NBA To Phase In Second Tax Apron

The second tax apron that’s included in the NBA’s new Collective Bargaining Agreement will be phased in over two seasons, sources tell John Hollinger of The Athletic.

The new financial provision is designed to discourage excessive spending by the league’s wealthiest franchises. It is set at $17.5MM above the luxury tax threshold and places severe restrictions on teams that go above that figure.

Penalties for exceeding the second apron include the loss of the mid-level exception, a ban on including cash as part of trades and the inability to accept more salary in a trade than the team sends out. A team in the second apron will also be unable to aggregate salary in trades and cannot trade its first-round pick seven years in the future (ie. its 2030 pick in 2023/24) or sign players on the buyout market.

Also, if a team exceeds the second apron and remains there in two of the four subsequent years, its frozen draft pick (the one that was initially seven years out) will get moved to the end of the first round, regardless of the team’s record in that season.

Hollinger points out that the Clippers and Warriors face the most immediate concerns about the second apron. Both teams are currently about $40MM above the luxury tax line and are locked into payrolls at the same level for next season. Hollinger notes that the only way for either team to substantially reduce its payroll over the next few years is to downgrade its roster.

He adds that the Bucks, Celtics, Mavericks, Lakers and Suns are also more than $17.5MM above the tax line this season, but they have easier paths to avoiding the second apron in the future.

There’s more on the new CBA:

  • Teams that exceed the first apron by going $7MM above the tax will see their taxpayer MLE reduced to $5MM with a two-year maximum for signings, Hollinger adds. Like teams above the second apron, they will also be unable to take back more salary than they send out in any deal and will be prohibited from signing most players who get bought out.
  • Any team that’s below the league’s salary floor on the first day of the 2024/25 season will not receive a tax distribution for that year, Bobby Marks points out in an ESPN writers’ discussion of the CBA provisions. That’s likely to encourage low-spending teams to add an additional free agent or two to make sure their payroll qualifies. Marks notes that the union also benefits from the addition of 30 more jobs with each team adding a third two-way slot, as well as growth in the non-taxpayer and room mid-level exceptions.
  • The number of players that teams can have under contract during the offseason and training camp will increase from 20 to 21, tweets Blake Murphy of
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