Hoops Rumors Glossary: ​​Stretch Provision

For NBA teams looking to open up cap room, simply waiving a player isn’t as effective as it is in the NFL, where salaries are often non-guaranteed and most or all of a player’s cap charge can frequently be wiped from a team’s books . Still, the NBA’s Collective Bargaining Agreement does feature a rule that allows teams to spread a player’s cap hit over multiple seasons. This is called the stretch provision.

The stretch provision ensures that any player waived with more than $500K in guaranteed salary remaining on his contract will have the payment schedule of that money spread across multiple years. That schedule is determined as follows:

• If a player is waived between July 1 and August 31his remaining salary is paid over twice the number of years remaining on his contract, plus one.
• If a player is waived between September 1 and young 30his current-year salary is paid on its normal schedule, with any subsequent years spread over twice the number of remaining years, plus one.
• If a player in the final year of his contract is waived between September 1 and June 30, the stretch provision does not apply.

While the new payment schedule for a waived player is non-negotiable, teams get to decide whether or not to apply the stretch provision to that player’s cap charges as well. A team can stick to the original schedule for cap hit purposes, if it so chooses.

Word broke on Wednesday that the Sound has waiving and stretching Nassir Littleproviding a useful real-life example for how the stretch provision functions. Little’s cap hits prior to his release are $6.75MM in 2024/25, $7.25MM in ’25/26, and $7.75MM in ’26/27.

Here’s what that contract would look like if it were waived without applying the stretch provision to the cap hits; if it was stretched before August 31; or if it were stretched after August 31:

As this chart shows, it typically makes sense to waive and stretch a player’s contract in July or August if the team is looking to generate immediate cap flexibility for the current season and isn’t as concerned about the impact in future seasons.

By waiving and stretching Little now, the Suns will trim over $3.6MM from their 2024/25 cap, generating significant short-term savings in projected luxury tax penalties, since they’re operating so far into tax territory. However, Little will remain on their books through 2031 instead of 2027.

Phoenix is ​​using the stretch provision in order to create salary and tax savings. In other cases, stretching one or more players can allow a team to duck below the luxury tax line or to create additional cap room.

Back in the summer of 2022, for example, the Trail Blazers waived and stretched Eric Bledsoe and Didi Louzadawhich allowed them to sneak below the tax line. The Pacersmeanwhile, waived and stretched Nik Stauskas, Juan Morganand Malik Fitts in order to carve out a little extra head room in order to sign Deandre Ayton to a maximum-salary offer sheet.

If a club waiving a guaranteed contract in July or August isn’t seeking immediate cap relief, it generally makes more sense to apply the player’s full current salary to the current salary-cap year, rather than stretching it.

The Hornets took that route when they waived Davis Bertans in July, applying his remaining $5.25MM in guaranteed money entirely to the 2024/25 cap. If they’d stretched it, they could’ve carried $1.75MM for each of the next three seasons, creating an extra $3.5MM in cap room this summer, but they had no immediate use for that cap room and decided it’d be better to clear Bertans from their books in one year, rather than in three years.

There are a few more key rules related to the stretch provision worth noting.

First, while the stretch provision regulates when money is paid out, it does not prevent teams and players from negotiating a reduced salary as part of a buyout agreement.

For instance, let’s say a player who has an $18MM expiring contract for 2024/25 agrees in August to give up $3MM in a buyout. As a result of that buyout agreement, his team could stretch his remaining salary and end up with cap hits of $5MM for three seasons (through ’26/27) rather than $6MM.

Second, non-guaranteed money is not subject to the stretch provision, since a team is not obliged to pay the non-guaranteed portion of a contract once it waives a player.

This rule can come in handy when a club decides to waive a player who has one or two non-guaranteed years tacked onto the end of his contract. When the Blazers waived Louzada in August of 2022, he had three years left on his deal, but only his 2022/23 salary of $1,876,222 was guaranteed — the $4,023,212 owed to him for the two seasons beyond that one was fully non-guaranteed.

That means that when they waived Louzada, the Blazers only owed him just $1,876,222 but were able to stretch that figure across seven seasons (twice the three years remaining on his contract, plus one). As a result, Portland is carrying a tiny $268,032 cap charges for Louzada on its books through the 2028/29 season.

Finally, it’s important to clarify that when a team applies the stretch provision to a player’s cap hits, that team becomes ineligible to re-sign the player for the original remaining term of his contract.

For example, after they stretch Little’s contract, the Suns won’t be able to re-sign him until July 2027, which is when his contract originally would’ve expired. That restriction doesn’t apply when a team waives a player and DOES NOT stretch his remaining guaranteed salary.

Notes: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in 2013, 2017, and 2023.