Predicting how the Bulls will use the Disabled Player Exception

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The Bulls applied for the Disabled Player Exception (DPE) on behalf of Lonzo Ball, who was announced to be out for the season as he recovers from his third surgery since January 2021.

As of July 13th, the NBA has granted the Bulls a DPE worth $10.2 million for the season-ending loss of Ball.

The NBA has granted the Bulls a $10.2 million Disabled Player Exception for the season-ending loss of Lonzo Ball, sources say. https://t.co/6pJ3Lc78vY

— Shams Charania (@ShamsCharania) July 14, 2023

What is the Disabled Player Exception?

The Disabled Player Exception (DPE) allows teams to replaced a player who is deemed unable to render playing services as a result of injury.

Whereas teams above the salary cap are unable to sign free agents using space, they must use an exception, such as the Mid-Level (MLE) or Bi-Annual (BAE) to sign free agents.

Whereas the MLE and BAE are fixed rates, in the case of the DPE, it can be worth half the players salary plus an additional $100,000 up to the value of the MLE, $12.4 million in the 2023-24 season.

This exception would allow the Bulls to bring in a player via trade, waiver claim or free agency, only in the final year of his contract.

Other notes of interest

• The Bulls are not required to use this exception, but it will expire if not used before March 10
• If the player resumes playing for the Team, or is traded, prior to the Team’s use of its Exception, the Exception shall be extinguished.
• Ball may be permitted to return to play for the Bulls if he is recovered without impacting the DPE.

You can read the entire rule in Article VII, Section 6(c) of the new Collective Bargaining Agreement.

Salary Cap implications

Like all contracts, if the Bulls were to bring in a player using this exception, it would count towards the salary cap.

The Bulls are currently just $1.43 million below the luxury tax line with one open roster spot remaining (assuming Ayo Dosunmu’s returns on his $5.2 million qualifying offer and that the Bulls retain Carlik Jones).

Having used more than $5 million of the MLE, per the NBA CBA, the Bulls are hard capped at the $175 million first apron — they are not able to exceed that number under any circumstances. With one roster spot remaining (again depending on Dosunmu and Jones), the Bulls are $8.43 million below that hard cap apron — that is the largest contract they would be allowed to absorb.

Of note, the Bulls only used about half of the MLE on Jevon Carter, so they still have the remaining $6.1 million of that exception to use. They also have the full $4.5 million Bi-Annual Exception at their disposal.

If they were going to go into the tax, they didn’t have to wait for the DPE to be granted to do so.

Predicting the usecase

Given that they operate in a reality that effectively sees the luxury tax as a hard cap, it’s unlikely they use this exception at all.

However, at the post-Draft press conference, Arturas Karnisovas suggested the Bulls would be allowed to go into the luxury tax if the team was competitive enough.

“Jerry and Michael have been always open with me to go into luxury tax if our team is competitive — top-four, top-six in the East,” he said.

They could utilize this tool immediately to give themselves the best chance to compete this season, or wait to see if and how they should use it mid-season.

But my best guess is that they would wait until the trade deadline to determine whether they are truly good enough to warrant going into the luxury tax, and if so, having half of a season to evaluate their group, identify their weaknesses and try to acquire a player that helps address them.

Maybe they need to find a solution for another injury. Maybe they realize they still don’t have enough shooting and want to find more.

All in all, it’s unlikely they use this exception as it would require them to pay the luxury tax for the second time in franchise history.

Targets

We’ll believe that they went into the tax when we see it, but if the Bulls are going to use this DPE, the have a few options.

Via Trade without outgoing salary

Here are 20 players making less than the $8.43 million on expiring contracts remaining the Bulls can theoretically spend before hitting the hard cap.

• Isaiah Hartenstein ($8.19M)
• Thaddeus Young ($8M)
• Delon Wright ($8.19M)
• Zach Collins ($7.7M)
• Killian Hayes ($7.41M)
• Khem Birch ($6.98M)
• Danilo Gallinari ($6.8M)
• Patty Mills ($6.8M)
• Cedi Osman ($6.71M)
• Rudy Gay ($6.47M)
• Kira Lewis ($5.72M)
• Aaron Nesmith ($5.63M)
• Cole Anthony ($5.53M)
• Furkan Korkmaz ($5.37M)
• Chuma Okeke ($5.26M)
• Jarred Vanderbilt ($4.64M)
• Taurean Prince ($4.51M)
• Danuel House ($4.31M)
• Mike Muscala ($3.5M)
• Jordan Nwora ($3M)

Via trade with outgoing salary

The Bulls could also send money out in a trade that would give them more space below the apron.

For example, they send out Dalen Terry’s $3.35 million or Andre Drummond’s $3.36 million in a deal which would allow them to take back a salary worth the full $10.2 million DPE without hitting the hard cap.

If they did that, here are a few more names they could target:

• Alec Burks ($10.48M)
• Reggie Bullock ($10.48M)
• Monte Morris ($9.8M)
• Royce O’Neale ($9.5M)
• Kyle Anderson ($9.21M)
• Grayson Allen ($8.5M)

Via free agency

Here are 15 remaining names that could potentially be interested in a $8.4 million or less payday for a single season

• PJ Washington
• Christian Wood
• Kelly Oubre
• Darius Bazley
• Will Barton
• Hamidou Diallo
• Terence Davis
• TJ Warren
• Justise Winslow
• Lindy Waters
• Dylan Windler
• Danny Green
• Terrence Ross
• Kevin Knox
• Markieff Morris