Definition: The NBA's next collective bargaining agreement may include some form of "amnesty clause," allowing teams to eliminate bad player contracts under certain conditions.
The last time the NBA offered an amnesty period, the benefit was somewhat limited. In 2005, teams were offered the opportunity to waive a single contract. Players waived under the 2005 amnesty rule still received their paychecks and still counted against the salary cap, but their teams did not have to pay luxury tax on the waived salaries.
(In an ironic twist, the 2005 amnesty was generally known as the "Allan Houston Rule," after the high-priced, oft-injured New York Knicks guard most thought would be among the first players waived. But the Knicks opted to hang on to Houston, gambling that his injuries would force a retirement and that they'd recoup more money via an insurance settlement.)
The amnesty scenarios being discussed as part of the current CBA negotiations are a bit different. One option: if owners succeed in pushing through a "hard" salary cap - or a soft cap at a much lower number, teams would be given a one-time opportunity to remove a contract from the salary cap as a way to help reduce payroll. Or, teams might be given the opportunity to waive a contract periodically - say, once every other year - as a means of getting out from under the most onerous contracts without shifting to NFL-style non-guaranteed deals.
Examples: Orlando management is hoping an amnesty clause in the new CBA will allow the team to terminate Gilbert Arenas' enormous contract.