Hoops Rumors Originals

Hoops Rumors Originals: 3/22/20 – 3/28/20

Every week, the Hoops Rumors writing team publishes original content to complement our news feed. Listed below are our original segments and features from the past seven days:

  • Luke Adams supplied a helpful list of the NBA draft’s early entrants.
  • For our Hoops Rumors Glossary entries this week, Adams defined Bird Rights and Early Bird Rights.
  • In our Community Shootaround conversations this week, we asked:
    • Who was the most improved player this season? (link)
    • Who was the best defensive player this year? (link)
    • Who deserved to make your hypothetical Rookie Of The Year ballot? (link)
    • Which players would qualify for your hypothetical MVP ballot? (link)

Community Shootaround: Most Improved Player

Over the course of this week, we’ve discussed a handful of awards for the 2019/20 NBA season, exploring what your ballots might look like if the regular season ends up being over. After tackling MVP, Rookie of the Year, and Defensive Player of the Year, we’re moving on today to Most Improved Player.

As Dan Devine of The Ringer notes, there was no shortage this season of candidates for the MIP award. Thunder guard Shai Gilgeous-Alexander, Hornets guard Devonte’ Graham, and Heat sharpshooter Duncan Robinson were among the many second-year players who made substantial improvements in year two.

For those who prefer to shy away from second-year players – who are, after all, expected to improve – Pistons big man Christian Wood could be a strong candidate. So could Celtics wing Jaylen Brown or Magic point guard Markelle Fultz, former top picks who had breakout seasons in 2019/20 — both earned honorable mentions from Zach Harper of The Athletic.

Many of the names that ultimately landed on Devine’s and Harper’s hypothetical ballots overlap. Heat big man Bam Adebayo, who was Devine’s runner-up, was Harper’s top choice. Celtics forward Jayson Tatum and Pelicans forward Brandon Ingram rounded out Harper’s top three, and also tied for third place on Devine’s list.

Devine’s choice for the award was a second-year player: Mavericks star Luka Doncic, who evolved from the league’s top rookie into a legit MVP candidate.

Mark Murphy of The Boston Herald, meanwhile, picked Tatum as this year’s Most Improved Player and gave honorable mention to Kings sharpshooter Buddy Hield and Pacers big man Domantas Sabonis. I’m not sure I’m on board with the Hield pick – many of his numbers were better a year ago and he was removed from Sacramento’s starting lineup in January – but Sabonis is a strong candidate after emerging as one of the top centers in the conference.

The names provided by Devine, Harper, and Murphy don’t form an exhaustive list of candidates — you could identify at least one player who made major strides on just about every NBA team. Hawks star Trae Young, Wizards marksman Davis Bertans, Grizzlies forward Dillon Brooks, and Raptors point guard Fred VanVleet are among the others I’d look at if I were considering my own ballot.

But we want to know what you think. If you were putting together a three-man ballot for Most Improved Player in 2019/20, who would be on it?

Head to the comment section below to weigh in with your thoughts!

Hoops Rumors Glossary: Early Bird Rights

Bird rights offer teams the chance to sign their own free agents without regard to the salary cap, but they don’t apply to every player. Other salary cap exceptions are available for teams to keep players who don’t qualify for Bird rights. One such exception is the Early Bird, which applies to players formally known as Early Qualifying Veteran Free Agents.

While the Bird exception is for players who have spent three seasons with one club without changing teams as a free agent, Early Bird rights are earned after just two such seasons. Virtually all of the same rules that apply to Bird rights apply to Early Bird rights, with the requirements condensed to two years rather than three. Players still see their Bird clocks restart by changing teams via free agency, being claimed in an expansion draft, or having their rights renounced.

As is the case with Bird rights, a player’s clock stops when he’s released by a team and clears waivers, but it would pick up where it left off if he re-signs with that same team down the road without joining another club in the interim. For instance, if DeMarcus Cousins – released by the Lakers last month before the end of his one-year contract – were to sign a new one-year deal with L.A. during the 2020 offseason, the team would have his Early Bird rights in the 2021 offseason.

The crucial difference between Bird rights and Early Bird rights involves the limitations on contract offers. Bird players can receive maximum-salary deals for up to five years, while the most a team can offer an Early Bird free agent without using cap space is 175% of his previous salary (up to the max) or 105% of the league-average salary in the previous season, whichever is greater. These offers are also capped at four years rather than five, and the new contracts must run for at least two years (with no second-year options).

Christian Wood (Pistons), De’Anthony Melton (Grizzlies), Nerlens Noel (Thunder), and Brad Wanamaker (Celtics) are among the free agents who will have Early Bird rights at the end of the 2019/20 season.

In some instances, teams can benefit from having Early Bird rights instead of full Bird rights if they’re trying to preserve cap space. The cap hold for an Early Bird player is 130% of his previous salary, significantly less than most Bird players, whose cap holds range from 150-300% of their previous salaries.

That could help a team like the Pistons, who project to have cap space in the 2020 offseason. The cap hold for Wood, who is earning a minimum salary this season, will be worth the ’20/21 minimum, but the big man will be in line for a much more lucrative salary than that. If the Pistons reach an agreement to re-sign Wood near the start of free agency, they could wait to make it official, keeping his cap hold on the books until they use the rest of their cap room, maximizing that space. Then they could go over the cap to finalize Wood’s deal using the Early Bird exception.

Meanwhile, some players with limited NBA experience are subject to a special wrinkle involving Early Bird rights, called the Gilbert Arenas Provision, which applies to players who have only been in the league for one or two years. We cover the Gilbert Arenas Provision in a separate glossary entry, so you can read up on the details there. It would apply this offseason to a player like Melton.

Finally, one more distinction between Bird rights and Early Bird rights applies to waivers. Players who are claimed off waivers retain their Early Bird rights, just as they would if they were traded. Those who had Bird rights instead see those reduced to Early Bird rights if they’re claimed off waivers. This rule stems from a 2012 settlement between the league and the union in which J.J. Hickson was given a special exception and retained his full Bird rights for the summer of 2012 even though he had been claimed off waivers that March.

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 salary information from Basketball Insiders was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.

Community Shootaround: Defensive Player Of The Year

After exploring hypothetical ballots for 2019/20’s Most Valuable Player and Rookie of the Year earlier this week, we’re moving on today to a third award, Defensive Player of the Year.

Unlike the MVP or Rookie of the Year races, where one or two obvious frontrunners have emerged over the course of the season, the Defensive Player of the Year race is a little more wide open. There are certainly basic and advanced defensive statistics we can use to assess a player’s impact on that end of the court, but the eye test plays a significant role in evaluating a player’s defensive ability, so the award is more subjective.

One player most analysts agree deserves to be in consideration for this year’s Defensive Player of the Year award? Lakers big man Anthony Davis. Although teammate LeBron James looks like the stronger MVP candidate, Davis has often been the club’s last line of defense, protecting the rim and helping turn L.A. into one of the NBA’s stingiest teams — the Lakers rank third in defensive rating.

Mark Murphy of The Boston Herald and Zach Harper of The Athletic both had Davis atop their hypothetical Defensive Player of the Year ballots, while Dan Devine of The Ringer placed him second.

Devine’s top choice is Bucks star Giannis Antetokounmpo, whose elite defense is a major factor in his case for a second consecutive MVP award. Devine argues that Milwaukee’s top-ranked defense is as good as it is because Antetokonmpo can “essentially erase half the floor,” roaming around the court like an NFL free safety. Among high-volume defenders, Giannis ranked first in opponents’ field goal percentage, at 36.1%. He was on Harper’s and Murphy’s ballots as well.

Ben Simmons (Sixers), Bam Adebayo (Heat), Marcus Smart (Celtics), Brook Lopez (Bucks), and P.J. Tucker (Rockets) were among the other players to earn Defensive Player of the Year consideration from at least one of Devine, Murphy, and Harper. Interestingly, none of their three ballots included reigning DPOY Rudy Gobert, though Harper did give the Jazz center an honorable mention.

What do you think? Would you pick Davis, Antetokounmpo, or someone else as this year’s Defensive Player of the Year, assuming the season is over or close to it? What would your top three look like if you were submitting an official ballot?

Head to the comment section below to share your thoughts!

Community Shootaround: Rookie Of The Year Ballot

Earlier this week, we asked you for your hypothetical 2019/20 NBA ballot, based on the possibility that the regular season is essentially over. Today, we’re shifting our focus to another one of the NBA’s major end-of-season awards: Rookie of the Year.

Entering the season, No. 1 pick Zion Williamson was viewed as the overwhelming favorite for the Rookie of the Year award. However, health issues delayed Williamson’s NBA regular-season debut until January 22, and the Pelicans forward ultimately only appeared in 19 games.

Williamson was as good as advertised in those games, averaging 23.6 PPG, 6.8 RPG, and 2.2 APG on 58.9% shooting in just under 30 MPG. However, it’s tough to put the former Duke star atop any Rookie of the Year ballot, considering he didn’t even reach the 20-game threshold. Joel Embiid, who appeared in 31 games in 2016/17, didn’t earn ROY honors either, and he wasn’t up against a competitor like Ja Morant, who looks like the overwhelming favorite to take home the award in 2020.

Morant, the No. 2 overall pick in last year’s draft, filled up the box score by recording 17.6 PPG, 6.9 APG, and 3.5 RPG on .491/.367/.770 shooting in 30.0 minutes per contest. He put up those numbers while starting 59 games for the Grizzlies and leading the overachieving squad to a No. 8 seed in the Western Conference.

Zach Harper of The Athletic writes that “it feels impossible” to give this year’s Rookie of the Year award to anyone besides Morant, while Dan Devine of The Ringer refers to the former Murray State standout as “the no-doubt-about-it pick” for the trophy. ESPN’s analysts agreed — all 70 straw poll respondents placed Morant atop their ballots.

Although Morant seems like a lock for the actual award, it’s still worth exploring how you’d fill out the rest of your three-man ballot.

Despite his small sample, Williamson earned 51 second-place votes from ESPN’s panel, and placed second on Harper’s list too. However, Devine left Zion off his ballot entirely, opting for Grizzlies forward Brandon Clarke and Raptors guard Terence Davis instead, pointing to a series of impressive advanced stats to make his case for the two less heralded rookies.

Heat guard Kendrick Nunn deserves consideration as well — he placed third on ESPN’s list and on Harper’s ballot. Warriors big man Eric Paschall and Knicks forward RJ Barrett earned honorable mentions from Harper and at least one second-place vote apiece from ESPN’s voters. Bulls guard Coby White, Hornets forward PJ Washington, Wizards forward Rui Hachimura, and Heat sharpshooter Tyler Herro were among the players receiving third-place votes from ESPN’s panel.

What do you think? Can you make a case for anyone besides Morant as this season’s Rookie of the Year? Were Williamson’s 19 games enough to earn him a spot on your ballot? Who would your top three picks be for the 2020 Rookie of the Year award?

Head to the comment section below to share your thoughts!

Community Shootaround: Hypothetical MVP Ballot

Before the 2019/20 NBA season was postponed, LeBron James seemed to be building some momentum in an MVP race that Giannis Antetokounmpo had dominated for much of the year.

James had just led the Lakers to signature wins over the Bucks and Clippers, the two top threats to the Lakers’ title hopes. At the same time, a knee injury sustained in that Bucks/Lakers showdown had sidelined Antetokounmpo for the two games leading up to the stoppage.

With the NBA now in an indefinite hiatus, the MVP race has been put on hold. In fact, it’s possible it might be over altogether. While team owners and players alike want to resume the season, it’s not clear if or when that will happen. And if it does resume, the rest of regular season figures to be significantly reduced or perhaps even excised entirely in order to quickly advance to the playoffs.

With that in mind, we want to get your hypothetical MVP ballot for the 2019/20 NBA season. Do you have Giannis or LeBron in the top spot? How would you fill out the rest of your top five?

Dan Devine of The Ringer tried his hand at putting together a ballot, picking Antetokounmpo as his MVP, followed by James, Rockets star James Harden, LeBron’s teammate Anthony Davis, and reigning Finals MVP Kawhi Leonard. Mark Murphy of The Boston Herald had the same top three (Giannis, LeBron, and Harden) on his unofficial MVP ballot, as did ESPN’s panel of voters.

ESPN’s straw poll respondents had Leonard and Davis in their top six as well, but were more bullish than Devine on Mavericks star Luka Doncic, who finished fourth. Thunder guard Chris Paul, Nuggets center Nikola Jokic, Raptors forward Pascal Siakam, and Trail Blazers guard Damian Lillard rounded out ESPN’s top 10, with Jayson Tatum (Celtics) and Bradley Beal (Wizards) each receiving a lone down-ballot vote as well.

What do you think? How would you fill out your five-man MVP ballot based on what we’ve seen so far?

Head to the comment section below to share your list and your reasoning!

Hoops Rumors Glossary: Bird Rights

The Bird exception, named after Larry Bird, is a rule included in the NBA’s Collective Bargaining Agreement that allows teams to go over the salary cap to re-sign their own players. A player who qualifies for the Bird exception, formally referred to as a Qualifying Veteran Free Agent, is said to have “Bird rights.”

The most basic way for a player to earn Bird rights is to play for the same team for at least three seasons, either on a multiyear deal or separate one-year contracts. Still, there are other criteria. A player retains his Bird rights in the following scenarios:

  1. He changes teams via trade. For instance, the Cavaliers would hold Andre Drummond‘s Bird rights if he opts for free agency this offseason, despite just acquiring him in February. His Bird clock didn’t reset when he was traded from the Pistons to Cleveland.
  2. He finishes a third season with a team after having only signed for a partial season with the club in the first year. Patrick McCaw finished the 2018/19 season on a contract with the Raptors, then re-signed with Toronto on a two-year deal in the summer of 2019. When that contract expires, McCaw will have full Bird rights because of the partial season he spent with the Raptors last year, which started his Bird clock.
  3. He signed for a full season in year one or two but the team waived him, he cleared waivers, and didn’t sign with another team before re-signing with the club and remaining under contract through a third season. This one’s a little confusing, but let’s use DeMarcus Cousins as an example. Partway through his one-year contract with the Lakers, Cousins was waived last month and has yet to join a new team. If the Lakers were to re-sign Cousins to a two-year contract in the offseason, without him joining a new team in the interim, they’d have his full Bird rights at the end of that deal.

A player sees the clock on his Bird rights reset to zero in the following scenarios:

  1. He changes teams via free agency.
  2. He is waived and is not claimed on waivers (except as in scenario No. 3 above).
  3. His rights are renounced by his team. However, his Bird clock resumes where it left off if he re-signs with that team without having signed with another NBA team. For example, Mike Scott had his rights renounced by the Sixers last July, as Philadelphia attempted to gain cap flexibility. Scott eventually signed a new two-year deal with the 76ers and will have full Bird rights at the end of it.
  4. He is selected in an expansion draft.

If a player who would have been in line for Bird rights at the end of the season is waived and claimed off waivers, he would retain only Early Bird rights. Meanwhile, a player with Bird rights who re-signs with his previous team on a one-year contract (or a one-year deal with a second-year option) would lose his Bird rights if he’s traded. As such, he receives the ability to veto trades so he can avoid that scenario.

[RELATED: Players with the ability to veto trades in 2019/20]

When a player earns Bird rights, he’s eligible to re-sign with his team on a maximum-salary contract for up to five years with 8% annual raises when he becomes a free agent, regardless of how much cap room the team has. The maximum salary will vary for each player depending on how long he has been in the league, but regardless of the amount, a team can exceed the salary cap to complete the deal.

A team with a Bird free agent is assigned a “free agent amount” or cap hold worth either 190% of his previous salary (for a player with a below-average salary) or 150% of his previous salary (for an above-average salary), up to the maximum salary amount. For players coming off rookie scale contracts, the amounts of those cap holds are 300% and 250%, respectively.

The Pelicans, for instance, will have a cap hold worth $21,796,456 for Brandon Ingram on their 2020/21 books — 300% of his $7,265,485 salary for 2019/20. New Orleans could renounce Ingram and clear an extra $21MM+ in cap space, but the Pelicans would lose the ability to re-sign him using Bird rights in that scenario, which would force them to use either cap room or a different cap exception to re-sign him. As such, the club figures to keep that cap hold on its books until Ingram is officially re-signed.

Ultimately, the Bird exception was designed to allow teams to keep their best players. The CBA ensures that teams are always able to re-sign them to contracts up to the maximum salary, assuming the player is interested in returning and his team is willing to go over the cap.

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 salary information from Basketball Insiders was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.

2020 NBA Draft Early Entrants List

With the sports world on pause as a result of the COVID-19 pandemic, it’s somewhat reassuring to see reports of early entrants declaring for the 2020 NBA draft as they would in any other year. Still, the coronavirus crisis figures to seriously complicate the decision-making process for many of the prospects who aren’t automatically draft-eligible.

A number of pre-draft scouting events have already been nixed or are in danger of being canceled, and there are serious doubts about whether NBA teams will have the ability to work out prospects leading up to this year’s draft. Many early entrants declare for the draft based on the belief that they’ll be able to improve their stock in those events and workouts, and may be less inclined to leave college if those opportunities aren’t available.

Additionally, with the NBA still hoping to resume its 2019/20 season, it remains to be seen when the 2020 draft – currently scheduled for June 25 – will actually take place.

For now, NCAA early entrants have until the end of the day on April 26 to declare for the draft, and can withdraw at any time up until June 3 while maintaining their college eligibility. The NBA’s withdrawal deadline is on June 15 at 4:00pm CT, so international early entrants would have until then to decide whether or not to remain in the draft. But some or all of those dates could be subject to change if the draft gets pushed back.

The NCAA has relaxed its rules in recent years for prospects who want to “test the waters” before officially committing to the draft, even allowing those players to hire agents without losing their college eligibility. Those changes have contributed to record-setting numbers of early entrants declaring for the draft. It will be fascinating to see how long this year’s list of early entrants will be, given the unprecedented circumstances.

As we navigate uncharted draft waters, we’ll be using the space below to keep track of 2020’s early entrant prospects. Our running list will include not only players who have officially declared their intent to enter the draft, but also those prospects who are expected to declare, based on reliable reports — be sure to click on the links next to each player for more details. If any players listed here ultimately decide not to enter the draft after all, they’ll be removed.

Since players can now hire agents while retaining their college eligibility, we won’t be dividing our initial list into players who are testing the waters and those who are definitely going pro, since that distinction is often unclear.

This post, which will be updated daily, will be accessible anytime under “Hoops Rumors Features” on the right sidebar of our desktop site, or in the “Features” page found in our mobile menu. The players below are listed in alphabetical order. If you have any corrections or omissions, please contact us.

Last updated 3-28-20 (5:52pm CT)

College Players:

  1. Tyler Bey, F, Colorado (junior) (link)
  2. Jordan Bruner, F, Yale (junior) (link)
  3. Jalen Crutcher, G, Dayton (junior) (link)
  4. Ryan Daly, G, Saint Joseph’s (junior) (link)
  5. Devon Daniels, G, North Carolina State (junior) (link)
  6. Kendric Davis, G, SMU (sophomore) (link)
  7. Anthony Edwards, G, Georgia (freshman) (link)
  8. Malik Fitts, F, Saint Mary’s (junior) (link)
  9. D.J. Funderburk, F, North Carolina State (link)
  10. Alonzo Gaffney, F, Ohio State (freshman) (link)
  11. Jayvon Graves, G, Buffalo (junior) (link)
  12. Tyrese Haliburton, G, Iowa State (sophomore) (link)
  13. Rayshaun Hammonds, F, Georgia (junior) (link)
  14. Elijah Hughes, G/F, Syracuse (junior) (link)
  15. Feron Hunt, F, SMU (sophomore) (link)
  16. Marreon Jackson, G, Toledo (junior) (link)
  17. Mason Jones, G, Arkansas (junior) (link)
  18. Tre Jones, G, Duke (sophomore) (link)
  19. Saben Lee, G, Vanderbilt (junior) (link)
  20. Kira Lewis, G, Alabama (sophomore) (link)
  21. Cam Mack, G, Nebraska (sophomore) (link)
  22. Sandro Mamukelashvili, F, Seton Hall (junior) (link)
  23. Kenyon Martin Jr., F, IMG Academy (N/A) (link)
  24. Naji Marshall, F, Xavier (junior) (link)
  25. Aaron Nesmith, G, Vanderbilt (sophomore) (link)
  26. Zeke Nnaji, F, Arizona (freshman) (link)
  27. Onyeka Okongwu, F/C, USC (freshman) (link)
  28. Isaac Okoro, F, Auburn (freshman) (link)
  29. Daniel Oturu, C, Minnesota (sophomore) (link)
  30. John Petty, G, Alabama (junior) (link)
  31. Fatts Russell, G, Rhode Island (junior) (link)
  32. Jay Scrubb, G, John A. Logan College (sophomore) (link)
  33. Parker Stewart, G, UT Martin (sophomore) (link)
  34. Xavier Tillman, F/C, Michigan State (junior) (link)
  35. Obi Toppin, F, Dayton (sophomore) (link)
  36. Jordan Tucker, F, Butler (sophomore) (link)
  37. Devin Vassell, G, Florida State (sophomore) (link)
  38. Keith Williams, G, Cincinnati (junior) (link)
  39. Patrick Williams, F, Florida State (freshman) (link)
  40. James Wiseman, C, Memphis (freshman) (link)
  41. McKinley Wright, G, Colorado (junior) (link)
  42. Zeke Nnaji, PF, Arizona (freshman) (link)

International Players:

  1. LaMelo Ball, G, Australia (born 2001) (link)
  2. RJ Hampton, G, Australia (born 2001) (link)
  3. Killian Hayes, G, Germany (born 2001) (link)

Hoops Rumors Originals: 3/15/20 – 3/21/20

Every week, the Hoops Rumors writing team publishes original content to complement our news feed. Listed below are our original segments and features from the past seven days:

  • We explored what the lottery odds for the 2020 NBA draft look like if the season doesn’t resume.
  • We also explored which traded 2020 picks would and wouldn’t change hands based on the current league-wide standings.
  • Luke Adams explained everything you need to know about luxury tax penalties in the latest Hoops Rumors Glossary post.
  • He also examined the minimum salary exception, one of the NBA’s most commonly used cap exceptions.
  • Our Community Shootaround this week focused on the best NBA games to re-watch during the league’s hiatus.
  • Our poll question relates to whether the NBA should change its calendar in response to the coronavirus pandemic. Would you be in favor of shifting the entire NBA calendar back by roughly six-to-eight weeks on a permanent basis?
  • NFL free agency is continuing to push forward in the midst of this hiatus. Be sure to check out Pro Football Rumors to stay in the loop on all NFL-related updates.

Hoops Rumors Glossary: Luxury Tax Penalties

Although some NBA teams can become hard-capped during a given league year if they use specific exceptions or make certain transactions, the NBA doesn’t have a set hard cap for all teams. In addition to its soft cap though, the league does have a luxury tax threshold, which serves to discourage excessive spending. When a team’s total salary ends up over that line at season’s end, the NBA charges a tax for every extra dollar the club spends.

[RELATED: Recent History of NBA Taxpaying Teams]

The formula to determine the luxury tax line is a complicated one, related to the NBA’s projected basketball related income (BRI) and projected benefits. Generally though, it comes in around 20-22% above the salary cap line. For instance, in 2019/20, the league’s salary cap is set at $109,140,000, while the luxury tax threshold is at $132,627,000. So any team whose total ’19/20 salary exceeds $132,627,000 on the last day of the regular season is subject to a tax bill.

The NBA’s luxury tax system is set up so that the penalties become more punitive if teams go further beyond the tax line. Here’s what those penalties look like:

  • $0-5MM above tax line: $1.50 per dollar (up to $7.5MM).
  • $5-10MM above tax line: $1.75 per dollar (up to $8.75MM).
  • $10-15MM above tax line: $2.50 per dollar (up to $12.5MM).
  • $15-20MM above tax line: $3.25 per dollar (up to $16.25MM).
  • For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar.
    • Note: This would mean $3.75 for $20-25MM, $4.25 for $25-30MM, etc.

For instance, if a team is over the tax by $12MM, its tax bill would be $21.25MM: $7.5MM for the first $5MM over the tax, $8.75MM for the $5-10MM bracket, then $5MM for the final increment in the $10-15MM bracket.

While those are the rates that apply to most taxpayers, including the Trail Blazers, Heat, and Timberwolves this season, a team can become subject to a “repeater” penalty if it paid the tax in three of the previous four seasons. This scenario currently applies to Oklahoma City — the Thunder were a taxpaying club in 2016, 2018, and 2019, which means they’ll be a repeat offender this season. Here are the penalties that apply to repeat taxpayers:

  • $0-5MM above tax line: $2.50 per dollar (up to $12.5MM).
  • $5-10MM above tax line: $2.75 per dollar (up to $13.75MM).
  • $10-15MM above tax line: $3.50 per dollar (up to $17.5MM).
  • $15-20MM above tax line: $4.25 per dollar (up to $21.25MM).
  • For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar
    • Note: This would mean $4.75 for $20-25MM, $5.25 for $25-30MM, etc.

If the hypothetical team we described in our first example, over the tax by $12MM, was a repeat taxpayer, its bill would increase to $33.25MM.

Generally speaking, luxury tax penalties are calculated by determining a team’s total cap hits at the end of the regular season. So a team that starts the year above the tax line could get under it before the end of the season by completing trades or buyouts. The Warriors did just that in February, slipping below the luxury tax threshold by completing a series of trades that reduced their overall team salary.

[RELATED: Projected Taxpaying Teams For 2019/20]

However, team salary for tax purposes is calculated slightly differently than it is for cap purposes. Here are a few of the adjustments made at season’s end before a team’s tax bill is calculated:

  • Cap holds and exceptions are ignored.
  • “Likely” bonuses that weren’t earned are removed from team salary; “unlikely” bonuses that were earned are added to team salary.
  • If a player with a trade bonus is acquired after the final regular season game, that trade bonus is added to team salary.
  • If a player with 0-1 years of NBA experience signed a minimum-salary free agent contract, the minimum-salary cap charge for a two-year veteran is used in place of that player’s cap charge.
    • Note: This only applies to free agents, not drafted players. For example, Raptors rookies Dewan Hernandez (second-round pick) and Terence Davis (UDFA) are each earning $898,310 in 2019/20. Hernandez would count for $898,310 for tax purposes, while Davis would count for $1,620,564.

So let’s say that five teams finish the season owing a total of $50MM in taxes. Where does that money go? Currently, the NBA splits it 50/50 — half of it is used for “league purposes,” while the other half is distributed to non-taxpaying teams in equal shares. In that scenario, the 25 non-taxpaying teams would receive $1MM apiece.

As cap expert Larry Coon explains in his CBA FAQ, “league purposes” essentially covers any purpose the NBA deems appropriate, including giving the money back to teams. In recent years, the NBA has used that money as a funding source for its revenue sharing program. Coon also notes that the CBA technically allows up to 50% of tax money to be distributed to non-taxpaying teams, but there’s no obligation for that to happen — in other words, the NBA could decide to use 100% of the tax money for “league purposes.”

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.

Earlier versions of this post was published in 2012 and 2018.