The problem that Lonzo Ball's departure to the Chicago Bulls has created

When the Bulls traded Lonzo Ball for Isaac Okoro earlier this month, they had to use a part of their trade exception from Zach LaVine, valued at over 17 million dollars, to absorb Okoro's 11 million dollar salary, as tweeted by Keith Smith from Spotrac. Chicago couldn't simply use Ball's outgoing 10 million dollar salary to match the offer due to an injury protection clause in his contract, notes Smith.

The 10 million dollars owed to Ball for the 2025/26 season would be fully guaranteed if he were waived today, but his contract includes an Annex 3 clause ("prior injury exclusion") that would exempt the team from paying the total amount if he suffers a specific injury, likely a serious injury related to his operated knee.

It appears that the NBA required the Bulls to treat Ball's salary as non-guaranteed due to that Annex 3 clause, meaning it would not count as 10 million dollars for cap purposes. This meant another exception had to be used to take on Okoro's incoming 11 million dollars.

The move will continue to limit the Bulls to the first tax threshold for the 2025/26 season: instead of utilizing the revised player trade exception (which recovers more than 100% of Ball's salary), they used a trade exception generated from the previous season. Both measures create a maximum limit at the first threshold.

Other MLE Examples

The Nuggets used a portion of the trade exception generated from their Michael Porter Jr. for Cameron Johnson trade to acquire the 10.4 million dollar salary of Jonas Valanciunas from Sacramento, creating a new TPE worth the outgoing 5.4 million dollar salary of Dario Saric in the process, as reported by Bobby Marks from ESPN for Sports Business Classroom. Denver could have used Saric's outgoing salary to legally match Valanciunas' incoming amount without touching Porter's trade exception, but doing so would have created a hard cap at the first level. Since Porter's trade exception was created after the regular season ended, its use does not impose a hard cap on Denver.

The 2025/26 salaries of Clippers' point guard James Harden and Celtics' point guard Josh Minott are now fully guaranteed. Neither Harden nor Minott received a fully guaranteed salary for the first year when they signed earlier this month, but that was only a formality for the Clippers and the Celtics to avoid guaranteeing their options for the second year, 2026/27. Harden's 39.2 million dollar salary for the 2025/26 season was guaranteed after July 11, while Minott's 2.4 million dollar salary was guaranteed after July 15.

Once Damian Lillard officially signs with Portland, only four NBA teams will have their full non-taxpayer mid-level exception of 14.1 million dollars and remain far enough below the first tax threshold to use it in full. Those teams are the Wizards, the Hornets, the Bulls, and the Warriors. However, Chicago and Golden State still need to address the restricted free agency of Josh Giddey and Jonathan Kuminga, respectively, so there is no guarantee they will remain on that list. This makes Washington and Charlotte two teams to closely monitor throughout the rest of the offseason and possibly during the season, as the flexibility of the mid-level exception makes them candidates to take on unwanted salaries in trades.

This news is an automatic translation. You can read the original news, El problema que ha creado la salida de Lonzo Ball a los Chicago Bulls