NBA Moratorium Period 101


The saga that was DeAndre Jordan and the Mavs/Clippers in 2015 is likely going to lead to some form of reform in the NBA Moratorium period. But since all the hoopla around Jordan changing his mind on his contract, I’ve received questions from quite a few readers wondering why this moratorium has been put in place at all. In order to answer those questions, this is a basic run-down of the what and why behind the crazy first week of July.

Teams aren’t allowed to begin negotiations with players until July 1. That’s because under the current CBA, contracts expire June 30. But no contracts are allowed to be signed until 9-10 days (depending on the year) after July 1. Before that, nothing can be made official, so Jordan and the Clippers did nothing wrong in this situation, at least legally. In fact, this isn’t the first time this has happened, but it may be the first time a guy who may be all-NBA changed his mind on quite this scale.

The What

During the moratorium period, most free agent signings can’t take place, and trades can’t be finalized. There are a few exceptions allowing certain free agents to be signed.1

  • Teams may sign their first round draft picks (to a standard rookie “scale” contract)
  • A second round draft pick can accept a required tender, which is a one-year contract offer teams must submit to retain their rights to the player
  • A restricted free agent can accept a qualifying offer from his prior team
  • A restricted free agent finishing the fourth season of his rookie “scale” contract can accept a maximum qualifying offer. The player will receive the maximum salary, but the actual amount is not determined until the end of the moratorium
  • Teams may sign players to minimum salary contracts for one or two seasons, with no bonuses of any kind
    Teams may make a waiver claim during a player’s waiver period when the player was waived June 29 or 30

Next year the moratorium is scheduled to carry over until July 12. The same is true for the 2017 offseason. In 2018 the calendar pulls it back to July 11.

The Why

To put it in the most basic terms, the negotiations can’t begin until the audit is completed for the prior fiscal year and the new cap is put in place. The NBA’s fiscal year runs from July 1 – June 30.

This makes sense. Maximum contracts can’t be figured out until the cap is finalized. A guy agreeing to sign for $20 million a year could leave a team $3 million in cap space or $5 million. If deals could be signed before the cap is finalized, then teams might ink in deals that their owners won’t be allowed to cash. That would be a major issue for the owners and the player’s union.

Still, teams are forced to neogitate deals without knowing the final cap figures. They’re trading players in order to open up space that they ultimately may not need. The uncertainty of the finances usually isn’t as drastic as it has been this year,2 but over the next few years, the crazy leaps in TV revenue mean it’s likely to keep a level of uncertainty.

A side effect of this is it allows teams a better chance to get in the room with a player. If deals could be signed from the first minute, then someone might just re-sign with their team and not even hear Phil Jackson’s pitch. But as we’ve seen so far this season, that may not really matter as much as the opportunity for a change of heart does.

Potential Changes

There’s been talk of banning all contract talk until the cap figures are sorted out. While that could solve the problem, it doesn’t seem to be the most efficient solution. Players would be without a contract for 10 days, putting their limited vacation time on hold? A much simpler solution seems to be the way to go.

Simply move the fiscal year’s end back until a few days after the NBA finals. Say, June 22? That way, there’d be plenty of time for the numbers to be sorted out before the existing contracts expire. Then, negotiations and signings can all start on July 1.

This still eliminates allowing extra time for teams to talk to players, but these are grown men and functioning businesses. If a player wants to seriously consider another option, then he doesn’t sign on the first day. It’s as simple as that.

One quick final note: The current moratorium system was collectively bargained. Changing it will require a buy-in from the Player’s Union.

  1. This information is from Larry Coon’s CBA FAQ site, an invaluable resource to understand the minutia of these situations. 

  2. The cap was projected to be around $67 million and ended up being $70 million 

About the author: Alex Lowe

A former college athlete in a sport that no one cared about, Alex now spends most of his days being a furiously biased Bulls and Braves fan. When he's not busy with that, he still imagines his 5'7" self making an improbable rise to NBA stardom.