Updated: Aug 5, 2021
The Larry Bird Exception, more commonly known as Bird Rights, is one of many clauses in the NBA’s Collective Bargaining Agreement that allows teams to circumvent the League's Salary Cap.
Bird Rights originated in 1983 when the League's newest CBA instituted the first-ever salary cap, since the mid-1940s when a salary cap existed for just one year. In 1983 the League reinstituted a cap to promote balanced competition going forward. At the time, the cap was set at just $3.6 million, a sharp contrast to today’s salary cap at $109.1 million. To make a smooth transition from having no salary cap, it was crucial to include a few different exemptions, hence the Larry Bird Exemption. In 1983, Bird was in the final year of his rookie contract, meaning that he would become a free agent in the following offseason. Bird Rights were included in the CBA to allow teams to be able to re-sign their star players under the new cap rules. In the simplest terms, Bird Rights enable teams to incentivize players to re-sign by allowing that team to offer higher salaries than their competitors.
There are three different levels of Bird Rights, each of which corresponds to a proportional salary increase that does not affect the team’s Salary Cap:
Full Bird Rights for a player are awarded to a team if that player stays with the team for three seasons without leaving. This can include players signed on consecutive deals as long as they last a total of three seasons. This exemption allows players to resign for the most money of all three types of Bird Rights. The only limit is the maximum salary that teams can offer, ranging from about 25-35% of the League’s Salary Cap.
Early Bird Rights are awarded for a player who spends two consecutive seasons with one team. This exemption allows the player to resign for 175% of their previous salary or 104.5% of the League’s average salary, whichever is higher.
Non-Bird Rights are awarded to a team after a player spends just one season with a team. In this case, teams can pay the player 120% of the player’s previous salary.
Regardless of the type, the key to Bird Rights is that they allow a team to offer contracts to their returning free agents that are larger than what any other team can offer. And that additional money does not count against the team’s salary cap. This exemption allows players to make much more money while also promoting continuity to the League’s franchises. The Celtics and Lakers in the ‘80s, the Bulls in the ‘90s, and teams like the Warriors in the last decade owe thanks in no small part to Bird Rights.
Let’s take Steph Curry, for example. After being drafted with the 7th pick in 2009, Curry signed on with the Golden State Warriors on a deal worth $12,700,262 over four years. Curry’s four seasons with the Warriors meant the team would have Full Bird Rights for Curry going forward. Bird Rights played a role in Curry’s next contract, which he signed in 2013, worth $44,000,000 over four years. Curry elevated his game over these four years, winning his first 2 NBA MVP Awards in 2015 and 2016. After his contract expired, Curry was set to be one of the most valuable players in the Free Agency market. However, his Bird Rights being held by the Warriors virtually took him off the table. The Warriors could offer Curry so much more than any other team in the League would be able to, and they did. In 2017 Curry signed a 5-year deal worth $201,158,790, making him the League’s highest-paid player. Not only does this exemption allow the Warriors to hold onto their MVP, but it also allows them to do so while maintaining Salary Cap space to hold onto other stars like Klay Thompson and Draymond Green. Led by these three players, the Warriors won 3 NBA Championships in 2015, 2017, and 2018. It is safe to say this would not have been possible without Bird Rights.
Bird Rights are an underappreciated feature in the CBA. Most people do not know what they are or how they can impact a team. If you are a fan of superteams or dynasties, Bird Rights contribute immensely to the success of your franchise by encouraging roster continuity and allowing teams to retain their stars for long-term success.
Until next time…