Updated: 4/3/23 @ 2:45pm
More “Super Tax” Penalties
What Is It:
There are going to be even more penalties on teams that exceed what we’re going to now call the “Super Tax”, which is the second tax apron at $17.5 million above the luxury tax line. These penalties include: not being able to send cash out in trade, restrictions on when they can trade first-round picks, not being able to sign players on the buyout market and not being able to take on salary in trades.
The league is doing what they can to curb the spending of the most expensive teams. We already covered some of the potentially unintended consequences, but here’s another set to consider.
If you can’t add salary via a trade, will we see a $20 million player given a $30 million, simply so a team could trade him for a $25 million player? That’s one way to start working around it. It’s not necessarily a bad thing, because the player benefits. But it could be a workaround for teams. And NBA teams are really good at figuring out workarounds with the cap and CBA.
Players are allowed to invest in NBA and WNBA teams, as well as partner with gambling and cannabis companies.
What Is It:
This one is pretty straight forward. Or, it seems to be, at least. Players will be able to become more partners with teams, as opposed to contract employees. And players will be able to branch out and become partners with business that were previously prohibited.
Investing in the NBA and WNBA is a great idea. If you’re invested, you’re likely to do more to grow your product and your team. That should be a rising tide lifts all boats scenario.
Partnering with gambling companies is a little more of a slippery slope. If it’s simply “Hey! I’m Player X! Do your betting with Company Y!” then it’s fine. If it becomes “Hey! I’m Player X! Bet on me to score over 20 points tonight!” then things could get really messy. When we have full details, it seems likely we’ll find out it’s more like the former than the latter.
We didn’t touch on it previously, so we will here…marijuana is no longer a prohibited substance in the new CBA. With where things are headed, as more and more of the country legalizes marijuana use, that makes sense. And if it’s not a prohibited substance, why can’t a player endorse it? This is common sense in action.
Revenue from licensing will be added to the Basketball Related Income (BRI) calculation
What Is It:
Previously, any money the NBA itself or NBA teams made from licensing agreements went directly to the owners. The players will now get a share of that, through the BRI process.
This seems like a no-brainer. The NBA and its teams have no value without the players. If you’re going to license your logos or team names to be used somewhere, the players should get a cut of that.
Second Round Pick Signing Exception
What Is It:
Teams will now have an exception to sign their second-round picks. In today’s world, if a team wants to sign a player selected in the second round to more than the two-year, minimum salary deal allowed by the minimum exception, they have limited ways to do so. They can give the player come of their cap space, if they are a room team. Or they can carve out a portion of their Mid-Level Exception to sign the player. Now, they’ll be able to sign their second-round picks to deals without having to give up cap space or part of their MLE.
This is a good change. As much as we’ve all enjoyed picking on the Los Angeles Lakers for bungling this time and time again, this will help everyone. Teams are helped because they can use their full MLE, or full cap space, to sign veterans, while also still signing second-round players. Veteran players don’t lose out on a chunk of money, because teams had to conserve that space to sign second-round players.
Unanswered questions: Is this one exception per team per season? Is this allowable for any second-round pick, without restrictions? Can you still use cap space or a different exception to give the player even more salary or a longer deal? Those will all get answered when we have the actual CBA.
10% Cap Smoothing
What Is It:
In order to avoid another cap spike like in 2016, when the cap went from $70 million to $94.1 million, the NBA will smooth those increases. This is likely to matter most in 2025, when the first season with the new media rights deals will begin.
This is a good thing. Now that the NBA and NBPA have a better working relationship, they can trust that no one will get cheated out of money. A cap spike ends up disproportionately impacting that one year’s free agent class. They benefit greatly, while following free agent classes are often less with less money, because everyone capped out the year prior.
Smoothing in this increase will allow for fewer massive contracts that immediately turn sour. And it will spread the wealth amongst several free agent classes.
Elimination of Designated Player Roster Restrictions
What Is It:
Under the current CBA, teams are limited in how many Designated Players they can have on their roster at a given time. Currently, teams are limited to two Designated Rookie Scale Extension players and two Designated Veteran Players. In addition, team could only have one Designated Player that they acquired via trade. These restrictions are being eliminated moving forward.
As with a lot of these changes, things are being set up to allow teams greater flexibility in retaining their own players. This change is another good one. Simply because you hit on three, or more, draft picks over a period of time, you shouldn’t be punished for wanting to re-sign all of them for the most you can. This removes that, while still putting in the “Super Tax” caveats that restrict team building, should your team get too expensive.
MLE and Room Exception to increase in size
What Is It:
The Non-Taxpayer MLE is expected to increase by 7.5%, while the Room Exception is expected to increase by 30%. It’s expected that these increases are on top of how much these exceptions will have increased in correlation with how much the cap increases.
This is another good change, as these exceptions will become even more valuable tools for those non-taxpaying teams. One unanswered question: Is this a one-time releveling, and then things will go back to the standard increase with as the cap increases? Or will this be phased in over a period of time?
Teams will be able to use signing exceptions as trade exceptions
What Is It:
In today’s world, a team can only use their MLE to sign a player to a contract. The only way to acquire a player via trade is to match salary in a deal, or to acquire them using a Traded Player Exception (TPE)
This is also a good change. It allows teams increased flexibility in how they can build their rosters. Anything that allows for more ways to build a roster is for the better.
Luxury Tax bands/brackets will increase and expand
What Is It:
Currently, the luxury tax bands run from $1 dollar over the tax to $5 million then to $10 million to $15 million and $20 million. Those bands were set at a time when the salary cap was roughly $58 million. The cap and tax lines have doubled, but the bands have remained the same.
Another good change. Adding $5 million to your team salary was essentially one signing. That was often true with $10 million. That could mean jumping one or two bands by adding just one player. The penalties for adding even that relatively small amount of salary were out of balance with the actual impact. This change was long overdue, as the bands were outdated and needed changing. As with a lot of other items, we don’t yet have the details to what the new bands will be, and how they will be phased in over a period of time.
This is also a nice balancer for those “Super Tax” teams. They’re already restricted as to how they can build their roster, hitting them with even more of a tax penalty feels overly punitive at this point.
Players who attend Draft Combine must undergo physicals that will be shared with teams
What Is It:
Currently, most top draft prospects attend the NBA Draft Combine. Very few of them work out at the combine, but are instead there to interview with teams. Some also will do physicals and medical reviews, but that’s something a player can opt out of, and many do. Now, players who attend the combine will be required to do a physical. Those results then will be shared with teams, based on that player’s draft projection.
This is good, but not good enough. Drafting a player in the NBA is a hope that you are entering into a relationship that will last for more than a decade. For many teams, a “bad” medical or no medical at all, will take that player off that team’s draft board. There’s simply too much risk involved. This is helping to change that
Why is this change not good enough? For one, whose projections are being used with which teams to share physical information with? Why not just share it with all teams? This is especially true considering teams can trade up.
Another concern is that this could simply cause players to skip the combine entirely. They can then control the draft process, at least as much as possible, by only meeting with, working out for and having a physical done by certain teams.
Restricted Free Agency changes
What Is It:
Qualifying offers will reportedly increase by 10%, while the time a team has to match an offer sheet will decrease from 48 hours to 24 hours.
This is another good set of changes. The 10% increase in qualifying offer amount could make that enticing enough that a player who doesn’t like his contract proposal from his incumbent team might opt for the one-year deal via the qualifying offer. This is opposed to simply sitting in restricted free agency, while money and jobs dry up around the league. It gives players another reasonable option to control their future contracts.
The decrease from 48 hours to 24 hours is just common sense. With today’s technology, teams can be notified of a signed offer sheet within moments of it being signed. And teams generally know if they are going to match or not, long before any offer sheet comes.
Non-max Rookie Scale Extensions allowed to have fifth season
What Is It:
Original Post: 4/1/23 @ 10:30am
The NBA and NBPA have reached an agreement on a new collective bargaining agreement. This agreement came after both sides agreed to push back their mutual opt-out deadline several times. In the end, in the early morning hours of April 1, the NBA will continue a long run of labor peace.
The agreement will carry through the next seven seasons, from 2023-24 through 2029-30. Once again, both sides hold mutual opt-outs after the sixth season of the agreement.
As it’s still early in the process, details on the new agreement are still being filtered out. Here’s what we know so far:
What it is:
Adam Silver’s long-wanted in-season tournament will be added, possibly as soon as next season. All NBA teams will take part in the tournament, with pool play and early-round games in the season’s opening months doubling as regular season games. The final four teams will meet at a neutral site to crown the champion.
The in-season tournament was coming, like it or not. Teams will initially prioritize it as much as they do any regular season game. Over time, it’s likely that winning the tournament will become a thing. If you put a trophy in front of competitive people, they want to win it.
Oh, and a $500,000 per player prize is pretty good too. No, the max players won’t really care all that much. But for the guys on a minimum deal, that’s a pretty nice bonus. That’ll make the stars want to win it, as much as claiming the trophy or the prize money for themselves.
Load Management Provisions
What it is:
In order for players to eligible for major postseason awards, such as MVP, Defensive Player of the Year and All-NBA, they will have to appear in at least 65 games. There are to-be-announced conditions where a player could miss more than 17 games and remain eligible for awards.
A 65-game threshold is roughly 79% of the schedule. That feels like a reasonable and, more importantly, attainable marker. With most teams now playing between 12 and 16 back-to-back games per season, this still allows for resting players on the nights they are most likely to miss anyway.
Does this solve everything? No. But given that players want the individual recognition of the awards (and for some, the financial benefits that come along with it!), and teams promote players for individual awards, this should get the main guys on the court at least a little more often.
A potential downside is that teams could start a player, and then simply sub that player out at the earliest opportunity. That makes a farce of the entire thing and it’s something the NBA will not want to see.
Standard Veteran Extension Increase
What is it:
The standard Veteran Extension salary increase will rise from 120% to 140%.
Let’s use Jaylen Brown as an example here, since he’s prominently in the news. Under the current CBA, Brown would be eligible for a 120% raise. That would make his total extension in the range of four years and $170.5 million.
With a 140% raise, Brown would go up to his maximum salary amount. That would cap him at about $192.2 million over that same four-year period. That’s a fairly impactful amount, even if Brown would probably prefer to see if he makes All-NBA this season or next season and qualifies for the Super Max, which could pay him in excess of $290 million over five years, or $224 million over the same four-year period.
So, for a currently near-max player like Brown, this at least gets him in the territory of what he could sign for in free agency. For a not near-max, breakout player like Domantas Sabonis or Kyle Kuzma, the increase probably still isn’t enough to get them to bite.
This feels like a good fix, but more for vets who are established as non-max players without a ton of contractual upside. They’ll probably get a little more money now.
For the true stars of the NBA, this didn’t go far enough. There’s no real reason to keep a team and player from extending for their max salary when they are eligible to do so. A better solution might have been to say you can offer the current 120% (or maybe even bumped that slightly) or you can offer the player the max. That still leaves agency for both the teams and players to make a real decision.
Second Luxury Tax Apron
What is it:
The new CBA will see the addition of a second luxury tax apron, set at $17.5 million above the luxury tax line. This new apron will make it so that the league’s most expensive teams will no longer have access to the Taxpayer Mid-Level Exception. That exception is currently available to any teams that are above the current tax apron (roughly $6 million above the tax line), unless they are hard capped.
This feels like a bit of a band-aid, but an impactful band-aid nonetheless. It’s not a true “upper spending limit”, which several teams and players were adamantly against. Most seasons, somewhere between four and six teams will be impacted. Since spending is generally not a worry for those teams, that means somewhere between four and six players will likely have to sign a minimum deal, as opposed to the Taxpayer MLE, that will be over $7 million next season.
Those very expensive teams will still be able to add salary via minimum deals and via trades. They’ll have to get a bit more creative in how they build their rosters. It will help keep them from outspending some opponents by hundreds of millions in total salary plus tax penalties.
But some players are going to lose out here. That doesn’t seem great. This is one we’ll have to measure for a few years to get a real understanding of how this impacted teams and players.
Third Two-Way Roster Spot
What is it:
This one is pretty simple, as there will be a third Two-Way spot added to rosters. Teams can currently sign two players to Two-Way deals for a length of up to two seasons.
The NBA wants the G League to be a viable minor league system. This increases that, while still giving players flexibility and not locking them into minor league contracts.
By tying up to three players to the NBA club, the Affiliate team is strengthened and that’s good for the overall health of the G League. It’s also a great development opportunity for players and teams. Several players have emerged from Two-Way contracts to become regular NBA rotation players. This includes Jose Alvarado, Alex Caruso, Lu Dort and Austin Reaves.
One downside to this is that it doesn’t appear NBA roster sizes are increasing in the offseason. Teams are allowed to bring up to 20 players to training camp. With 15 players on standard contracts and now up to three on Two-Way deals, that leaves openings for only two camp signings.
In addition, we’ve seen some teams choose to leave roster spots open more often, and for longer periods of time, because they can backfill with their Two-Way players. This could have the unintended (or perhaps intended?) consequence of some players missing out on standard contracts to fill out NBA benches.
No Change To “One-and-Done” Rules
What it is:
US-born players will still need to be a year removed from their high school graduation in order to be draft eligible. That means players will still need to attend college, or sign with a non-NBA professional team, before entering the NBA Draft.
Teams didn’t want to have to scout high school players again. That would have added a major increase to staffs and workload across the league. And it would have meant scouting many, many players who have no shot at the NBA.
Players didn’t really want the one-and-done rule changes, because for each extra player you let in the league, that’s one less spot for a veteran. The NBPA was adamant about protecting veteran players and their roster spots. Not allowing players to come in from high school helps to accomplish that.
For the players coming out of high school, the advent of NIL deals being available to them, allows them to begin earning money right away. This is in addition to professional opportunities with the G League Ignite, Overtime Elite and overseas, which have become paths to the NBA for several players in recent years.
What We Don’t Know Yet
There are a lot of items we don’t have details on yet. This includes:
- Cap smoothing: Will this happen or not? If not, we’ll see another major cap spike when the new media rights deals hit. That’s something both sides were initially eager to avoid.
- Luxury tax bands: The luxury tax bands, and the related penalties, only rise by $5 million per band now. Were those bands enlarged at all?
- Extend-and-trade rules: With the standard Veteran Extension rules being adjusted, were the very restrictive extend-and-trade rules changed at all?
- Trade requests/demands: Was anything done to prevent trade requests or demands? There was a lot of blustering about this being a problem, but was anything done to try to fix it?
- Changes to rosters: Are there more changes beyond the addition of the third Two-Way spot?
- Expansion details: Was anything changed as far as expansion goes? It seems like expansion is inevitable, perhaps in the life of this new CBA.
(This post will be updated as more details are known about the new CBA.)