The NBA’s salary cap primarily serves as a way to restrict the amount a team can invest in player salaries in a given year. However, because the league has a soft cap rather than a hard cap, there’s technically no specific figure that clubs are prohibited from exceeding once they go over the cap to re-sign players.
There is, however, a specific threshold on the lower end that teams must meet in each NBA season. The league’s minimum salary floor requires a club to spend at least 90% of the salary cap on player salaries. For instance, with the 2018/19 cap set at $101,869,000, the salary floor for this season is $91,682,100.
If a team finishes the regular season below the NBA’s salary floor for that league year, the penalties levied against that team aren’t exactly harsh — the franchise is simply required to make up the shortfall by paying the difference to its players. For example, if a team finished this season with a team salary of $88,682,100, that team would be required to distribute that $3MM shortfall among its players.
The players’ union determines how exactly the money is divvied up — most recently, players who spent at least 41 games on a team’s roster have received a full share, while players with between 20-40 games on the roster receive a half share. A player can’t exceed his maximum salary as a result of a shortfall payment.
For the purposes of calculating whether a team has reached the minimum salary threshold, cap holds and international buyouts aren’t considered, but players who suffered career-ending injuries or illnesses are included in the count, even if they’ve since been removed from the club’s cap.
Additionally, the NBA made a change in its most recent Collective Bargaining Agreement to prevent teams from circumventing certain rules to reach the salary floor. Under the old CBA, a team that was $8MM below the salary floor could trade a player earning $4MM for a player earning $12MM halfway through the season and be in accordance with minimum team salary rules.
Under the current CBA, only the salary the team actually pays the player counts for minimum team salary purposes. For instance, in the example above, the team would be credited with having paid its original player $2MM for the first half of the season and its new player $6MM for the second half. In that scenario, the club would still be $4MM shy of the salary floor.
For the 2018/19 season, only one team is currently below the salary floor, as the Kings have a team salary of $90,844,422, per Basketball Insiders. If Sacramento’s team salary remains unchanged until the end of the season, the result would be a very modest shortfall of $837,678. That’s an unlikely outcome though — the club is a good bet to reach the floor at some point later in the season via free agent signings and/or trades.
Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.