Friday, December 16, 2011

Baron Davis and the New NBA Amnesty Clause

By Graydon Ebert

The Cleveland Cavaliers announced that they would be waiving Baron Davis under the amnesty provision of the new NBA collective bargaining agreement prior to Friday’s deadline. Recall that under the newly agreed upon CBA, each NBA team is allowed to waive one player during the lifetime of the CBA, and that player’s contract would not count against the team’s salary cap or luxury tax figure (though it does still count when calculating whether a team has reached the salary floor.

Davis, who has a herniated disc in his back and is expected to miss 8-10 weeks, has $30 million left on his contract, of which $27 million is guaranteed. The Cavs are still obligated to pay Davis the full amount of guaranteed salary owed to him, unless he is selected in an amnesty waiver auction. Once Davis is released, he will be made available to all teams that are currently under the salary cap via a blind auction. These teams are free to make a bid on Davis’ services, with Davis going to the highest bidder. The team that won will be required to pay Davis the amount of their bid and this amount will be subtracted from the amount of guaranteed salary that the Cavs have to pay Davis. For example, if a team bid $8 million, they would be required to pay Davis this amount, and the Cavs would still owe him $19 million. Should no team make a bid for Davis after 48 hours, he will become a free agent able to sign with any team, and the Cavs will have to pay him the full $27 million he is guaranteed.

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