Tim Bontemps, Bobby Marks and Kevin Pelton contributed to this story.
The one-and-done rule wasn't touched. There's no new super-duper-max contracts. There isn't even an amnesty clause. So the biggest thing to know about the NBA's new CBA is... aprons?
It might not sound exciting, but the modified luxury tax rules in the new collective bargaining agreement between the NBA and the National Basketball Players Association will ensure labor peace in the league through the remainder of this decade. After the two sides pushed back the opt-out deadline on the previous CBA multiple times, they agreed to this new deal April 1, and it runs through June 30, 2029. Last week, the two sides completed the term sheet that lays out important deal points, many of which were reported by ESPN's Adrian Wojnarowski with Tim Bontemps and Bobby Marks on April 1.
Inevitably, the new rules will create winners and losers for teams and players.
To help unpack the implications of the CBA, Bontemps and Marks were joined by ESPN NBA Insider Kevin Pelton to discuss their biggest takeaways from what owners and players agreed to change, as well as whether those adjustments will ultimately have the intended benefits for both sides.
Jaylen Brown's future, the NBA's biggest spenders and the 'second apron'
Bobby: There are a lot of items to discuss (the term "sheet" is actually 91 pages!) but let's start with the two big questions people want to know. Tim, are there rules in place to prevent big-spending teams such as the Golden State Warriors and LA Clippers from keeping their roster together? And what impact does the CBA have on the Boston Celtics' Jaylen Brown?
Tim: Let me first start with Brown, whose current contract runs through 2023-24 and pays him $30.7 million next season. Under the old CBA, Brown was limited to signing an extension that paid him 120% of that salary in the first year, which is far less than the max salary he could earn by becoming a free agent.
The new CBA increases the maximum in the first year of an extension from 120% to 140%. Because of this, Brown is now eligible to sign a four-year, $189 million max extension. Of course, if he earns All-NBA this season, it becomes moot because he could earn an additional $100 million over five seasons. The cost, however, to the Celtics in the future is significant.
It should be noted his teammate Jayson Tatum is in line to sign a $300 million supermax extension next offseason if he earns All-NBA this season. That would give Boston two players earning close to $600 million in the future, which gets us back to the other question about high-spending teams being able to keep their rosters together.
From the beginning of talks between the NBA and the National Basketball Players Association, it was clear the top-line objective for the league was to rein in the spending of its top teams -- hence the early calls for an "upper spending limit," otherwise known as a hard cap. That was always going to be a nonstarter for the NBPA, but it led to a series of changes in the new agreement that go a long way toward limiting the ability of teams such as the Warriors and Clippers -- and a Celtics team with two supermax players -- to add to their payrolls.
The new CBA introduces two "apron" levels above the luxury tax line, where teams have to deal with not only harsher luxury tax penalties but also restrictions on what they can do with their rosters.
For 2023-24, the salary cap is projected to be $134 million, and the luxury tax line is set to be $162 million. The first apron is set at $7 million above the luxury tax level in each season of the CBA (so $169 million for 2023-24) and the second apron is set at $17.5 million above the tax threshold (or $179.5 million). In future seasons, all of those numbers will rise at the same rate.
There are at least six teams, including the Celtics, Denver Nuggets and Phoenix Suns, that are projected to be above the first apron but below the second apron in 2023-24. The Philadelphia 76ers could join the group if James Harden signs a $47 million max contract in the offseason.
We currently project the Warriors, Clippers and Miami Heat to be over the second apron in 2023-24.
Now here's where things get challenging for those teams right away.
Teams over the second apron will no longer have access to the taxpayer midlevel exception. Had this rule been in place last season, the Warriors would not have been able to sign Donte DiVincenzo and the Milwaukee Bucks would not have been able to sign Joe Ingles (or those players would have needed to sign with those teams for the league minimum).
Buyout season will also look different with these aprons in place. Teams over either apron will be prevented from signing a player waived during the regular season if that player's pre-waiver salary was larger than the non-taxpayer midlevel exception (about $10.5 million this past season). Had this rule been in place for 2022-23, the Clippers would not have been allowed to sign Russell Westbrook, the Nuggets wouldn't have been able to sign Reggie Jackson and the Suns wouldn't have been able to sign Terrence Ross. The Heat, on the other hand, would have still been allowed to sign Kevin Love, despite his pre-buyout salary of $31.1 million, because they were not over either apron.
Trades will also get harder for these teams, as the salary matching exception will be reduced from 125% to 110% starting this offseason. Had this rule been in place in the prior CBA, the Nets wouldn't have been able to complete their trade to acquire James Harden from the Houston Rockets in 2021 (or would have had to add an additional player to make the salaries work).
Things get even worse for apron teams starting in the 2024 offseason when a team over the second apron will no longer be able to aggregate salaries to trade for a single player making more money. This rule would have prevented the Clippers from trading for Eric Gordon this past February -- a deal LA was only able to make by aggregating the salaries of John Wall ($6.5 million) and Luke Kennard ($14.4 million). Second apron teams will also no longer be able to use cash in trades. This would've prevented the Clippers from sending $3.8 million to the Bucks in February 2022 to shed the contract of Serge Ibaka (a move that saved LA $6.8 million in luxury tax payments).
Teams over the first apron but below the second apron will still be able to aggregate salaries, but they will not be able to take back more salary in a trade than they send out.
Beginning with the 2024-25 season, teams that finish the regular season over the second apron will no longer be able to trade their draft pick seven years out (so the 2032 draft for teams that hit that level the first season this rule is in place). Once a team has ended a season over the second apron, and frozen their future pick, if it goes over the second apron twice in the following four seasons, the pick would then be moved to the bottom of the first round regardless of where a team finishes in the standings. If a team stays under the second apron in at least three of the following four years, however, the pick becomes unfrozen and can be trade-eligible again (which is another enticement for teams to not repeatedly exceed the second apron).
Finally, starting in 2025-26, there will be an increased penalty for teams that spend more than $10 million over the tax threshold. Under the new CBA, the Warriors' tax bill this season would have been $233 million instead of $170 million.
That's a lot of words to say that it's going to be difficult for teams over the second apron to add talent to their rosters, which the league hopes will dissuade teams from spending over that level.
Dissecting the CBA changes, the NBA's goals and what the union gets in return
Kevin: Now that we have the full details of the double-secret apron, I understand why Warriors forward Draymond Green expressed his unhappiness with the new CBA on Twitter. While the rules don't prevent the Warriors from re-signing or extending their own free agents, including Green (who must decide after the season on a $27.6 million player option for 2023-24), staying over the second apron for more than a couple of seasons looks prohibitively painful.
In particular, the possibility of having a team's draft pick moved to the end of the first round should be a major deterrent. Let's say Golden State triggers restrictions on its 2031 draft pick in 2024-25 by exceeding the second apron. Well, that pick will come when Stephen Curry is age 43, and as much as the Warriors might believe in their ability to extend the run, there's no way they can rule out a lottery pick turning into the 30th one.
As a result, the second apron should work to reduce the gap in team payrolls between the highest- and lowest-spending teams (a gap that was nearly $89 million this season), though it'll force teams such as the Clippers and Warriors to make some difficult choices on who to retain.
Ultimately, the second apron won't affect most teams because they're unwilling to spend so far into the luxury tax no matter the restrictions. Remember, that second apron is $17.5 million above the luxury tax line itself, which sets it at $45.5 million above the cap line. More than half the league's teams haven't had payrolls that would have qualified at any point in the past decade. Still, I'm surprised the NBPA was willing to concede a harder limitation on team spending. Bobby, what did they get in this deal in return?
Bobby: Considering that the hard cap was the first salvo the NBA threw out in the negotiations, the players walked away with some key economic improvements. As we mentioned in the case of Jaylen Brown, the new CBA overhauls the extension rules. Being able to extend for 140% of a player's current salary is a big improvement, though there are still players such as Domantas Sabonis, O.G. Anunoby, Mikal Bridges and Dejounte Murray who signed team-friendly contracts and will likely still be better off waiting until free agency to sign a new deal. Another improvement is that players entering the final year of their rookie deals are now allowed to sign five-year extensions for any salary. Previously only rookie max extensions could be five years long (all others had to be four years or less).
Players are also allowed to decline the player option in their contract and extend their contract for a lower salary. For example, under the new CBA, Draymond Green would have been allowed to decline his $27.6 million player option and extend starting at a lower salary, rather than having to go into free agency to sign such a deal. Starting in 2024-25, players who are acquired in a trade are allowed to extend for an additional four seasons (including what is left on their contract) at 120% of their current salary or estimated average player salary. Under the previous CBA, players who were within six months of having been traded could only extend for three total seasons (including the amount remaining on the current deal) and at 105% of their salary.
This change would have benefited Bojan Bogdanovic, who was traded to the Detroit Pistons in September and signed a two-year contract extension. Under the new CBA, he would've been eligible to add three years to his deal.
One non-extension rule that should benefit players in free agency is adding additional penalties for teams that do not spend. Under the current CBA, teams are required to spend a minimum 90% of the salary cap. However, the only penalty is that the shortfall is distributed back to the players on their roster at the end of the season. However, starting in 2024-25, any team that is below the minimum floor on the first day of the regular season will not receive a tax distribution. In 2021-22, that would've meant the Oklahoma City Thunder would not have been eligible for a $10.5 million tax distribution, which could have encouraged them to sign an additional free agent in the summer of 2021 to hit that floor.
The new CBA also created 30 more player jobs with the addition of a third two-way player spot for each team. There was also significant growth in the non-taxpayer and room midlevel exceptions.
One rule that benefits both the players and the teams is the creation of a second-round exception. Now teams looking to sign a second-round pick for more than the minimum don't have to dip into one of their other exceptions to do so. They can also add option years to the contract, which, for example, would've allowed the Mavericks to sign Jalen Brunson to a three-year deal with a team option for the fourth season. In that scenario, Dallas could have declined the team option on the fourth season, making Brunson a restricted free agent in the summer of 2021, allowing the Mavs to match any offer sheet he got from another team (something they weren't able to do last summer because Brunson was an unrestricted free agent after his original four-year deal expired).
Tim: It should be noted that in addition to the improvements Bobby laid out, the NBPA, led by executive director Tamika Tremaglio, went into these negotiations hoping to establish some equity and ownership possibilities moving forward, and achieved that. Players will be able to invest in funds that will allow them to have small stakes in both NBA and WNBA teams, giving players a chance to directly benefit from rising franchise valuations.
Marijuana testing has also been removed, and players have been given a whole range of additional investment and sponsorship opportunities, including in sports betting, cannabis and CBD companies. There also are pension increases, boosts in funding to help retired players and improved benefits for two-way players.
How the new CBA impacts other teams, including the Cavs and Evan Mobley
Kevin: Taxpaying teams not flirting with the new second apron will also face more stringent limitations on adding players, as the taxpayer midlevel exception will decrease in value and to a maximum of two years rather than the current three. Additionally, as Bobby noted, the elimination of signing players waived midseason applies to teams over the first tax apron as well as the higher second one.
On the flip side, going a small amount into the tax will become less painful because the tax rates for the first two brackets will be lowered starting in 2025-26. Additionally, as we first proposed last summer, those tax brackets will grow with the salary cap. Still, the fact that taxpaying teams lose out on the tax distribution may continue to make the tax line a de facto hard cap for low-revenue teams.
Teams that don't go over the first tax apron will have far more flexibility under the new CBA. The non-taxpayer midlevel exception will grow in value by 7.5% and the room midlevel exception, which teams can use after spending cap space in free agency, will grow by 30%. That latter change means it's more likely teams will use cap space instead of choosing to stay over the cap and using the non-taxpayer midlevel exception to add talent.
Both those exceptions, plus the biannual exception, will also be available for use in trades in addition to signing free agents. This is maybe the element of the new CBA I'm most curious to see play out. Will teams save their exceptions to use making unbalanced trades at the deadline without needing to match salary? If so, that could hurt the players' goal of giving teams more money to spend in free agency. And that's not the only rule change that could have unintended consequences.
Bobby: Eliminating the rule limiting the number of designated veteran (aka supermax) and designated rookie extensions a team can have on the roster will also have important implications. The current rule has restricted teams to carrying no more than two players per designation. This could come into play very quickly for the Cleveland Cavaliers, who have Donovan Mitchell on his rookie max extension (signed in 2020 when he was with the Utah Jazz) and signed Darius Garland to his own rookie max extension last summer. Their 2021 first-round pick, Evan Mobley, becomes eligible to sign his own extension next summer. Under the previous CBA, the Cavaliers would not have been allowed to sign Mobley to a rookie max extension (and because of the rules that only max extensions could be five years, they would've been forced to sign him to a four-year extension). Now Cleveland can offer Mobley the max -- or even a five-year deal for less than the max if it so chooses.
Still, one improvement I would've liked to have seen happen that didn't is allowing players who were traded from their original team after signing a rookie extension still be eligible to sign a supermax extension (if they qualify). A player such as Bridges can't become supermax-eligible because he was traded after the end of his rookie deal, even though he signed an extension of that deal with his original team. However, the supermax rules allow a player like Tyrese Haliburton -- who was traded before the end of his rookie deal -- to gain supermax eligibility.
Home-grown teams, and walking the line between continuity and parity
Bobby: Did the NBA miss the boat in not rewarding Golden State and teams in the future for retaining their own players they selected in the draft? For example, should players such as Curry, Green, Klay Thompson and Jordan Poole, all homegrown products, be taxed at the same rate as players like the Clippers' Kawhi Leonard and Paul George?
Kevin: I haven't felt like the Warriors needed tax relief per se, given lower-revenue teams would have been forced to break up that group for cost reasons long ago. However, now that the apron rules might force Golden State to break up its core simply to maintain any type of roster flexibility, I'm onboard.
Part of the NBA's challenge has always been threading the needle between continuity and parity. The idea of Bird rights are themselves a way to prioritize keeping teams together. It feels like the second apron rules tilt too hard toward the parity side of the equation. We'll see whether the NBA feels inclined to move things back the other direction the next time around.
Tim: This CBA clearly puts a significant emphasis on drafting and developing your own talent. For these high-spending teams, players such as Poole and Terance Mann -- late first-round and second-round picks that hit -- are going to be more valuable than ever, because of the lack of ability to add veteran talent moving forward.
What I don't see happening is things moving back in the opposite direction moving forward. These limits on spending were clearly the No. 1 thing the NBA wanted to get out of this agreement, and it achieved its goal. But in each of the previous CBAs, we have seen unintended consequences from changes that have been made. It will be interesting to see what ones come from this one -- and if it is these curbs on spending that turn out to be the cause of them.
We should also remember, however, that the second apron is currently going to be close to $50 million over the salary cap, and that only a couple of teams are likely to be impacted by it. And, in the aggregate, I believe -- and the people I've spoken to in the NBA and the NBPA generally agree -- that this was a good agreement that should benefit the league as a whole moving forward. Now, we'll wait and see if that proves to be correct.