What is an undrafted free agent and how do the rules work?

The NBA Draft takes place every summer following the conclusion of the NBA Finals. This is where the best and brightest stars from high schools, colleges, and overseas are selected by NBA teams and ultimately sign their first contracts. However, not every player in the draft pool is taken. The Draft is only two rounds, and each team typically has one pick per round.

The players that are not drafted then enter the free agent pool as undrafted free agents. But what happens with these players than ultimately aren't drafted, and what does it mean if a player is an undrafted free agent?

Undrafted free agents and the process

As stated above, players that are not drafted ultimately enter the free agent pool. Some of these players go on to have successful careers, but their paths become that much harder. There's no guarantee a team will come calling for their services. They can still seek employment with NBA teams, but their path is far from a straight line.

When an undrafted player becomes a free agent, any team can sign them as long as the terms agreed upon don't violate the rules of the Collective Bargaining Agreement. According to the CBA, these players are allowed to sign with any team as soon as the Draft reaches its conclusion.

The contracts that are signed by undrafted free agents come much cheaper than regular free agents. The minimum value of the contract for an undrafted free agent for this upcoming season is roughly $1 million. Often, undrafted free agents are signed to two-way deals that allow them to play on G-League teams. Teams can also bring them up to the NBA for a limited number of days. Two-way contracts are expected to be valued at about $580,000 this coming season.

The most recent example of an undrafted free agent to make it to the NBA is Christian Wood, who was left unselected in 2015. However, he was later signed by the Philadelphia 76ers and has put together a nice career. Wood is currently a key piece for the Los Angeles Lakers.