of December 30th.

    Step 1 – $2,613,120 ÷ 174 (Regular Season Days) = $15,017 Per-Day Salary.

    Step 2 – $15,017 x 70 (days elapsed) = $1,051,255 Earned Compensation.

    Step 3 – Because his Earned Compensation was greater than the $1 million guaranteed Salary, Minnesota owed Dozier $1,051,255 in Dead Salary.

    Stretching Salary

    Payment vs. Effect on Team Salary

    Stretching Salary means spreading the Dead Salary across twice the remaining Seasons, plus one more Season.

    The actual Payment Arrangement of the Dead Salary is automatically stretched.

    For Team Salary purposes, the Team can elect whether to stretch the Dead Salary, or to keep the Dead Salary as it was originally allocated in the Contract.

    🏀 To Stretch or Not to Stretch
    Player is waived on August 1st for the 2025-26 season with $5 million for both 2025-26 and 2026-27. Automatically, the Player will be paid $2 million over the next five Seasons. The Team can then elect to (i) have $5 million in Dead Salary in 2025-26 and 2026-27, or (ii) lower the Dead Salary amount for those Seasons and spread it across the five Seasons in line with the stretch provision (the Team can also wait and stretch only the Second Season in a Delayed Stretch discussed below).

    Calculating Stretched Dead Salary

    Election from July 1st to August 31st

    Dead Salary stretched equally for twice the amount of Remaining Seasons, plus one (including the Current Season).

    Election from September 1 through June 30th

    Any Dead Salary for the Current Season shall remain unchanged. Any Dead Salary for Future Seasons will be stretched equally for twice the amount of Remaining Seasons, plus one (not including the Current Season).

    🏀 Bucks Waive-and-Stretch Lillard’s $112 million
    In the 2025 offseason, the Bucks waived Lillard’s remaining $112,583,216 in guaranteed salary. Lillard had two Seasons remaining, which included his Player Option. The Bucks stretched his Dead Salary over the 5 Seasons for $22,516,603 each Season through 2029-30. This helped clear cap space to sign Myles Turner in the same offseason.

    Delayed Stretch

    The Team can elect to stretch the Dead Salary at any point through the term of the waived Contract until September 1st of the last Season.

    🏀 Delaying the Stretch Election
    Taking the “To Stretch or Not to Stretch” Example above. The team can wait until the 2026 offseason, and elect a Delayed Stretch for only the 2026-27 Season (election to be made prior to September 1st). This means that the $5 million in Dead Salary was on the books for the 2025-26 Seasons, and now the Team will stretch the remaining $5 million across three seasons at $1.66 million through 2028-29.
    🏀 Delayed Stretch Before Rubio’s Final Season of Dead Salary
    Rubio’s Buyout with the Cavaliers is discussed in detail below. After the Buyout, the Cavaliers elected to Stretch his 2024-25 Dead Salary of $1,274,015, which is stretched equally at $424,672 over 3 Seasons (twice the remaining seasons (1), plus one).

    Limitation on Stretch Election

    A Team’s Stretched Salary can only make up 15% of the Salary Cap for a particular Season.

    🏀 Suns stretch 15% of the Salary Cap in 2025-26
    In the 2025 offseason, the Suns waived Bradley Beal’s Contract with $103,870,200 remaining in guaranteed Salary. The Suns already had stretched Salary from waivers in 2024 of Nassir Little ($3,107,143) and E.J. Liddell ($706,898). Beal had to agree to a buyout, reducing his guaranteed Salary to $96,917,050 to allow the Suns to stretch his Salary, which takes up 12.5% of the Salary Cap and keeping them right at 15% of the maximum Stretched Salary for the 2025-26 Season.

    Buyout

    General Rule

    A Buyout is a method of the Team and Player agreeing to reduce the amount of the Player’s Protected Compensation in exchange for his release.

    The Buyout agreement can include language limiting or eliminating the Team’s right to Set-Off.

    🏀 Micic Agrees to Buyout and Signs Overseas
    In 2025, Vasilije Micic was traded to the Bucks. Shortly after the trade, he agreed to a buyout, foregoing $6.1 million of his $8.1 million Protected Compensation. Shortly after the Buyout, Micic signed overseas to a 3-Year, $18 million Contract.

    Buyouts and January 10th

    On January 10th all non-guaranteed Base Compensation for the Season is fully guaranteed, so there is nothing to Buyout (unless the Player has future guaranteed Seasons). However, a Player can still agree to reduce the guaranteed Salary if he wants out of his current Contract to sign with a new Team.

    🏀 Starks Argues Right to Forego Guaranteed Salary
    In 2000, John Starks wanted to forego his guaranteed Salary after the January 10th guarantee date, but it was unclear if he was able to do so. The case went to an arbitrator that ruled that a Team and Player can agree that the Player can forego his guaranteed Salary after January 10th. (Note it was too late for Starks by the time the ruling came out, but blazed a new path for Players seeking to forego guaranteed money for a Playoff Team).

    Allocation of Buyout

    If the Player and Team agreed on a Buyout (discussed below), then the total amount that was reduced will be reallocated pro rata over then-current and remaining Salary Cap Years based on the remaining Protected Compensation in each Salary Cap Year.

    This math is without any Stretch election, discussed above.

    Allocating Buyout Amount

    Step 1 – Calculate the total Dead Salary after Buyout
    First, determine how much of the remaining Protected Compensation (i.e. Dead Salary) after the Buyout. This is the New Dead Salary.

    Step 2 – Calculate the Percentage of Original Dead Salary for Each Season
    For all Seasons with remaining Protected Compensation, add together Original Dead Salary (prior to Buyout) and find the percentage of each individual Season. This is the Yearly Percentage.

    In other words, if the total Dead Salary prior to Buyout is $10 million, and Year 1 has Dead Salary of $2 million, then the Yearly Percentage for Year 1 is 20%.

    Step 3 – Reallocate New Dead Salary using Yearly Percentage
    For each Remaining Season, multiply the New Dead Salary amount by the Yearly Percentage.

    🏀 Rubio’s Buyout Allocated Pro Rata
    In January 2024, Rubio agreed to a Waiver and a Buyout, reducing his Dead Salary from $10,396,342 to $4,996,342. His remaining Dead Salary was originally as follows:

    2023-24: $6,146,342
    2024-25: $4,250,000
    Total: $10, 396,342

    Step 1 – Calculate the total Dead Salary after Buyout
    The New Dead Salary is $4,996,342 million

    Step 2 – Calculate the Percentage of Dead Salary for Each Season
    The Yearly Percentage for 2023-24 is 59.12% (6,146,342 ÷ 10,396,342 = 59.12) and for 2024-25 is 40.88% (4,250,000 ÷ 10,396,342 = 40.88).

    Step 3 – Reallocate new Dead Salary using Yearly Percentage
    For 2023-24, the new Dead Salary after Buyout is $3,722,327 (0.5912 × 4,996,342 = $3,722,327), and for 2024-25 is $1,274,015 (0.4088 × 4,996,342 = $1,274,015).

    Set-Off

    If a Player (i) is waived by one Team (Prior Team), (ii) is owed Dead Salary by his Prior Team, and (iii) signs a new Contract with a new Team (Subsequent Team) during the term of the original Contract, then the Prior Team may be entitled to a Set-Off, reducing the amount owed in Dead Salary to the Player.

    The Set-Off Amount is calculated using the amount of Compensation the Player earns in his Subsequent Contract and adjusting using the calculation below (the Prior Team can require the Player provide evidence of the Compensation earned in his Subsequent Contract).

    Calculating Set-Off Amount

    Below are the steps for calculating the Set-Off Amount:

    Calculating Set-Off Amount

    Step 1 – Calculate Earned Compensation

    Calculate the total Compensation earned by the Player during the Salary Cap Year from the Subsequent Contract to find the Earned Compensation.

    Step 2 – Subtract Minimum Salary

    Subtract the following amount from the Earned Compensation:

    1. If Rookie when waived: Subtract Minimum Salary for 0 YOS at the time the initial Contract was terminated.
    2. If Veteran when waived: Subtract the Minimum Salary for 1 YOS at the time the initial Contract was terminated.

    Step 3 – Cut in Half

    If Step 2 is a positive number, then multiply that amount by 50% to find the Set-Off Amount.

    Deferred Compensation Adjustment

    If the Dead Salary is unearned Deferred Compensation covering the term of the original Contract, then the Set-Off Amount is discounted by the Prime Rate at the time the agreement for Deferred Compensation was made.

    ✍️ Set-Off Amount, Allocation and Team Salary
    Note the difference between calculating the Set-Off Amount, how the Set-Off is allocated, and how it effects Team Salary. Each are treated differently.
    1. Set-Off Amount – Calculated based on the term of the original Contract (regardless of any stretching of payments).
    2. Allocation – Once the Set-Off amount is known, is it equally spread across the stretched payments equally.
    3. Team Salary – Effect on Team Salary is solely dependent on if the Team elected to stretch the Dead Salary.

    Allocation of Set-Off

    Once the Set-Off Amount is calculated, is it allocated on an equal basis over the Mandatory Stretch Provision.

    Effect on Team Salary

    The Set-Off Amount will operate in line with the Team’s election to stretch Dead Salary.

    If the Dead Salary is stretched, then the Dead Salary is reduced the same as the Set-Off Payments above.

    If the Dead Salary is not stretched, then the Set-Off Amount will apply to the applicable Salary Cap Year.

    🏀 Waiver and Set-Off Calculation of Stretched Salary
    Player has Dead Salary of $3 million from his 2023-24 Salary. The Team receives a Set-Off amount for the 2023-24 Season of $600,000. The Dead Salary is stretched over three seasons at $1 million per Season. The Set-Off reduction is $200,000 across the three Seasons. If the Team elected to stretch the Dead Salary for Cap purposes, then the Dead Salary will also be reduced in the same manner
    🏀 3-Year Contract Waived
    Player has guaranteed Salary from 2023-24 through 2025-26 of his Contract for $9 million ($3 million each Season). The Player clears waivers on September 7, 2023, and signs a new Contract with the Second Team for years 2023-24 and 2024-25. The First Team has a set-off right of $600k for 2023-24 and 2024-25 (and nothing for year 3 as the Second Contract does not run through 2025-26). The Player’s Dead Salary for 2023-24 is reduced to $2.4 million and is paid in accordance with the Contract (no stretch because it is after 8/31). The Player has $6 million remaining Dead Salary for 2024-25 and 2025-26, which is reduced by the $600,000, totaling $5.4 million. The $5.4 million Dead Salary payments are then stretched across five Seasons (twice the remaining seasons, plus one) at $1.08 million. If the Team stretched its Cap Hit, then the Cap Hit will be reduced in line at $1.08 million. If the Team did not elect to stretch the Cap Hit, then the Cap Hit for Year 2 would be $2.4 million and 2025-26 would be $3 million.
    🏀 Another Contract Signed in Year 3
    Taking the same facts as the example above, but a Third Team signs the Player on October 1, 2025, and assume that the First Team is entitled to a $500,000 Set-Off Amount for 2025-26 as a result. The $500,000 Set-Off Amount would be allocated across the remaining four seasons at $125,000 per Season, reducing the $1.08 million yearly Dead Salary to $955,000 from 2025-26 through 2028-29.

    Waiver of Set-Off Right

    The Team can waive or reduce its right to a Set-Off as part of a Buyout agreement (discussed above).

    Non-NBA Team and Set-Off Rights

    The right to Set-Off also applies when the Second Team is a Non-NBA Team.

    Compensation can include any non-cash compensation provided to a Player as identified within the CBA.

    If the Player is paid by the Non-NBA Team on a net-of-tax basis, then his Compensation for the year is to be divided by 0.65 before beginning Step 1 above, unless the Player shows that taxes were not paid or exceed the actual amount paid.

    A Team is not required to enforce its Set-Off right against a Player who signed with a non-NBA Team.

    Unrecouped Set-Offs

    If the Prior Team cannot deduct enough from ongoing payments to satisfy the Set-Off Amount, then the Prior Team can direct the Subsequent Team to withhold payment and pay the unrecouped amount to the Prior Team.

    If there is still not enough to satisfy the Set-Off Amount, then the League and NBPA will work out an agreement.

    Multiple Set-Off Rights

    If the Player was waived multiple times resulting in more than one Team with Set-Off rights during a Salary Cap Year, then the initial Prior Team will take priority in recouping the Set-Off Amount, followed by the following Teams with Set-Off rights in succession.