Understanding Cap Holds: What they mean and how they impact the Celtics’ future

(Tim Bradbury/Getty Images)

One of the most complicated parts of the NBA for fans is the ins and outs of team building during the offseason. There are complex rules about what a team can and can’t do with certain players, how much a team can offer a free agent, what happens when a team goes into the luxury tax and much more.

I write a lot about the particulars of these rules, but one of the common requests I’ve received at BSJ is to simplify an explanation of these tricky CBA rules and terms and how they apply to the Celtics. Over the upcoming month, we will take a weekly look at some of the common phrases and rules I used that are involved in the collective bargaining agreement and try to make them easier to understand so it’s easier to break down the options the Celtics or another team has with their players in any offseason.

We begin today with another term that had a major impact on the Celtics most recent offseason: Cap holds. It’s very connected to Bird Rights, a topic we explored yesterday and influences a team every offseason when they are considering opening up room under the salary cap.

Part 1: Understanding Bird Rights: What they mean and how they impact the Celtics' future

What is a cap hold?

A cap hold is essentially a placeholder for any free agent on a team’s roster that counts towards the salary cap in the offseason. Any calculation involving a team’s cap room in an offseason includes the cap holds of any players are hitting free agency unless they are renounced (we will get to that later).

How are cap holds determined?

There is a system in place depending on the player’s previous salary and what kind of free agent he is. We covered the various types of free agents yesterday (Bird Rights, Non-Bird Rights, Early Bird Rights) and these are broken down, even more, when it comes to cap holds.

What’s the cap hold for each type of free agent?

  • Bird Rights Free Agent (not coming off rookie deal): 150 percent of previous salary
  • Bird Rights Free Agent (coming off rookie deal): 300 percent of previous salary
  • Early Bird Free Agent: 130 percent of his previous salary
  • Non-Bird Free Agent: 120 percent of his previous salary

***There are a few other different kinds of cap holds but these are the basic ones that come up the most.
***Cap holds can be no bigger than the league maximum salary

How do you get rid of a cap hold to open up cap room?

This happens when you renounce a player’s cap hold, which is essentially giving up any Bird Rights/Early Bird Rights/Non-Bird Rights exception you have on a player. It doesn’t mean you can’t sign said player anymore but it keeps a player from counting against your cap in the meantime. This is what the Celtics needed to do (renounce) with a number of their free agents in 2017 in order to sign Gordon Hayward. Once their cap holds were gone, the team had enough cap space open to sign Hayward outright.

If a team renounce all of its free agents, do they get all of the cap room?

Not unless they have 12 players signed to contracts (the league minimum in the offseason). Otherwise, there is a minimum salary player cap hold (for each open spot before there are 12 players on the roster). For the 2019-20 season, that total was $898,310, but it changes year-to-year based on league minimum.

How did cap holds impact the Celtics this past summer?