When the NBA Collective Bargaining Agreement expired at the end of the 2011 season, the NBPA and the NBA couldn't reach an agreement and there was a lockout. When the lockout was ended just in time for a shortened season, there were some significant changes (lower salaries, shorter contracts, etc.).
One of these changes was the Amnesty Clause. Under this clause, each team could relieve themselves of one contract on their roster without any penalty. While the player amnestied would still have to be paid, that money would not apply to the team's salary cap. Once a player is amnestied, he is placed on amnesty waivers where teams can place anonymous bids to try to sign the player. If a player clears waivers, he then becomes a free agent, free to sign wherever he pleases.
When Chauncey Billups was amnestied by the New York Knicks this December, the Clippers placed a $2,000,032 bid and won. That made them responsible to cover that portion of Billups 14.2 million dollar contract, and left the Knicks with the rest.
The whole dispute and arbitrator thing was over the following dilemma: should teams be allowed to go over the cap to sign players claimed off of amnesty waivers with bird rights?
Now, the arbitrator decided that bird rights would be allowed.
But, let's pretend he didn't. The Clippers enter the offseason, and Chauncey is coming off of his 14.2 million deal with one year of experience with the Clippers. As a 1-year Free Agent, the Clippers can now go over the cap to re-sign Billups for up to 120% of his previous salary. Since Chauncey made 14.2 million last year, he would be eligible for slightly more than 17 million next season. So, without his Bird Rights, the Clippers can offer him more than 17 million for next season.
Now, back to reality, where the Clippers have his Bird Rights. That means that the Clippers can sign him for the maximum salary for a veteran of 10+ seasons- that's 35% of the Salary Cap. With the cap expected to be around 60 million dollars, that qualifies Billups for 21 million next season.
So, let's review:
No Bird Rights, Clippers can offer Chauncey up to 17 million
With Bird Rights, Clippers can offer Chauncey up to 21 million
I think I speak for all of us when I say that I would be upset to learn that the Clippers had signed Billups for 17 million or 21 million. I would be shocked if Chauncey even got 5 million.
So, in the end, the arbitrator granted the Clippers Bird Rights. While it doesn't affect Los Angeles, it helps out the New York Knicks by giving them the Bird Rights to Jeremy Lin and Steve Novak.
In my opinion, this makes sense. The players claimed off of waivers did not negotiate a new contract with the team that claimed them. Since they are still under the same contract, it's just like they had been traded.