The Cost Of The Amnesty Clause

Amnesty comes with a hefty price tag these days — at least in the NBA. On Friday, the Philadelphia 76ers showed veteran forward Elton Brand some brotherly love through the NBA’s new Collective Bargaining Agreement’s Amnesty Clause. By effectively releasing Brand via the Amnesty Clause, the 76ers both saved and lost $18.1 million in one transaction.

Confused yet? Well don’t be. The Legal Blitz reviewed a copy of the highly contested CBA to figure out what exactly is going on with this whole Amnesty Clause thing. Here are the basics:

  • Each team is permitted to waive one player prior to any season of the CBA (only for contracts in place at the inception of the CBA) and have 100% of the player’s salary removed from team salary for Cap and Tax purposes.
  • Salary of amnestied players is included for purposes of calculating players’ agreed-upon share of Basketball Related Income.
  • A modified waiver process will be utilized for players waived pursuant to the Amnesty rule, under which teams with Room under the Cap can submit competing offers to assume some but not all of the player’s remaining contract. If a player’s contract is claimed in this manner, the remaining portion of the player’s salary will continue to be paid by the team that waived him.

What this all means is that teams can shed at least one bad contract to clear up room under the salary cap to sign somebody else. Then if another team claims the Amnestied player, they only have to pay a negotiated fraction of that total salary with the original team on the hook for the remainder of the original “bad” contract. If no team claims the player, like Brand, off the amnesty wire, he will become a free agent and can sign with any team. Brand, 33, averaged 11 points and 7.2 rebounds for the 76ers last season.

Note that in order to use the Amnesty Clause the contract had to be signed before before July 1, 2011, and must be on the team’s current roster. Each team is allowed to use the clause once between now and the time that the CBA expires and six teams have already exercised the option. A team cannot sign or trade for a player now and apply for amnesty later. The provision is meant for past mistakes, not future cap calamities.

The NBA is not alone in wanting to correct those past, bloated contract mistakes. This winter, several NHL general managers proposed the idea of adoption a similar Amnesty Clause once the NHL’s CBA expires in September. Much like a mulligan for GMs, the Amnesty Clause appears to benefit all sides — except, of course, for the owners writing the checks.

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One Response to The Cost Of The Amnesty Clause

  1. Rajiv Radia says:

    Nice post..I think it’s effective in terms of helping teams with bad contracts get out of trouble, but does it discourage teams from continuing to overpay players?

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