A few of you have asked me to explain what a qualifying contract is, so here is a quick post on it along with the language from the CBA.
A qualifying contract is a one-year deal that can be given to a player that has four or more accrued seasons in the league. That player must be given the minimum salary for his accrued seasons and the extra compensation cannot exceed $65,000. Starting in 2015, that amount will increase to $85,000.
A qualifying contract comes with a base cap charge equal to that of a player with two accrued seasons and any extra compensation, as defined above, is then tacked on to that number.
The team still must pay the player the minimum base salary plus any extra compensation he is due, so the only savings come via the salary cap accounting. These contracts were put into effect to entice teams to sign older players.
Below is a complete description of what a qualifying contract is via the collective bargaining agreement:
Section 1. Qualifying Players: For purposes of this Article, a “Qualifying Player” shall be defined as a player with four or more Credited Seasons, whose contract has expired or been terminated, who signs a Qualifying Contract.
Section 2. Qualifying Contracts:
(a) For purposes of this section, a “Qualifying Contract” shall be defined as a Player Contract signed by a Qualifying Player that (i) covers only a single League Year and (ii) contains no terms that affect compensation in any way other than (1) the applicable minimum Paragraph 5 Salary, (2) up to $50,000 in “Additional Compensation” (e.g., signing bonus allocation, roster bonus, reporting bonus, or any incentive (“likely to be earned” or not)), and/or (3) a guarantee for Salary and/or Salary advance of up to the Minimum Salary for a player with two Credited Seasons. A Qualifying Contract may not be extended or renegotiated in any manner. Split contracts, if they otherwise qualify, may be Qualifying Contracts. Thus, for example, a contract that includes an option year is not a Qualifying Contract.
(b) The maximum amount of Additional Compensation in (2) above shall be increased to $65,000 for the 2012–14 League Years, to $80,000 for the 2015–17 League Years, and $90,000 for the 2018–20 League Years.
(c) If the player’s prior contract was terminated, he is eligible to sign a Qualifying Contract if he does not earn more than maximum amount of Additional Compensation less the amount of any Additional Compensation and/or guaranteed Salary earned during that League Year under the terminated years of his prior contract(s), but his combined compensation from the terminated contract(s) earned for that League Year and the Qualifying Contract cannot exceed the applicable minimum for that League Year plus the maximum amount of Additional Compensation.