The New NBA Collective Bargaining Agreement: Key Rules and Impact on Team-Building
This week is the start of the 2024-2025 NBA Regular Season. Every day this week, I will bring you an article to catch you up on what's been happening while you've been away from the NBA and what things you need to focus on to get the most out of this year. Today, we will focus on the Collective Bargaining Agreement and why it matters in today's NBA.
During last year's offseason, the NBA and the National Basketball Players Association (NBPA) reached a new Collective Bargaining Agreement (CBA) that took effect in July 2023. This agreement introduces several new rules that aim to address various issues within the league, including competitive balance, player movement, salary cap restrictions, and the creation of "super teams." Here is a comprehensive breakdown highlighting the most significant changes in the CBA and their potential impact on team-building for the future.
Do you wonder why the LA Clippers didn't offer Paul George a maximum contract when other teams would've happily given him one? Why did Golden State let Klay Thompson walk in free agency? Why was Minnesota willing to part from Karl-Anthony Towns for two lesser players while they still hope to compete for a title in the brutal Western Conference? Or why do the New Orleans Pelicans refuse to re-sign Brandon Ingram to a new max contract and aren't able to trade him elsewhere? The new CBA is full of penalties and disadvantages to teams that are repeatedly over the salary cap.
These rules affect how multiple teams acquire new talent or keep young stars today. Many teams are already limited in how they can sign new players or make trades to get better; all of this is due to the new rules from the CBA. Look at the Phoenix Suns, LA Clippers, LA Lakers, Golden State Warriors, and Boston Celtics. Strategy is imperative while maneuvering around the rules for luxury tax teams, so each move must be carefully planned, or the repercussions could affect that team for multiple years.
1. Harder Cap on the Highest-Spending Teams
Rule: Second Apron Introduced
A key provision in the new CBA introduces a "second apron" for teams that significantly exceed the salary cap. Teams above this threshold—set $17.5 million above the luxury tax line—face severe restrictions that limit their ability to improve their rosters.
Impact on Team-Building:
This second apron serves as a de facto hard cap for the highest-spending teams. Under this rule, teams that exceed this threshold lose many tools, such as:
• The ability to use the taxpayer mid-level exception (a vital tool for signing veteran free agents).
• The ability to aggregate salaries in trades.
• Limits on signing buyout players mid-season.
• Inability to send cash in trades.
• Freezing of first-round picks (picks seven years into the future become frozen and potentially dropped to the end of the round if the team remains over the second apron for too long).
Example: A team like the Golden State Warriors or the Brooklyn Nets—who historically spent well into the luxury tax to keep their star-laden rosters together—would now find it challenging to sign supporting role players or execute trades. In past years, these teams could use exceptions to add veterans or aggregate contracts for major trades. Now, exceeding the second apron would hamper such flexibility, forcing teams to either shed salary or face significant competitive limitations.
2. Limitations on Supermax Contracts and Extensions
Rule: Revised Extension Rules
The CBA increases the percentage of salary increases players can receive in extensions from 120% to 140%. This encourages more players to sign extensions earlier, preventing them from reaching free agency, where bidding wars could drive up their salaries further.
Impact on Team-Building:
This change incentivizes teams to lock in their stars with contract extensions, but it also discourages the formation of super teams through free agency. By giving teams the ability to offer a more lucrative extension, stars are more likely to stay with their current teams rather than test the waters in free agency.
Example: Players like Jayson Tatum or Devin Booker may opt for lucrative extensions with their existing teams instead of exploring options on the open market. This can help teams maintain continuity but makes it harder for big-market teams to lure multiple stars in free agency.
3. Increased Salary Floor
Rule: Higher Minimum Spending Requirement
Teams must now spend at least 90% of the salary cap at the start of the season, up from 85% in previous CBAs. Additionally, teams that fail to meet this threshold face penalties, including fines and redistribution of money to the players' union.
Impact on Team-Building:
This rule ensures that all teams, even small-market or rebuilding teams, spend close to the salary cap. The higher salary floor prevents teams from hoarding cap space and forces them to invest in players, promoting more balanced competition across the league. If a team's roster is under the salary cap floor, the remaining money needed to reach the floor is distributed among the players.
Example: A team like the Oklahoma City Thunder, which has historically managed its payroll conservatively while stockpiling draft picks, would now be compelled to spend more on talent. This could lead to fewer situations where teams bottom out for years, as spending will be required to stay competitive.
4. In-Season Tournament
Rule: Introduction of the In-Season Tournament
The CBA introduces an annual in-season tournament where all 30 teams participate, with financial bonuses for the winning team.
Impact on Team-Building:
While not directly related to salary cap management, the in-season tournament incentivizes teams to remain competitive throughout the year. The tournament offers players and teams additional chances to earn revenue and increase their visibility among fans. This hopes to encourage more teams to stay competitive, especially in the season's early months, rather than resting players or "tanking" for better draft picks.
Example: Mid-tier teams that might otherwise coast through the regular season, like the Indiana Pacers or Charlotte Hornets, may prioritize building rosters that can compete well in both regular-season play and the tournament for financial and reputational rewards.
5. More Flexibility for Player Movement in Free Agency
Rule: Enhanced Trade and Free Agent Flexibility
The new CBA allows for more flexibility in player movement by increasing the value of sign-and-trade deals and giving teams more options for managing their cap space in free agency. Additionally, teams now have the ability to spread out contract payments to free up immediate cap space, known as "cap smoothing."
Impact on Team-Building:
This change makes it easier for teams to remain flexible with their rosters while still adhering to salary cap restrictions. The enhanced sign-and-trade rules allow for greater player movement without putting too much financial strain on teams, especially those near the luxury tax line.
Example: A team like the Miami Heat, historically known for its aggressive free-agent signings and trades, could benefit from more flexible sign-and-trade mechanisms. It would allow them to add key players without immediately breaking the bank.
6. Rookie Scale Adjustments and Two-Way Contracts
Rule: Increased Rookie Salaries and Expanded Two-Way Contract System
The rookie salary scale and maximum contract values for two-way players (those who split time between the NBA and the G League) have been increased.
Impact on Team-Building:
By increasing rookie salaries, the CBA ensures that young players are fairly compensated, which may discourage some teams from hoarding young, cheap talent for extended periods. Additionally, the expanded two-way contract system allows teams to develop young players without occupying valuable roster spots, which can be crucial for teams looking to balance star power and depth.
Example: A team like the Houston Rockets, with a deep pool of young talent, can use the increased two-way contract flexibility to develop players without sacrificing roster depth, allowing for a smoother rebuilding process while maintaining competitiveness.
7. Draft and Lottery Reform
Rule: Adjustments to the Draft Lottery Odds
The CBA maintains the flattened odds for the draft lottery but reinforces the anti-tanking measures. Teams that consistently perform poorly and land in the top lottery positions may face penalties, including reduced odds in future lotteries.
Impact on Team-Building:
The continued emphasis on discouraging tanking means teams must focus on building competitive rosters rather than relying on draft picks to improve. This also emphasizes scouting and player development to build a winning team.
Example: The Detroit Pistons, who have been in the lottery frequently in recent years, might need to be more strategic about how they build their roster. Simply hoping for top draft picks each year may no longer be a reliable strategy for long-term success (they've had the 5th pick in each of the last three drafts).
The new NBA CBA introduces several measures that will have far-reaching consequences for team-building. By limiting the financial advantages of the highest-spending teams and encouraging player retention through extensions, the CBA makes it harder to form super teams like the Golden State Warriors or Miami Heat dynasties of the past. Teams must now be more strategic in allocating their resources and building rosters, emphasizing balance and depth rather than merely collecting superstars. This shift is intended to promote parity across the league, creating a more competitive and entertaining product for fans.
Day 2: NBA Offseason Recap
