Bird rights in the NBA refer to a provision in the league’s collective bargaining agreement that allows teams to exceed the salary cap to re-sign their own free agents. The rule is named after former Boston Celtics legend Larry Bird, who was the first player to become a free agent under this provision in 1988.
What are bird rights?
Under the NBA’s collective bargaining agreement (CBA), teams are limited in the amount they can spend on player salaries each season, known as the salary cap. For the 2022-23 season, the salary cap is set at $123.655 million per team.
However, through bird rights, teams are allowed to exceed the salary cap in order to re-sign their own players who have become free agents. This gives teams an advantage in retaining their own talent since they can offer more money and years on a contract than opposing teams that are capped at the maximum salary.
Requirements for bird rights
For a team to acquire a player’s bird rights, the following conditions must be met:
- The player must have played for that team for three consecutive seasons without being waived or changing teams as a free agent.
- The team must have originally drafted the player or acquired him in a trade while he was still under his rookie scale contract.
- Early Bird rights can be obtained after two consecutive seasons, but these provide more limited contract options compared to full bird rights.
Once a player qualifies for full bird rights, the team possesses those rights for as long as the player remains with the organization. The rights travel with the player if he is traded to another team during his contract.
Using bird rights to re-sign players
When a player with full bird rights becomes a free agent, their original team can re-sign them to a new contract even if it pushes them over the salary cap. This gives teams a major advantage in retaining their star players.
For example, Stephen Curry was eligible for a 5-year, $215 million supermax extension from the Golden State Warriors in 2017 thanks to the bird rights he accumulated after being drafted and playing eight seasons with the franchise.
Teams can also use bird rights to re-sign their own free agents to contracts exceeding the maximum salary, which is based on years of NBA service. In 2022, the max salary ranges from $10.1 million for 0-6 years of service up to $42.5 million for players with 10+ years of experience.
History and origin of bird rights
The concept of bird rights was introduced in the NBA’s 1999 CBA negotiations and went into effect starting in the 1988-89 season. The rules were informally named after Larry Bird because he was the first prominent player to reach free agency under this system.
In 1988, Bird had completed his seventh season with the Boston Celtics but his original 5-year contract had expired. Under normal restricted free agency, the Celtics would have been limited to the maximum salary to re-sign Bird.
However, thanks to bird rights, Boston was able to offer Bird a 7-year, $28 million contract that exceeded the max salary other teams could offer. This allowed the Celtics to retain their star player despite salary cap restrictions.
Larry Bird’s 1983 contract situation
Ironically, the contract situation that led to the creation of bird rights happened because Larry Bird and the Celtics were unable to reach an agreement on an extension in 1983.
After winning championships in 1981 and 1984, Bird played the 1983-84 season without a new deal. He eventually signed a 5-year, $12.5 million contract in 1984, becoming the highest paid player in the NBA at the time.
This contract took him through 1988, setting up his free agency and the creation of bird rights provisions that carried his name moving forward.
Strategic use of bird rights in the NBA
NBA teams have leveraged bird rights in strategic ways to build championship rosters under the salary cap.
Teams often draft and develop young players under affordable rookie contracts. Then, using bird rights, they can exceed the cap to re-sign these players to lucrative deals once they hit free agency.
This strategy was key to the Chicago Bulls’ dynasty in the 1990s. They drafted stars like Michael Jordan, Scottie Pippen and Horace Grant, developing them into a championship core. When it came time to re-sign them, the Bulls benefited from having full bird rights.
More recently, the Golden State Warriors used bird rights to retain their homegrown Big Three of Curry, Klay Thompson and Draymond Green. Each of them signed massive contracts from 2017-19 that pushed the Warriors deep into the luxury tax.
The ability to exceed the cap allowed Golden State to keep their championship roster intact while other teams would have been forced to break up their cores due to cap limitations.
Trading for players with bird rights
In some cases, teams will trade for a player in the final year of their contract mainly to obtain their bird rights. This allows the new team to offer a longer and more lucrative contract than the player’s previous team.
For example, in 2012 the Los Angeles Lakers traded for Steve Nash and signed him to a three-year, $28 million deal using the bird rights they received. Nash’s previous team, the Phoenix Suns, were only able to offer a two-year, $16 million contract.
Using bird rights in sign-and-trade deals
Sign-and-trade deals allow teams losing a star player to free agency to get some assets in return, rather than losing the player for nothing.
A team with bird rights on a departing player can re-sign them and immediately trade them to another team. This enables the player’s new team to obtain their bird rights and offer them a bigger contract.
In 2019, the Charlotte Hornets utilized this in a sign-and-trade of Kemba Walker to the Boston Celtics. Boston obtained Walker’s bird rights from Charlotte in the trade, enabling them to offer a 4-year, $140 million max contract.
Luxury tax implications of bird rights contracts
While exceeding the salary cap to re-sign players through bird rights is allowed, teams must still contend with the luxury tax when doing so.
The luxury tax threshold for 2022-23 is $150.267 million. Teams that exceed this figure must pay a steep tax bill based on the amount they went over the threshold.
For example, after using bird rights to re-sign Thompson, Green and Durant in 2017 and 2018, the Warriors’ payroll ballooned to around $200 million including luxury taxes.
Teams like the Warriors aim to offset these massive tax bills by generating greater profits through their success on the court and higher incomes from ticket sales, media deals, sponsorship, and merchandising.
Repeater tax penalties
The luxury tax includes an escalating “repeater tax” for teams who exceed the tax threshold multiple seasons in a row. This further deters teams from repeatedly incurring high payrolls and luxury tax bills.
For instance, from 2018-20 the Warriors paid approximately $170 million in luxury tax costs on top of their massive payroll. The repeater tax penalties accounted for $106 million of the $170 million total tax bill during that time.
How do bird rights impact NBA free agency?
The availability of bird rights to teams impacts the strategy and spending of franchises across the NBA during free agency periods.
Big market advantages
Large market franchises like the Lakers, Knicks and Warriors have greater capability to generate revenues that offset luxury tax penalties. This enables more liberal spending to retain or acquire stars.
As a result, these teams are often major players in free agency thanks to available cap space and bird rights. Stars gravitate towards big markets where they can earn max contracts.
Mid-tier free agent movement
The majority of small and mid-market NBA franchises cannot afford to repeatedly enter luxury tax territory. So they are limited in utilizing bird rights to retain multiple max-contract players.
As a result, many mid-tier free agents move around the league frequently to different teams with cap space available under the tax threshold.
Draft and develop strategy
Smaller markets must often be more prudent with spending and build through the draft. Teams like San Antonio, Utah, Indiana and Oklahoma City have found success through drafting well and developing young talent.
When these players eventually earn big contracts, keeping them may still push smaller markets into the luxury tax. This has led to difficult decisions to trade developed stars like James Harden and Paul George to avoid tax penalties.
Controversy around bird rights contracts
The large bird rights contracts offered by big market teams have caused some controversy and debate around competitive balance in the NBA.
Big market collusion claims
There have been accusations that star players conspire with each other to form “super teams” in major markets. Fans perceive that leverage of bird rights enables rival players to collude on teaming up.
For example, LeBron James and Chris Bosh joined Dwyane Wade on the Miami Heat in 2010. Some deemed this collusion between rival stars to capture championships.
Soft salary cap criticism
Critics argue the prevalence of bird rights contracts defeats the purpose of a salary cap to control spending. The NBA has a “soft cap” with many exemptions, unlike the NFL’s stricter “hard cap” system.
Allowing the biggest brands like the Lakers and Knicks to repeatedly exceed the cap has led to cries of an uneven playing field between large and small markets.
Counterpoints
Defenders of bird rights argue the system rewards smart drafting, player development and proactive cap management. Teams must still budget appropriately to avoid crippling repeater tax penalties.
In reality, the ability to spend alone does not guarantee success – big spending does not always lead to championships.
The soft cap and bird rights also enable fair compensation for veteran players. Stars in their prime generate tremendous revenues for the league and their teams.
Key Takeaways
- Bird rights allow NBA teams to exceed the salary cap in order to re-sign their own free agents, an advantage in retaining talent.
- To qualify, a player must play 3 consecutive seasons with the same team that drafted or traded for them early in their career.
- Bird rights are named after Celtics legend Larry Bird, the first beneficiary of this rule in 1988 free agency.
- Large markets leverage bird rights to retain and attract stars. Small markets must draft and develop cost-controlled talent.
- Bird rights contracts can lead to massive luxury tax penalties, but big revenue teams are better positioned to absorb the costs.