Originally Posted by DallasBasketball

So what's with all the talk about Michael Finley being waived by the Mavericks? What are the rules and how do they apply to this situation? Does it really make sense? Here we present what we believe is an exhaustive look at the situation:
The idea has exploded into the Dallas sports landscape with a frenzy since Friday's speculative article in the Dallas Morning News saying Finley 'may be let go' by the Mavericks because of an obscure new rule being added to the NBA's new Collective bargaining Agreement (CBA). Here we take on all the issues for you - we review the rule itself, what it means, how it would apply in this (or any case), and analyze the idea of Finley being let go, while we try to clear up inaccurate information and false misconceptions that have arisen.
This article is offered with a nod of credit to many knowledgeable internet debaters, whose points and questions I used in a desire to cover all the bases. An article like this doesn't lend itself to footnotes, so if you see something you think you wrote, you probably did, and I included it to try to offer something more exhaustive. I don't have all the answers - but there are many smart people out there who make incredible observations, and I applaud you. This is in many ways a collection of those ideas, in hopefully an organized form.
THE ONE-TIME WAIVER RULE
The new rule states that each team will be given a one-time opportunity to waive one player and exempt the team from any potential future luxury tax obligations on that player's contract.
When will this opportunity begin? A team will be able to designate such a player beginning July 22.
When will this opportunity end? Beginning of the regular season.
Can a team opt to wait and use this rule in a future year? No.
What does it mean to waive a player? "Waiving a player" is the same thing as getting rid of a player who still has a contract, cutting a player, releasing a player, and so on.
If they have a contract, what happens to the contract when he is waived? If he has a guaranteed contract (which is true in 99% of the cases), you have to pay him in full anyhow even if you waive him, but he is then allowed to sign a new contract with another team for whatever he can get and play for them.
How does waiving a player differ from a buyout? A buyout is a negotiation with a player who has a guaranteed contract, to see if they will accept less money or a longer payout if the team waives them. Waiver and buyout are usually part of the same process.
Can a team try to buy out a player at a reduced amount, in using this rule? Yes.
Why would a player accept a reduced amount? Once they are waived, they will have the opportunity to make additional money elsewhere, so sometimes they are open to the idea and willing to offer a discount.
Does a player have to accept a buyout? No. If they refuse, the team would have to choose between waiving the player and paying them in full, or keeping the player.
How does a retirement (like Bradley's) differ from a waiver? It doesnt. It is merely a different description for the same process, except in a retirement the player has decided he prefers not to play (or is physically incapable of playing) for another team after being waived.
What if a team wants to apply the rule to a player already waived prior to July 22? The rule may be applied to any player waived by the team in which there are future salary obligations, regardless of when they were waived. A team like Toronto may elect to apply the rule to a player like Mourning whom they waived during the past season.
How many players may a team apply the rule to? One.
Is a team required to waive and designate a player? No, and many wont.
If a player is waived and designated under this rule, does the team still have to pay them in full? Yes, they must be paid in full per their contract (or under the terms of any negotiated buyout between the team and the player). If a player is waived and designated under this rule, is there any special reduction to their salary (or buyout) on the team's salary cap? No.
Does using this rule lower a teams cap total where they gain extra flexibility to sign additional players? No.
If the team negotiates a buyout of the contract, how is the team charged on the cap? Like any other buyout of a player contract, the total dollars paid under the buyout will be added together and then prorated in the same manner and over the same terms as the original contract term, regardless of how the buyout is paid. Therefore, if a player's original contract still had 3 years remaining and paid him annual salaries of $1M in year 1, $2M in year 2, and $3M in year 3, 1/6 of the total buyout would be charged to the team's cap in year 1, 2/6 in year 2, etc, even if the buyout was being paid over a different period and in different proportions.
Can the team re-sign the player it waives under this rule? No, such players will be prohibited from re-signing with the team until the ending date of that contract.
If the team still has to pay the player, and the payment still counts on the salary cap, what benefit is there in this rule? The rule was designed to give teams who feel the need to get rid of a player they deem unproductive a break from potentially paying 'luxury tax' (in years there is a tax) on the future cap amounts paid to the player.
If such a player signs to play with another team, will it effect the original team's financial obligation to him? Maybe. After being waived, if he signs a new deal elsewhere for the minimum contract, then he keeps the minimum in additon to his original pay. If he signs for more than the minimum, his original pay is reduced by 50% of the amount he receives above the minimum. For example, if the minimum is $1M and he signs for $5M, his pay from the original team would be reduced by $2M (50% of the amount above $1M.)