What is the “Over-36” rule?
Suppose a player is nearing retirement, and he wants to finish his career with a team that can only offer him their Mid-Level exception. If they want to give the player more money than the Mid-Level exception would allow, then there is a potential loophole they could exploit by signing a contract for more years than they expect the player to play. For example, suppose the Mid-Level exception is $5 million. With 8% raises, a four-year contract would total $22.4 million. But if they added a fifth year to the contract, the total salary would be $29 million. If the player retires after four seasons and continues drawing his salary for the additional season, he will effectively be paid $29 million for four years’ work. In essence, they are giving the player a four year contract with additional deferred compensation. This loophole is closed by the Over-36 rule. Certain long-term contracts that extend past the player’s 36th birthday are deemed Over-36 contracts. In an Over-36 contract, the pr
