Exploring the Mid-Level and Bi-Annual Exceptions

The Grizzlies are in the midst of trimming down their roster to 15 guys. As of this writing Memphis currently has… 19(?!?) players rostered. They will have two 2-Ways to work with, but that’s still 17 guys.

They’ll need to cut two guys to get down to the league mandated 15.

Here’s the thing… I’m of the opinion the front office still isn’t done tweaking the roster. If it’s through trade or free agency, they still have several means of which to acquire guys. That being said, they still have some things to utilize.

They’ve got the Traded Players Exception via the Dillon Brooks sign and trade. There will also be two specific ways for Memphis to sign free agents while not going against the cap. With the new CBA, cap navigation is more important now than ever before—the exceptions are imperative to roster construction.

So any exception to the salary cap they can use, the better. I’ve already touched on the TPE, so now let’s examine the other options the Grizzlies have. Should they wish to sign players who are free agents but not go against their cap, they will have two options.

The Grizzlies could use the Mid-Level Exception, or they could use the Bi-Annual Exception. They cannot use both. Or, they could choose to not use either. The ball is in their proverbial court as it were.

Regardless, it’s worth having a frame of reference of what each exception is worth, as well as the intent behind both exceptions. Once broken down you will have a better idea of a couple things.

Not only what their options might be… But also the specific option they may be leaning towards.

Bear in mind, the Grizzlies could just as easily decide to say, “to hell with it,” and roll with the roster they have, cutting two guys. No one is going to force the Grizzlies to sign guys with the MLE/BAE… At least I don’t think so.

That would be real weird to find out about the team now, geez. Would the league step in? I have so many questions… but I digress.

Either way, best to have your head on swivel around this front office. I don’t expect them to be content until one, maybe two, moves are made. Those moves could very well be made using one of the two exceptions below—best familiarize yourself with them.

The Mid Level Exception

The Mid-Level Exception. A tool created by the league for franchises to build out their rosters. It serves as a means for teams to sign free agents—high level players—without overspending. Let’s get more specific… Memphis will have access to the Non-Taxpayer Mid-Level Exception to sign FAs.

The league distributes the Non-Taxpayer MLE each year to teams that are above the salary cap ($136,021,000) but below the Luxury Tax ($172,346,000). Currently the Grizzlies rank 8th in the league in total cap and cap space.

As their total cap is $153,662,366, that would put them at $17,641,366 over the cap… and yet still in firm position under the luxury tax. That puts Memphis smack dab in the middle of that window. Not a bad place to be when you consider the roster the front office has built.

Now, under the new CBA the value of the current NT MLE is $12,405,000. That means team will have that much to use without it counting towards the cap. The most beautiful thing about this exception? It’s adaptability. What I mean by that is… you’re not handcuffed to any one option when using the MLE.

With this exception, teams can chose to sign one or several players, to contracts up to four years in length.

Meaning, you can offer the full amount to a single hooper. Or you can sign several guys to more minor contracts as long as the sum isn’t more than the annual extension amount. So, in this case as long as it doesn’t exceed the full $12,405,000.

This extension encourages continuity among franchises. How so? By the length of the contracts offered. The ability to offer three-to-four-year contracts helps teams get a player’s Bird Rights.

When was acquiring those never not a good thing?

Let’s examine the Grizzlies’ roster and use it as an example. A firm grasp on the cap situation (looking at you Kleiman) allowed them to be creative with this exception. Currently Memphis has three players that were signed using the MLE.

John Konchar signed as a free agent using the MLE. Memphis drafted and signed Xavier Tillman Sr. with the exception as well. And Kenneth Lofton Jr. inked a rest of season contract using the MLE. That’s at least one quality piece of the playoff rotation… and if we’re being honest, two or three depending on the crowds you run in.

It’s been a key factor in the way Kleiman built out the fringes of this roster. That’s the sign of someone who has a knack for maneuvering the salary cap situation, as well as proof that you can construct a team with championship aspirations around your superstars.

Sure, luck helps a little.

The MLE helps even more.

Examples of players signed last season with the MLE:

• Cleveland Cavaliers – Ricky Rubio ($5,853,659), Danny Green ($2,000,000), & Sam Merrill ($850,000)
• Dallas Mavericks – JaVale McGee ($5,461,219) & Jaden Hardy ($1,017,781)
• Denver Nuggets – Bruce Brown ($6,479,000)
• Portland Trailblazers – Gary Payton II ($8,300,000) & Jabari Walker ($1,017,781)

The Bi Annual Exception

Though not as popular as the Mid-Level, the Bi-Annual Exception is another option for teams… A bargain option for squeezing free agents onto the roster. That said, it’s hardly ‘bargain’ players that it’s used on; teams can sign quality guys with the BAE.

If the MLE is the Target of extensions, and the Veteran Minimum is the Goodwill… then the BAE is Walmart. You use it to sign guys that are worth more than your vets… but not as much as someone you’d offer the full MLE too.

Does that track? Let me break it down—how it works—and you tell me if it’s any clearer.

Getting accustomed to the parameters teams need to meet to have access to the BAE is a good place to start. You’ll notice the increased prerequisites teams have to meet compared to the MLE. As such, in general I’d say teams use the Bi-Annual much less.

For starters, as the name suggests, teams can only use it once every two years. That alone will have a slight limit on teams. Used it this year? It’ll be off-limits the next. And it doesn’t stop there.

Created and used more cap space? Also off-limits.

Oh, and if you’re not over the cap but under the tax apron? Bye-bye BAE, off-limits.

The typical outcome? The League will have 3-5 teams that can use the exception roundabouts. Teams’ offseason strategies must account for this.

With the BAE worth $4,105,000 this season, it’s not as if teams who can’t use it lose any significant amount of money.

Trust me. $4,105,000 may be a bag for you and me (you know how many copies of Point Break I could get with that??)… but it’s often a drop in the bucket for most owners.

Teams can also split the BAE across several players—something shared with the MLE. Yet, due to the lower amount of the exception it’s often utilized with less frequency. Why sign 4 players with the BAE, all to contracts worth a million and some change, ya know?

The last thing to note is the length of the deals offered with the exception. Contracts inked with the BAE may not exceed two years in length. So, you’re signing guys to either a one- or two-year deal here. Always worth keeping in mind.

Now, bringing it home. The last player the Grizzlies signed using the BAE was Marko Gudurić during the 2019-20 season.

Remember him? The Serb? The guy who we guaranteed $5,375,000? For 44 game appearances and 1 suspension? Or did you block him out like I did?

This is an example of how not to use your BAE. Using it as a flyer on an unproven guy comes with a lot of risks. The Grizzlies wound up cutting Gudurić, costing themselves a dead cap hit of $2,750,000 in 2020-21.

If you can get players like Brook Lopez or Bobby Portis—both signed at some point with the BAE? Now, that’s using the extension proper like.

Examples of players signed last season with the BAE:

• Philadelphia 76ers – Danuel House ($4,105,000) 
• Miami Heat – Kevin Love ($3,114,138)