NBA salary cap
The NBA salary cap is the limit to the total amount of money that National Basketball Association teams are allowed to pay their players.
[6] The league's newest CBA, which took effect with the 2023–24 season, requires teams to meet the 90% salary floor at the start of preseason training camp.
[7] In December 2016, the league and the players' union reached a tentative agreement on a new CBA, with both sides ratifying it by the end of that month.
MLB allows teams to spend as much as they want on salary, but it penalizes them a percentage of the amount by which they exceed the soft cap.
Starting in 2014–15, "repeat offenders", subject to additional penalties, are defined as teams that paid tax in previous seasons.
[24] The NBA allows teams to sign their first-round draft choices to rookie "scale" contracts even if their payroll exceeds the cap.
A much-publicized example for this was Devean George, who vetoed his inclusion into a larger trade during the 2007–08 season that would have sent him from the Dallas Mavericks to the New Jersey Nets.
[10] The 2023 CBA adds league licensing revenue to the definition of BRI, which is expected to boost the salary cap by at least $2 million.
[11] A Designated Player coming off his rookie contract may be eligible to earn 30% of the salary cap (rather than the standard 25%) if he attains certain criteria.
[42] The reasoning for the rule is to suitably reward players being extended off their rookie contract who are considered to be of a higher "caliber" than their peers, without restricting them to the lower (25%) salary level.
[52] During Kevin Durant's final five seasons with the Oklahoma City Thunder (2011–2016), he received a Designated Player level salary.
His contract was initially drawn up before the lockout—during which the Derrick Rose Rule was implemented—but was officially approved under the provisions of the 2005 CBA[53] by the NBA after the lockout.
Sharp argued that the rule in fact created more problems than it solved:[56]Teams who develop and retain homegrown superstars will find themselves rewarded with uniquely-bloated salary caps and stiff luxury tax payments.
[58] The next player to qualify for a supermax contract was Anthony Davis, who at the time had played his entire NBA career with the New Orleans Pelicans.
He qualified by being named to the All-NBA first team in 2017–18, enabling the Pelicans to offer him a five-year extension worth up to $230 million, effective with the 2019–20 season.
[66] The first player to sign a supermax contract was Stephen Curry, who agreed to a new five-year DVPE deal with the Warriors, worth $201 million, that ran through the 2021–22 season.
[72] During the 2023 offseason, Jaylen Brown signed a five-year, $304 million supermax extension with the Boston Celtics, the largest contract in NBA history [73].
That contract was surpassed by his teammate Jayson Tatum the following offseason, who also signed a supermax extension with the Celtics for five years, $315 million.
Cap analyst Larry Coon outlined how this potential loophole would work:[75]For example, suppose the Non-Taxpayer Mid-Level exception is $9 million.
Notably, several members of the union's executive committee at the time the 2017 CBA was negotiated were older players who were seen as potential major beneficiaries of a change to an over-38 rule.
For example, the change to an over-38 rule gave union president Chris Paul, scheduled to become a free agent after the 2016–17 season, a potential gain of nearly $50 million over the life of his next contract.
In 2003, Gilbert Arenas, who had been a second-round pick in 2001, signed a six-year, $60 million contract with the Washington Wizards after his original team, the Golden State Warriors, were unable to match the offer since they were over the salary cap.
[20] In 2015, DeAndre Jordan had reached a verbal agreement to sign with the Dallas Mavericks, but changed his mind at the end of the moratorium and re-signed with the Los Angeles Clippers.
Apart from these restrictions, the cap hold varies based on the status of the free agent and his salary in the previous season:[86] The 2017 CBA increases some cap holds from those found in the 2011 CBA as follows:[10] When a team is willing to sign an upcoming free agent, but the player's current team wants something in return, it might be in the best interest of both clubs to execute a sign-and-trade deal.
The Dallas Mavericks signed Keith Van Horn out of retirement as part of a package to acquire Jason Kidd, and the Lakers did the same with Aaron McKie to facilitate their deal for Pau Gasol.
[88] The tight salary-matching rules of the 2005 CBA often required what NBA cap analyst Larry Coon called "trade ballast"—extra players added to a deal solely for salary matching, who would typically be waived by their new teams.
A notable example of such a deal occurred in the 2009–10 season, in which the Cleveland Cavaliers included Zydrunas Ilgauskas in their trade with the Washington Wizards for Antawn Jamison.
If he is not claimed, he is said to have "cleared waivers", and is treated like any free agent, able to sign with any team (with the special restriction noted above for players who were traded and then waived).
"[5] The NBA Amnesty Clause provided franchises a means of escaping a contractual obligation to a player whose performance falls far short of the extremely large salary they initially agreed to pay him.
[5] Teams over the salary cap could only acquire an amnestied player if he became a free agent, and the offer would be limited to the veteran's minimum contract.
