Extensions to contracts that are not rookie scale contracts (i.e., veteran extensions) may be signed up to June 30, the day before the player would have become a free agent.
A contract that contains an Early Termination Option (ETO) cannot be extended if the ETO is exercised (ending the contract early). A contract with an option can be extended if the player opts-in. A contract with an option can also be extended if the player opts-out, as long as the extension adds at least two new seasons onto the contract (excluding any new option year) and the salary in the first year of the extension is not less than the salary in the non-exercised option year
. See question number 57 for more information on options and ETOs.
A veteran extension can contain an option (player or team), but cannot contain an ETO.
If the player agrees to waive a portion of his trade bonus in order to facilitate a trade (see question number 97), his contract may not be extended for six months following the trade.
Veteran extensions are limited to four seasons, including the seasons remaining on the current contract. Even if the extension is signed in late June, the current season counts as one full season toward the total. For example, a contract with two seasons remaining may be extended for up to two additional seasons
. However, an extension signed in conjunction with an Extend-and-Trade transaction (see question number 92) is limited to three seasons, including the seasons remaining on the current contract.
The salary in the first year of a veteran extension may be any amount up to 107.5% of the player's previous salary4, but no more than the player's maximum salary in that season (i.e., the maximum salary the player can receive if he were to sign a new contract that year as a free agent -- see question numbers 16 and 17).
Since the maximum salaries for an upcoming season are not known at the time the extension is signed, it is possible that the extension will specify a salary that is greater than the maximum salary. If this happens, the salaries in the extension are amended downward once the maximum salaries are defined.
Raises in each year of a veteran extension are limited to 7.5% of the salary in the first year of the extension5. If the salary in the first year of the extension is amended downward, the salaries in all subsequent season are amended as well. If the contract being extended contained bonuses, then the extension must contain the same bonuses -- teams can increase or decrease the bonus amounts by up to 7.5%, but they can't leave them off.