Even if the NBA’s salary cap doesn’t end up increasing at all for the 2020/21 season, teams are lobbying for a bump in the luxury tax line, according to ESPN’s Bobby Marks (Twitter link).
In 2019/20, the cap was set at approximately $109.1MM, with the luxury tax line at $132.6MM. Generally, the tax threshold is directly tied to where the cap lands, so if the ’20/21 cap remains at $109.1MM, the tax line would remain unchanged too. Teams that cross the tax line must pay a penalty for each extra dollar they spend.
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However, given the unusual financial circumstances dictated by the coronavirus pandemic, clubs are hoping the NBA will consider artificially setting next season’s tax level at around $139MM, with a $145MM tax apron, says Marks. Those are approximately the figures the NBA had projected before the pandemic, when the league was forecasting a $115MM cap for 2020/21.
It’s not hard to see why teams – or at least the teams without cap room – would be pushing for a higher tax line. The pandemic has already had a major financial impact on many clubs, and having to pay bigger tax bills than initially expected would only exacerbate those financial woes. Increasing the apron – which serves as a hard cap in certain situations – would also give teams more roster flexibility.
While it’s not clear how the NBPA feels about the issue, there’s incentive for them to favor artificial changes to the tax line as well. Increasing the tax level certainly doesn’t guarantee that teams will put those savings toward player salaries, but it would likely make at least some clubs more willing to be active in free agency and open to taking on money in trades, which would benefit players.
As cap expert Albert Nahmad points out (via Twitter), there are a number of other ways the NBA and NBPA could temporarily tweak the luxury tax rules for the 2020/21 season to lessen the risk of a widespread spending freeze. Besides artificially increasing the tax threshold, the two sides could explore reducing taxpayer penalties or waiving the more punitive repeater tax penalties altogether.