Basketball's Amnesty Clause

The rule would allow NBA teams to dump players with enormous contracts.

The "amnesty clause" is an NBA contract item that would allow teams to eliminate bad player contracts under certain conditions. The clause, understandably, can be a contentious issue during bargaining between the players' union and management. A tentative collective bargaining agreement was reached in late 2016 that "ensures labor peace through the 2023-24 season," according to "USA Today" -- but it contains no amnesty clause.

History

The last time the NBA offered an amnesty period, the benefit was somewhat limited. In 2005, teams were offered the opportunity to waive a single contract. Players waived under the 2005 amnesty rule still received their paychecks and still counted against the salary cap, but their teams did not have to pay a  luxury tax on the waived salaries.

Amnesty Victims

In 2005, the amnesty clause was known as the "Allan Houston Rule," named after the high-priced, oft-injured New York Knicks guard many thought would be waived under the amnesty rule. But the Knicks opted to hang on to Houston, gambling that his injuries would force a retirement and that they'd recoup more money via an insurance settlement. Houston did retire in 2005 as a member of the Knicks.

In another example, the management of the Orlando Magic used the amnesty clause to terminate Gilbert Arenas' enormous contract in 2011, according to Wikipedia.

Arenas then played a portion of the 2012 season for the Memphis Grizzlies -- at a much-reduced salary -- and eventually ended his career playing for the Shanghai Sharks of the Chinese Basketball Association in 2012-2013.

Contractual Considerations

During contract negotiations, there are several options that can be raised -- generally by owners -- in relation to the amnesty clause, including:

  • A hard cap: If owners succeed in pushing through a hard cap, teams are given a one-time opportunity to remove a contract from the salary cap as a way to help reduce payroll.
  • An option to waive contracts: Teams can be given the opportunity to waive a contract periodically -- say, once every other year -- as a means of getting out from under the most onerous contracts without shifting to NFL-style non-guaranteed deals.
  • An amnesty clause could be inserted in the next collective bargaining agreement: As BBall Breakdown notes: Without an amnesty clause, there is a greater possibility that teams may sign a player to "albatross contracts in the coming years, perhaps increasing the probability of an amnesty clause being included in the next collective bargaining agreement."

Ironically, a clause was inserted into the current CBA that seems to protect teams from themselves -- but not as much as before. The "over-36" rule in the 2005 CBA is now an "over-38" rule -- it prevents teams from signing players to four- or five-year deals if they are 38 years old or older. It's not amnesty, but the rule does prevent teams from signing older stars to contracts so large that they might wish they still had the amnesty option.