NBA’s current thresholds:
- Salary cap: $109,140,000
- Luxury-tax line: $132,627,000
- Hard-cap line: $138,928,000
Projections for next season before the coronavirus pandemic hit the league:
- Salary cap: $115,000,000
- Luxury-tax line: $139,000,000
- Hard-cap line: $145,470,158
Now what? Revenue fell way below projections last season, and the league anticipates continued financial difficulties next season. Many expect the salary cap to remain roughly flat, though some fear it could decline $3 million-$12 million. (In most of these reports, it’s unclear whether people are talking about relative to the current $109.14 million or the $115 million projection.)
One thing that is unanimous is that teams are lobbying for the tax level to come in at $139M and apron at $145M.
— Bobby Marks (@BobbyMarks42) October 26, 2020
If the tax stays flat at $132.7M, FA and the trade market essentially will become frozen.
A flat tax would only benefit the teams with cap space.
The Hawks, Knicks, Pistons, and Hornets project to be the main cap-space teams this offseason. The Heat, Suns and Pelicans could also open significant cap space – depending where the cap lands.
The league and players’ union are negotiating that.
As far as the luxury tax and hard-cap line (sometimes called the apron)… I don’t understand how that’s unanimous. Obviously big-spending teams – like the Warriors and Lakers – would want lower luxury-tax bills and greater ability to use the larger mid-level exception (which hard-caps any team that uses it).
But there are plenty of teams that won’t spend anywhere near that amount. Some, as Marks mentions, will have so much cap space that it’ll be practically impossible to spend into the luxury tax within a single year. Others might choose to spend less amid the economic downturn caused by coronavirus. Those teams would want other teams to pay more luxury tax. The luxury tax gets distributed among teams.
So not only must owners and players reach a deal, the owners must agree amongst themselves how to operate next season.
