NBA free agency explained: Key dates and terms

The 2024 NBA offseason has already been an eventful one and now that the draft is in the rearview mirror, the yearly free agency frenzy has descended upon us.

As of June 30, free agent negotiations officially got underway, as front offices can now start discussions with players from other teams.

While deals typically start being reported on June 30, July 6 is the day when teams can officially sign free agents, trades become official and both rookie-scale and veteran contracts can be extended.

Below are some key facts and important things to know about several key terms often used and referred to during the NBA free agency process.

What is free agency? 

In professional basketball a free agent is a player who is eligible to sign with other teams or franchises. In other words, it’s a player who isn’t under contract with any specific team. 

NBA 2024 free agency key dates

June 30: Each NBA team may begin negotiating with all other upcoming free agents (beginning at 6 PM ET).

July 6: Each NBA team may begin signing free agents to contracts (12:01 PM ET).

What are the different types of NBA free agency?

The type of free agent that most fans associate with NBA free agency is an unrestricted free agent (UFA). This term means exactly what it sounds like; an unrestricted free agent is free to sign with any team of their choice. Once they sign, that player is a part of that new team.  

On the other hand, a restricted free agent (RFA) is able to sign an offer sheet with any team. However, that player’s original team can retain him by matching the terms of that offer. This is referred to as the "right of first refusal".

Restricted free agency occurs for all veteran free agents who have been in the NBA for three seasons or less.

The exception to this league-wide rule is a first-round draft pick following his second or third season only if his team doesn’t exercise its option to extend his rookie-scale contract for the following season. In this specific case, these players then become unrestricted free agents. 

Players also become restricted free agents following the fourth year of their rookie “scale” contracts (if they were a former first-round draft pick).

A more unique case of restricted free agency eligibility is when a player coming off a two-way contract was on an NBA active or inactive roster for at least 15 days during the prior season. 

What is an offer sheet?

An offer sheet is a term commonly deployed by most NBA analysts and media members, but what does it mean exactly? 

The answer is pretty simple; if a restricted free agent in the NBA decides that he wants to join another team, then he is able to sign an offer sheet with the desired team of his choosing.

However, as stated previously, that player’s original team is then presented with the terms of the deal and has two days to match the offer sheet. 

As the rule goes, if the player’s original team matches the terms of the offer sheet, then the player stays with the original team under those terms.

An important thing to remember is the team who is making the offer must maintain enough salary cap space to acquire the player until either the offer sheet is signed, or the original team matches the terms.  

What is a player option?

Unlike some of the other terms in this piece, a player option is fairly straightforward. A player option grants a player the power to decide whether to stay with their team for another season or become an unrestricted free agent. 

For example, if a player has a three-year contract with a player option for the fourth season, that means if the option is exercised by the player, the contract extends through the fourth season and he will remain on his current team.

If the option is not exercised by the player, then the contract ends after the third season and the player then becomes an unrestricted free agent. Most importantly, once a player option is exercised it cannot be revoked, meaning that it is a binding decision.

What is a team option? 

In opposition to the player option, a team option grants the original team the right to keep a player for another year, or to end the contract.

For example, if a player has a two-year contract with a team option for the third season, the contract extends through the third season if the option is exercised by the team.

If the option ends up not being exercised by the team, then the player’s contract ends after the second season.