Bird Rights Aren’t Real

salary cap
Author

robert

Published

October 29, 2023

Let’s get one thing straight right now: bird rights aren’t real.

The term “bird” is nowhere to be found in the CBA. The closest term one could find in the document is a reference to Otis Birdsong. While it is mildly interesting to know the back story of this term, ultimately the term has led to more confusion about the NBA’s CBA than it has been helpful. Not because the concept of bird rights is confusing, but instead because it has spurred many armchair CBA analysts to coin other terms that start to creep into the language of the community. And this is bad as it adds confusion to an already complex document.

This post is ultimately a plea to stop renaming things that are already defined. But it’s also a good history lesson about colloquial terms about the CBA. Let’s dig in.

Back Story

The term bird rights is usually short-hand within the nerdy NBA CBA community that refers to the definition of a Qualifying Veteran Free Agent. I say usually because there are times when it refers to the Veteran Free Agent Exception that teams have available to them if they have a free agent that fits under the definition of a Qualifying Veteran Free Agent. It’s a subtle difference that does not have much for practical implications, but pedantic differences of terms is a bedrock of the NBA’s CBA community.

The story goes that when the NBA and NBPA negotiated over the implementation of the league’s Salary Cap around 19821, certain teams objected to having such a harsh restriction and lobbied to have Exceptions to the Salary Cap. The loudest objector was the Boston Celtics because of concerns over the mechanics of re-signing their star player, Larry Bird, and continuing to field a competitive roster. The Celtics argued that they had been operating under the assumption that their spending would not be restrained by other owners and such a drastic change would be unfair to them and other teams that were operating under the same assumption. Ultimately, a major compromise for enacting a Salary Cap was to have Exceptions to the Salary Cap, such as the Veteran Free Agent Exception, as a part of the CBA that would be fully implemented in 1984.

  • 1 Although this specific issue wasn’t detailed too much, a must read piece of the NBA-NBPA negotiations around this time is Josh Mendelsohn’s wonderful book The Cap

    • Definition

    I do not know the original definition of the Veteran Free Agent Exception from the 1983 CBA because that document is not publicly available nor is the subsequent 1988 CBA. The earliest CBA we have public access to is the 1995 CBA which complicates the bird rights topic because one of the major issues during the labor negotiations surrounding the 1995 CBA was to close a loophole2 with the Veteran Free Agent Exception. The loophole was related to Bridgeman v. National Basketball Ass’n, 838 F. Supp. 172 (D.N.J. 1993) where the NBA attempted to block certain contracts that abused the Veteran Free Agent Exception. The contracts in questions were “multiyear contracts with a one-year out” such as what Chris Dudley signed in 1993 with the Portland Trail Blazers.3

  • 2 This is always a tough term for me as it assumes an intent behind the rule that is different from what is written. But was the restriction poorly written? Or is this just an excuse to make a change to the rule in favor of one party? Hard to tell.

  • 3 Chris Dudley signed with Portland on a 6 year $10.5 million contract with an out clause after the first year instead of 7 year $20.75 million contract that New Jersey offered him. He would use the opt-out and then go on to earn $11.5 million over 3 more seasons in Portland.

    • Apparently, the definition of a Veteran Free Agent at the time entailed simply completing the most previous contract with an NBA team. Once a player finished their contractual duties, the team that they completed their contract with had the Veteran Free Agent Exception available to re-sign that player. This is roughly how Michelle Hertz described the set of exceptions available to teams from the 1988 CBA in her legal analysis of the Chris Dudley court cases:

    There are five basic exceptions to the salary cap and its application:

    1. a Team is permitted to exceed the Salary Cap to the extent of its current contractual commitments;
    2. a Team with a Team Salary at or over the Salary Cap may replace:
      1. a Restricted and Unrestricted Free Agent who elects not to re-sign a contract with that team at 100% of the Salary last paid to the player being replaced; and
      2. a retiree, a waived player, a holdout, or a player injured within 56 days of the first scheduled game at 50% of the Salary last paid to the player being replaced;
    3. a Team with a Team salary at or over the Salary Cap may enter into a one-year Player Contract with a College Draftee at the minimum player salary;
    4. a Team may enter into any new Player Contract with any team Veteran without regard to salary cap limitations; and
    5. a team at or over the Salary Cap may replace a player whose Player Contract has been assigned to another NBA Team.

    Teams in the early 1990s were frequently offering all of their cap space as long-term contracts with one year out clauses to free agents with the implication that the team would exceed the Salary Cap to re-sign the following season. This made teams with little cap space available competitive in the free agent marketplace and put upward pressure on salaries. Salaries are costs to owners and this signaled rising costs of operations which businesses dislike.

    But back to the Veteran Free Agent Exception, a major issue addressed by the 1995 CBA was limiting this loophole and introducing three new terms: 1) Qualifying Veteran Free Agent; 2) Early Qualifying Veteran Free Agent; and 3) Non-Qualifying Veteran Free Agent. These separate distinctions for players indicated different levels at which a team could exceed the Salary Cap in order to re-sign a player. The short of it is Qualifying Veteran Free Agents could be re-signed for any amount, Early Qualifying Veteran Free Agents the greater of 175% of their previous salary or 108% of the Estimated Average Player Salary, and Non-Qualifying Veteran Free Agents the greater of 120% of their previous salary or 120% of the minimum player salary:

    1. Veteran Free Agent Exception. Beginning on the July 1 following the last Season covered by a Veteran Free Agent’s Player Contract, such player may enter into a new Player Contract with his Prior Team (or, in the case of a player selected in an Expansion Draft that year, with the Team that selected such player in an Expansion Draft) as follows:
    1. If the player is a Qualifying Veteran Free Agent, the new Player Contract may provide for Salary of any amount for any Season of the Contract.
    2. If the player is a Non-Qualifying Veteran Free Agent, the new Player Contract may provide for a Salary for the first Season of up to the greater of (i) 120% of the Regular Salary for the final Season of the player’s prior Contract, plus 120% of any Likely Bonuses and Unlikely Bonuses, respectively, called for in the final Season covered by the player’s prior Contract, or (ii) 120% of the Minimum Annual Salary for the then-current Season. Salary increases and increases in Unlikely Bonuses in subsequent Seasons shall be governed by the 20% Rule.
    3. If the player is an Early Qualifying Veteran Free Agent, the new Player Contract must cover at least two Seasons and may provide for a Salary for the first Season of up to the greater of (i) 175% of the Regular Salary for the final Season covered by his prior Contract, plus 175% of any Likely Bonuses and Unlikely Bonuses, respectively, called for in the final Season covered by the player’s prior Contract, or (ii) 108% of the Average Player Salary for the prior Season (or if the prior Season’s Average Player Salary has not been determined, 108% of the Estimated Average Player Salary for the prior Season). Salary increases and increases in Unlikely Bonuses in subsequent Seasons shall be governed by the 20% Rule.

    Prior to 1995, there were no distinctions for tiers of Free Agents aside from the Right of First Refusal which delineated Restricted and Unrestricted Free Agency. It was a status granted to a player that successfully completed their previous contract. Teams were able to use an Exception to exceed the Salary Cap for their own Free Agents but not for other team’s Free Agents. An implication of this was that the team with the most available cap space at the beginning of an off-season drove the market for star Free Agents as that became a star player’s next best option. The star’s incumbent team could exceed the Salary Cap by any amount to re-sign the player, but why would that team bid more than the player’s next best alternative? This has been a bit of a tangent though, so back to the semantics about bird rights.

    Historical Context

    Larry Bird retired in 1992. At no point in time did he play during a CBA that had separate tiers for Free Agents aside from restricted versus unrestricted. And yet, for some reason, we’ve4 assigned the term bird rights to mostly mean a Qualifying Veteran Free Agent or its associated Exception. The community further extends this kind of terminology to the terms early birds and non-birds which apparently refer to the Early Qualifying Free Agent and Non-Qualifying Free Agent statuses that the CBA assigns to Free Agents. The obvious implication here being that Qualifying = bird.

  • 4 The nerdy CBA community, although this has continually crept into the NBA community at large. The official NBA website even has a CBA 101 which is a simplified version of the CBA and they refer to bird rights and bird free agents within it.

    • But Larry Bird played no direct or indirect role for how contract(s) length now determines a team’s rights to re-sign a player – he only indirectly influenced the Exception that a team has available for their Free Agents. If any player had an influence on these different tiers it would be Chris Dudley as his litigation directly spurred changes to the 1995 CBA by defining new tiers of Free Agents. If anything, the CBA community should have coined Dudley Do-Rights as a way to establish a Veteran Free Agent reaching particular thresholds in completing contracts that allows their previous team to exceed the Salary Cap to be consistent with applying the name of a player to the topic in the CBA they influenced.

    Dudley Do-Right, but also maybe a caricature of me well actuallying this issue

    The Problem.

    I admit, having gripes about bird rights fits the old man yells at cloud headline from The Simpsons and the suggestion of Dudley Do-Rights is firmly tongue-in-cheek. But there are real issues surrounding this poorly constructed jargon which can be illustrated by bird rights confusion: is it the Exception or the Rights someone is referring to?

    Or more pointedly, are bird rights referring to Article I (Definitions) or Article VII.6 (Exceptions to the Salary Cap)?

    There may not be much of a functional distinction between the Qualifying Veteran Free Agent Exception and Qualifying Veteran Free Agent Rights, but there most certainly is with other jargon that has crept into the CBA community. Legitimate issues arise from the other jargon that floats around in the community.

    A Supermax?

    The CBA has a definition for Maximum Annual Salary. For a player, this petty much depends on your Years of Service at this point:

    1. Players with 0 to 6 Years of Service can earn up to 25% of the Salary Cap;
    2. Players with 7 to 9 Years of Service can earn up to 30% of the Salary Cap; and
    3. Players with 10 or more Years of Service can earn up to 35% of the Salary Cap.

    The first takeaway one should have from these delineations is that there is no singular “max” but instead a player upper limit for the annual earnings for them, or a Maximum Annual Salary per the CBA. It is a player dependent term, which means if one wants to reference “max” then it should be their max and not the max. But this quibble aside, there are two provisions that allow a player to eschew their respective tier which has been termed a “supermax”:

    1. Article II.7.a.1: players coming off their Rookie Scale Contract that hit the “Higher Max Criteria” which bumps them from the 25% level to the 30% level.
    2. Article II.7.a.2: players with 8 or 9 Years of Service that can qualify as a Designated Veteran Player if they hit the “Higher Max Criteria” which bumps them from the 30% level to the 35% level.

    The “supermax” distinction causes more confusion than clarity as both of these situations fall within its loose definition. A player coming off of their Rookie Scale Contract would have a “supermax” that is equal to the “max” of a Veteran with 7-9 Years of Service but where that Veteran’s “supermax” would actually be the “max” of a Veteran with 10 or more Years of Service where that Veteran does not have a corresponding “supermax”. I believe the essence of a “supermax” is not even a level but instead describing the ability to skip a particular tier for a player.

    At the end of the day, we have no singular “supermax”. What we have instead is the same issue as the “max” – a player dependent term. So what purpose is this solving for clarity on a player’s potential Salary?

    Poison Pills

    The first time I recall reading the phrase “poison pill” was circa 2000 in relation to the Base Year Compensation (BYC) issues that were present in the 1999 CBA. It is likely this phrase was around much earlier because BYC was introduced in the 1995 CBA as a way to close a potential loophole related to the Dudley Do-Rights. However, the “poison pill” term has morphed to cover more provisions and flourishes today even though BYC is no longer present in the CBA.

    Base Year Compensation

    The quick and dirty definition of BYC was an Early Qualifying Veteran or Qualifying Veteran who signed a contract/extension that resulted in a raise in excess of 120% of their previous Salary would have an artificially lower Salary for trade purposes5. It was a status that a player could have for a Salary Cap Season that would only apply in a situation where the player was traded. The NBA wanted to reduce the possibility of a Team re-signing a player to an excessive contract in order to use the contract for matching salaries in a trade down the road. The “poison pill” aspect of BYC was related to the bloating of a player’s Salary for trade purposes and how it made it difficult to match salaries in a trade.

  • 5 The exact amount of a reduction in Salary for matching purposes varied across CBAs as well as the amount of time BYC status would apply to a player, but the reduction in Salary only applied to the Team trading away the player. BYC limited the amount of aggregate Salaries the trading team could take back. The Team receiving the player with BYC status always counted their actual Salary for matching purposes.

    • The problem with BYC (and probably the poison pill aspect) comes from the inability to match salaries when they seemingly should be able to match. The canonical example of BYC issues comes from the 1999 CBAFAQ:

    Here is a simple example – two $5 million players, both of whom are re-signed (by teams over the cap) for $10 million. Both players become base year players whose base year amount is $5 million (50% of the new salary). If the teams want to trade these players for each other they compare their player’s base year amount to the other player’s full salary. So each team can take back a maximum of 115% plus $100,000 of their player’s $5 million base year amount, or $5.85 million. They compare $5.85 million to the other player’s full $10 million. $10 million is way too high, so this trade can’t be done, even though the players’ actual salaries match exactly.

    In essence, you have two players with the same contracts and yet they can’t be traded for each other. I guess each has been…poisoned?

    Maybe?

    Current Usage

    The term Base Year Compensation was completely removed from the 2011 CBA. Although the term cannot be found, it still loosely remained because re-signing a player for a 120% or more raise with the Qualifying or Early Qualifying Veteran Free Agent Exception can trigger a reduction in Salary for trade matching purposes akin to BYC. But this only applies to sign-and-trade transactions, once the player becomes trade eligible there is no BYC status associated with them.

    If BYC pretty much does not exist anymore, why do we still hear about players being “poison pilled” fairly often? Well, that’s because two new concepts arose in the CBA that seem to be related to this concept, per the CBAFAQ:

    1. Players that sign an extension to their Rookie Scale contract6.
    2. Restricted Free Agents with two or fewer Years of Service that signed offer sheets with maximum allowable payments in the first two seasons then a significant increase in the additional season(s)7.

  • 6 Article VII.8.g: In the event a Rookie Scale Contract is extended pursuant to Section 7(b) above and a Team proposes to trade such Contract to another Team prior to the first day of the Salary Cap Year immediately following such Extension, then, only for purposes of determining whether the acquiring Team has Room for the Contract, the Salary for the last Salary Cap Year of the original term of the Contract shall be deemed to equal the average of the aggregate Salaries for such Salary Cap Year and each Salary Cap Year of the extended term.

  • 7 Article XI.5.d.iii: If the ROFR Team exercises its Right of First Refusal, the player’s Salary for each Salary Cap Year covered by the Contract with the ROFR Team shall be the Salary for such Salary Cap Year as set forth in the Contract. Notwithstanding the preceding sentence, if the sum of (A) the ROFR Team’s Team Salary at the time it exercises its Right of First Refusal, and (B) the average of the aggregate Salaries for each Salary Cap Year of the Offer Sheet, is less than or equal to the Salary Cap for the then-current Salary Cap Year, then the ROFR Team may, in connection with exercising its Right of First Refusal, elect to have the player’s Salary for each Salary Cap Year covered by the Contract equal the average of such aggregate Salaries for each such Salary Cap Year.

    • The first situation is fairly analogous to BYC because the outgoing versus incoming salary is different for the player but in reverse order – the player typically receives a large raise and so the outgoing is the actual salary while the incoming is an average of future salaries to reflect a higher value. But the second? Well, there’s no oddity with outgoing/incoming salaries in a trade. So what gives?

    With Restricted Free Agents that receive the bloated Offer Sheets, the “poison pill” aspect seems to refer to either the 1) difference in actual Salary versus the Salary for Salary Cap purposes or 2) the sudden massive increase in Salary for a player. It’s really not clear which of these two the “poison pill” is referring to, but for either of these it is certainly unrelated to trades as the salary for outgoing and incoming are identical in a trade of a player that fit this criteria.

    So what gives?

    Signing Bonuses

    Signing bonuses are not too common in the NBA, but they do occur. When a signing bonus does happen, it is an upfront payment made to a player. But for Salary Cap purposes? This amount is spread out equally over the life of the contract. A $10 million bonus on a 5 Season contract gets paid out immediately, but it is applied at $2 million for each Season of the contract for compliance with the Salary Cap (and with trades).

    This creates a difference in actual Salary versus a Salary for the Salary Cap. And yet, we never see a reference to a contract with a signing bonus as a “poison pill”.

    So what gives?

    Performance Bonuses

    Contracts in the NBA can include incentives (performance bonuses) that are based on player or team performance and paid out if met. In a given Salary Cap Season, these bonuses are deemed either likely or unlikely based on the previous Season’s performance since you can’t predict the future and determine if these incentives will be paid out or not. In the case of likely bonuses, they count towards the Salary Cap during the Season. This is the opposite for unlikely bonuses as they do not count towards a player’s Salary for that Salary Cap Season.

    When a player is traded, team based incentives can cause the Salary of a player to fluctuate. For instance, if a player has a $1 million incentive for making the playoffs and there is a potential trade from Team A (that made the playoffs) and Team B (that did not make the playoffs) then there will be a difference in how that player’s Salary is viewed in a trade: Team A will count the player at $1 million more than Team B. This can create a situation of a difference in outgoing versus incoming Salary. And yet, we do not hear of these incentives as “poison pill”.

    So what gives?

    Over 38s

    Older players in the NBA have an odd relationship with the CBA. They typically benefit from the agreement like with higher allowable Maximum Salaries and higher Minimum Salaries. But, there’s a clause in the CBA that works against them called the Over 38 Rule8. This rule affects long term contracts (4+ Seasons) with players that will be 38 or older during the contract. The effect is to redistribute a player’s Salary for Salary Cap purposes in a different manner than what the actual payouts are by “zeroing out” the Salary in the contract that is more than 4 Seasons away9. And yet, we never hear Over 38 as related to a “poison pill”.

  • 8 Article VII.3.a.2.: For the 2017 and 2023 CBA this has been the Over 38 Rule, but previous versions it was the Over 35 Rule in the 1995 CBA or the Over 36 Rule from the 1999 CBA and beyond.

  • 9 The Salary 4 Seasons away are actually applied pro rata to the previous Seasons for Salary Cap purposes but not for actual payments.

    • So what gives?

    Solution

    We’ve reach the point where using the poorly created jargon does nothing for separating a mildly informed NBA analyst from the field of CBA eggsperts. Maybe five years ago (ten? twenty?) one could reference “bird rights” and it was an efficient way to indicate to others that you are well versed with the CBA much like dropping a reference to “machine learning” used to signal to others in the statistics community that you are familiar with the concepts10. But that sort of signalling mechanism can only last for so long as other less informed individuals learn the lingo but not the concepts. If you can’t use a phrase to quickly distinguish between knowledgeable individuals and frauds, then it’s probably just terrible jargon.

  • 10 Once upon a time, discussing machine learning in the statistics community would have implied familiarity with a concept like random forests but now we have disingenuous individuals who will reference “machine learning” when the actual procedure they’re doing is a logistic regression.

    • By using the actual terms defined in the CBA, one can now make themself stand out from the crowd of CBA eggsperts. This also helps to avoid confusion that is present in these poorly thought out terms. To paraphrase Peter Singer, “I suspect that whatever [CBA concept] cannot be said clearly is probably not being thought clearly either.”