Expansion Draft NBA: How a New Franchise is Built

NBA expansion seems closer than ever: after years of speculation, the league is considering adding two new franchises, increasing the total from 30 to 32 teams.

The decision will be discussed during the NBA Board of Governors meeting on March 24-25, with Las Vegas and Seattle as the only candidate cities. The goal is to have them on the court by the 2028-29 NBA season, according to Shams Charania.

This initiative has already gained support among stakeholders, who may begin a bidding phase ranging from $7 billion to $10 billion per team.

In this article, we cover the rules of an NBA Expansion Draft, a process that allows new teams to acquire a limited number of players from existing franchises to build a competitive roster from the start.

Key Rules of the Expansion Draft

Based on past precedents, the Expansion Draft generally follows six main rules:

1. New franchises can “pick” players not protected by existing teams.
2. Each team can protect up to eight players.
3. Players with expiring contracts or restricted free agents cannot be protected.
4. Only one player per team can be selected.
5. Selected players’ contracts are transferred as-is.
6. Expansion teams usually receive favorable NBA Draft positioning, including the chance at the first overall pick.

How to Create an NBA Franchise

Establishing a new NBA franchise is complex, requiring significant financial resources and formal approval from the league. Here’s a general overview:

Funding and Ownership: Secure sufficient investment to cover initial costs and long-term operations. Funding can come from private investors, investment groups, companies, or individual owners.

Expansion Request or Purchase: Teams can join the NBA either via expansion, when the league adds new franchises, or by purchasing an existing franchise, which requires negotiation with the current owner and league approval.

Proposal Submission: For expansion, a formal proposal must be presented to the NBA, including financial details, market projections, game plans, proposed venue, and other relevant information.

NBA Approval: The league evaluates factors like broadcast markets, financial stability, fan base, proposed arena, and overall franchise viability. Once approved, the team officially joins the NBA.

Team and Organizational Setup: After approval, the franchise must build its roster, hire coaching and administrative staff, and establish a full operational infrastructure. This can take several years.

Arena and Facilities: Many franchises need to build or renovate arenas and support facilities.

League Participation: The new team enters the NBA Draft, signs free agents, and builds a competitive roster while following all NBA rules and financial regulations.

Once completed, the franchise can begin competing and participating in league activities. This process may take years and is subject to league discretion.

What is the NBA Expansion Draft and How It Works

The NBA Expansion Draft occurs when the league adds new franchises. During this draft, expansion teams can select players from existing teams.

How It Works:

• Player Availability: Existing teams submit a list of unprotected players.
• Draft Rules: The NBA sets rules determining how many players an expansion team can select from each existing franchise.
• Player Selection: Expansion teams take turns picking players until they meet their selection requirements or until all teams have no remaining unprotected players.
• Restrictions: Existing teams can protect key players, young talent, and other essential roster members.
• Compensation: Teams losing players may receive future draft picks or other considerations.

In short, the Expansion Draft allows new NBA franchises to construct competitive rosters under league rules.

Timeline for the Expansion Draft

• NBA approves expansion teams 1+ years before they join officially.
• The Expansion Draft is scheduled after the NBA Finals and before the NBA Draft.

Creating a Player List:

• Teams submit a list of protected players, including contracted players, restricted free agents, and players with player/team options (excluding unrestricted free agents).
• Teams can protect up to 8 players but must expose at least one.
• Players with less than 2 years of NBA experience, first-year draftees, or those with non-trade clauses are automatically exempt.
• No team can lose more than one player, and selected restricted free agents become unrestricted.

Key Rules to Follow During the Expansion Draft

• Each team can lose only one player from its unprotected list.
• After a selection, remaining players from that team are removed from eligibility.
• If a selected player exceeds a team’s salary cap, exceptions apply to match the player’s salary.
• Teams may expose unwanted contracts to incentivize expansion teams to select certain players, sometimes including future draft picks or trades.

After the Expansion Draft

• Expansion teams compete like any other NBA team but initially operate under a reduced salary cap, 66.6% of the NBA cap in year 1, 80% in year 2, and full normal cap from year 3.
• They also gain rights to unrestricted free agents (Bird, Early Bird, Non-Bird) with applicable limits.
• If a selected player is cut before the season, their salary is removed from the cap but still counts toward the minimum team salary.

Historical NBA Expansion Drafts

Past expansion drafts sometimes involved multiple teams, using a coin toss or lottery for draft order. Examples include:

• 2004: Charlotte Bobcats – 4th overall draft pick
• 1995: Toronto Raptors & Vancouver Grizzlies – 6th & 7th picks
• 1989: Minnesota Timberwolves & Orlando Magic – 10th & 11th picks
• 1988: Charlotte Hornets & Miami Heat – 8th & 9th picks

In 2004, Bobcats selected 19 players and made trades to acquire additional draft positions. Trades and agreements with expansion teams have historically influenced player selection strategy. Notable examples include Zaza Pachulia and Sasha Pavlovic, selected and later traded for future draft picks.