Hoops Rumors Glossary: Hard Cap

The NBA’s salary cap is a “soft” cap, which is why every single club’s team salary comfortably surpassed $109,141,000 at some point during the 2019/20 season. Once a team uses up all of its cap room, it can use a series of exceptions, including the mid-level, bi-annual, and various forms of Bird rights, to exceed the cap.

Since the NBA’s Collective Bargaining Agreement doesn’t feature a “hard” cap by default, teams can construct rosters that not only exceed the cap but also blow past the luxury tax line ($132,627,000 in ’19/20). While it would be nearly impossible in practical terms, there’s technically no rule restricting a club from having a team salary worth double or triple the salary cap.

However, there are certain scenarios in which a team can be hard-capped. Those scenarios are as follows:

  1. The team uses its bi-annual exception to sign a player.
  2. The team uses more than the taxpayer portion of the mid-level exception to sign a player (or multiple players).
    • Note: In 2019/20, the taxpayer MLE was worth $5,718,000, compared to $9,258,000 for the full non-taxpayer MLE.
  3. The team acquires a player via sign-and-trade.

A team making any of those three roster moves must ensure that its team salary is below the “tax apron” when it finalizes the transaction and stays below the apron for the rest of the league year. The tax apron was set $6MM above the luxury tax line in 2017/18 (the first year of the current Collective Bargaining Agreement) and creeps up a little higher each season as long as the cap keeps increasing.

For the 2019/20 league year, the tax apron – and the hard cap for certain clubs – was set at $138,928,000. Assuming the cap doesn’t change by much for the 2020/21, the apron figures to remain relatively unchanged for next season.

Last offseason, before the Warriors acquired D’Angelo Russell in a sign-and-trade deal, they had to dump Andre Iguodala‘s $17MM+ salary in a trade and waive Shaun Livingston‘s partially guaranteed contract to ensure their team salary was below the apron upon acquiring Russell.

Golden State then had to remain below the apron for the rest of the season, which was why the team spent much of the year carrying fewer than 15 players on standard contracts — even an extra minimum-salary player would’ve compromised the Warriors’ ability to stay below the hard cap. Golden State made some trades at the deadline that created some breathing room below the apron and allowed the club to fill its 15-man roster.

Many other teams technically faced hard caps during the 2020/21 season, but the Warriors were the team most affected by the restrictions imposed upon them. Most of the other teams with hard caps never got close to the $138,928,000 apron.

Once the 2020/21 league year officially gets underway, the Warriors will no longer be subject to the hard cap. And as long as they don’t use their bi-annual exception, acquire a player via sign-and-trade, or use more than the taxpayer portion of the mid-level, they won’t face a hard cap next season. So even though the Dubs already have a projected $142MM+ in guaranteed money on the books for ’20/21, they’ll still be able to make full use of their $17MM+ trade exception and $5.72MM taxpayer MLE if they so choose.

Finally, it’s worth noting that even though the Warriors will likely start the 2020/21 league year above the apron, that doesn’t mean they can’t become hard-capped at some point later in ’20/21. For example, if Golden State kicked off the offseason by trading Andrew Wiggins‘ $29.5MM contract without taking back any salary in return, then subsequently used its full, non-taxpayer mid-level exception, the team would once again be prohibited from surpassing the apron for the rest of the league year.

In other words, the hard cap applies from the moment a team completes one of the three transactions listed above, but isn’t applied retroactively.

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 and the Basketball Insiders salary pages were used in the creation of this post.

Photo courtesy of USA Today Sports Images.

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16 thoughts on “Hoops Rumors Glossary: Hard Cap

  1. Sillivan

    9 highest payroll teams are not allowed acquired Harrell via sign and trade if Harrell salary is $20M or over.
    1. Philadelphia 76ers
    2 Golden State Warriors
    3 Boston Celtics –
    4. Brooklyn Nets
    5 Houston Rockets
    6 Milwaukee Bucks
    7 Indiana Pacers
    8 Utah Jazz
    9 Orlando Magic

    • Sillivan

      Every team can acquire Harrell if they dump salary or let free agents walk for nothing.

  2. Sign all the Cubans

    Warriors have peaked and are on there way back down to being pretty-good-to-mediocre.

    I’m sure their fans will love getting the 6 seed each year for the next 4-5. Especially Strike Four.

    • Another GSW hater. Warriors are pretty much set with a 4 star team and gonna add another star in the #2 pick. They will be one of the top teams not mediocre. Reason their GM went after draft picks for the future. They come in handy when your team gets old. Teams like Houston and Lakers that traded away draft picks get old quickly.

      • El Don

        @arc89…. Oh boy don’t tell me you count Wigs as a star, hahaha… Oh boy how the mighty have fallen!!! From KD to Wiggs… Hahahaaaaa!!!

        • I'm a starboy not a Dr...

          Wiggins isn’t anywhere near KD but he’s better than Barnes was. Warriors only lack a two way big and a point guard off the bench.

    • I think they’ll be better than mediocre this coming season but time will tell. Mediocre means middle of the road so the six through 11 or 12 seeds? In each conference.

      So Houston OKC San Antonio New Orleans Portland? I think the Warriors will be a step above those so maybe the four or five seed? Fingers crossed they stay healthy. But I do think they’ll be better than mediocre. Next season you’ll have Lakers Clippers Denver then perhaps Utah and Portland? I think the Warriors will be right there with Utah and Portland, maybe Dallas, and above the next tier of teams I mentioned above.

      • Strike Four

        Warriors will -at minimum- make 5 finals in a row if neither of the splash bros miss significant time with injury, and even if they do miss time, just as long as they’re healthy for the playoffs, the Warriors will always, always be the smart money pick. They’ve been there before, they need to prove themselves to clowns like those in these threads. They will. Be afraid, be very afraid…

        • wagner13

          I’m willing to bet my life savings the Warriors will not even win three in a row, even if Klay/Curry stay healthy. Probability alone suggests another team will emerge and steal the wind beneath Golden State’s wings. The Lakers and Nuggets are going nowhere and it’s not as though the Warriors are the all-dominant force you proclaim them to be

      • I am not sold on Utah or Portland they both have holes to fill. Clippers need a big bounce back after looking so 1 dimensional. Lakers will be losing a few off the bench so they are weaker. Somebody needs to pull off a great trade or get the next super star draft pick.

    • Strike Four

      Wow, a personal callout. You’re admitting I’m already living rent free in your head. Wow, you’re a smart one aren’t ya!

  3. KnickerbockerAl

    Warriors are going to brand new stadium. They will have a contending team. They have more than a few options. They will be fine. They are going to load up for next 4 yrs. The draft will tell a lot. Do they trade for vet help. Or do they go for all star. They have TE (17.5 mill). They have ME ( 6.5 mill) to sign FA. They have plenty of picks to trade. Plus have Wiggins to trade. Plus they will have one or two vets take minimum. To ring chase a few yrs. Warriors will be back to contending next yr. I’m not even a Warriors fan.

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