APRIL 1ST 2023: WOJ BOMB.
The NBA & National Basketball Players Association reach a new 7 year collective bargaining agreement (CBA for short). The deal promises “labor peace through the rest of the decade” as well as introduce several rule changes that aim to bring more parity to the league. In an article from Woj key elements of the deal, included:
“Curbing the ability of the highest-spending teams… running up salary and luxury tax spending while still maintaining mechanisms to add talent to the roster. The league is implementing a second salary cap apron -- $17.5 million over the tax line -- and those teams will lose several key team building mechanisms, including the taxpayer mid-level exception, utilizing cash in trades, moving first-round picks in drafts that are seven years away, signing free agent players in the buyout market and taking on more money than is being sent out in trades, sources said.”
What wasn’t mentioned at the time were the details of each tax apron & how teams were about to be uprooted over time. In the previous CBA, an average of 3 teams per year were affected by it’s toughest penalties: a tax bill calculated by a per-dollar amount set in by which tax bracket a team would fall in (for example the 2020-2021 Nets tax penalty had Joe Tsai write a check of almost $102 million) and an exception that allowed teams to go over the cap to add players.
At time of writing, 9 teams are already over the 1st apron (with DAL & GS both having less than 534K breathing room) & 4 teams have passed into the 2nd apron (with LAL having a breathing room of $45,001). So if your team (see graphics below) has ventured into these penalties, here’s what you have to look forward to.
Key 1st apron tax penalties include: not being able to acquire a player in a S&T deal, not being able to take back more $ in during trades, not being able to use pre-existing trade exceptions from the prior season, & not being able to sign a waived player (during the season) who made more than the mid-level exception (12.8M via Spotrac).
These penalties could affect 11 (!) teams next season.
Teams over the 2nd tax apron (in addition to penalties above) can look forward to: not being able to use cash as incentives in trades, limitations on the use of trade exceptions, not being able to sign bought out players, & not being able to trade your own players in S&T deals. But the worst penalties come in the form of draft pick penalties…. Teams finishing over the 2nd apron in 24-25 will have their 2032 draft picks frozen aka untradeable (via Sportico). If those teams remain above the 2nd apron for at least 2 more seasons from 25-26 to 28-29, the frozen pick is automatically placed at the end of round 1 (and can’t be able to be used in a trade). For teams that have a 3 year window over the 2nd apron and then choose to rebuild, this could come with dire consequences. Yes teams can lower salary to negate some penalties but losing a draft pick 7 years down the line as an asset & losing it’s value (even if the team finishes with the worst record) maybe going a tad too far.
This offseason we've already seen the effect these tax aprons have on teams’ evaluation of players. Tyrus Jones, in line for a payday this offseason after making 14M last season was forced to take a vets min deal for 3.3M. Cam Johnson & Dorian Finney-Smith (DFS for short), 2 veteran players deep in trade rumors for much of the offseason (if not longer) are still on the Nets roster. Teams do not want to spend on “medium level talent” players. Players who may be difference makers but arnt super stars. It makes a lot of sense. I personally think teams will become top heavy for this reason. You pay the guys YOU ARE SURE you need to keep (aka your stars/elite starters). Would you want your team taking on any of these penalties for a non-starter or even a 6th man? Is it worth a team like LAL or DAL to take on penalties for a DFS or Cam Johnson? No. If im a GM having my draft pick possibly frozen 7 years down the line isn't worth it to me unless I KNOW a player will make my team a contender. The result going forward will be teams holding onto their draft picks even more, team taking more chances on younger players via 2nd rounders/2-way contracts & veteran players taking smaller deals in both $ & length. Teams that have major cap room (like the Nets) or can get their players to sign more team friendlier deals (Knicks & Brunson for example) may have a great advantage in the upcoming seasons as tax penalties begin to attack teams.
As time passes I think we’ll see this CBA give the owner’s an amazing amount of leverage heading into the next CBA, but at what cost for their franchise & it’s fans? If they care of course....
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Pete is host of “Nets Fans You Know: A Brooklyn Nets Podcast”. Each episode he is joined by guests from around the Nets & NBA from players, media personalities, beat writers, analytic analysts, to other content creators.
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