What happens to contracts if a player meets the criteria for designated veteran extensions?

When a player qualifies for designated veteran extensions, one of the critical stipulations is that their current contracts cannot be traded for a period of one year. This restriction is put in place to provide stability and protect the player's rights, preventing them from being quickly moved to another team immediately after signing the extension. The designated veteran extension is designed to reward players who have had significant achievements, such as making All-Star teams or being named to All-NBA teams. Therefore, the trading restriction serves as a safeguard for those players, giving them more control over their situation during the initial year following the extension.

The other choices do not accurately represent the process or rules related to designated veteran extensions. Automatic extension would imply no input from the player or the team, which is not the case since formal negotiations are necessary. Renegotiating contracts by other teams does not align with the rule, as contracts are specific to the team that holds the rights to the player. Meanwhile, the requirement to go through a third party does not apply in this context; all negotiations and decisions are handled directly between the player and their current team.