The NBA is in the midst of a massive shift, and fans of spend-happy teams used to the halcyon days of unfettered pay-to-contend are furious. The dreaded “second apron” is here, and thus far its effect on free agency has been profound. Paul George, Klay Thompson and Kentavious Caldwell-Pope are all on new teams, the three most notable casualties of the new salary rules — with some already bemoaning that the new CBA is a failure because of the tough decisions established playoff teams have had to endure.
There’s no question we’re in the middle of a seismic shift in NBA roster construction, but is the second apron addition a colossal mistake by the NBA and NBPA, or are we on the cusp of the greatest era of parity the association has ever seen?
With the 2023 CBA came a mandated establishment of a salary cap “second apron,” designed to force the league away from monolithic super teams and skyrocketing payrolls. Under the old system there was no incentive for a team to manage its spending outside of how much financial pain ownership was willing to enduring in their tax bill, which in turn ensured that only the richest teams got to compete consistently.
If we look at the last five years of luxury tax spending there’s no question there was a direct correlation between tax teams, playoff appearances, and NBA titles.
- 2019-2020: Five teams paying luxury tax, four made the playoffs
- 2020-21: Eight teams paying luxury tax, six made the playoffs. Taxed team won the championship
- 2021-22: Seven teams paying luxury tax, five made the playoffs. Taxed team won the championship
- 2022-23: Nine teams paying luxury tax, eight made the playoffs. Taxed team won the championship
- 2023-24: Eight teams paying luxury tax, seven made the playoffs. Taxed team won the championship
It goes without saying that if you’re a fan of a team with an owner willing to spend anything to win, then life was good under the old cap system. Superstars courted each other to join super teams, free agency was a constant case of the rich getting richer, and the only limitation on how far a team could go was the future draft assets it could offer in sign-and-trade scenarios.
The issue is that while over a quarter of the league was thriving, it came at the expense of everyone else. It’s all well and good to say “you should get an owner that spends more,” but a fan had no agency on the pocketbook of their owners, or their willingness to spend. Instead we were trapped in a cycle where deep-pocketed, predominantly large-market teams would be perennial contenders in the NBA — while small markets were often suppressed, locked in a cycle of hopelessness as they simply became feeder teams for the NBA elite. The only hope for these smaller organizations is that they’d land a generational superstar in the draft, with the potential promise down the line that they could lure elite players to these teams — as we saw in Milwaukee with Giannis Antetokounmpo, or in Denver with Nikola Jokic.
While we did see parity taking place, with six different NBA Champions in a row, they all shared the same DNA of excessive spending. Only one of these six champions (the 2019-20 “bubble” Lakers) won without paying luxury tax. This system was fundamentally broken. Not only that, but it lead to tremendous wage and talent disparity across the NBA. Elite teams would have 2-3 players on max-level contracts, and supplement their roster with anyone willing to take as little money as possible. Meanwhile with all the best talent locked on these elite teams, developing organizations were forced to over-pay mediocre players in the hopes of just trying to find a back door into the playoffs.
The long-term health and stability of the NBA was in tatters, and something needed to be done. It’s here the 2023 NBA Collective Bargaining Agreement comes in, and most specifically how it changed the salary cap and tax structure.
Here is how the salary cap breaks down for the 2024-25 season:
- Salary cap floor: $126,529,000. This is the minimum each team can spend on its roster
- Salary cap ceiling: $140,588,000. This is the maximum teams can spend without incurring luxury tax
- First apron: $178,132,000. This is where teams can no longer make a variety of moves, but most notably they can’t acquire players via sign-and-trade, or sign buyout players for more than the league minimum.
- Second apron: $188,931,000: All of the first apron restrictions apply, but in addition teams can no longer sign free agents from outside their organization, they can’t send out multiple salaries for one player in a trade, and they can’t send cash considerations in trades.
As it stands there are four teams who are locked into the second apron: The Celtics, Bucks, Timberwolves and Suns — all of whom are established NBA championship contenders as-is. Essentially what this blocks is their ability to try and buy more players to secure their dominance, meaning talented players were forced to join new teams.
The threat of the second apron was so significant that it prevented the Warriors from re-signing Klay Thompson, and the same is true of Paul George in Los Angeles and Kentavious Caldwell-Pope with the Nuggets. It necessitated that difficult decisions be made, and teams who for a long time basked in unfettered spending, now had to really think about how they assembled their basketball rosters. Were they happy with the results they were getting? If you’re Boston or Minnesota then sure, full steam ahead — but with the Clippers and Warriors specifically their future direction weren’t lining up with the sanctions that would prevent them from making in-season adjustments, so they chose to part ways with their established stars.
Much is made of the Nuggets in this second apron discussion. On the one hand they’re often touted as the team who did it “the right way,” bringing up a small market team from obscurity and creating a champion. Through that lens losing KCP for nothing seems fundamentally unfair. That argument ignores that fact that Denver had started to become a routine tax team, incurring tax in each of the last two seasons, set to be a tax team for the third year in a row, and due to their rapidly growing spending four of their starting five are all earning over $20M per season. Is it really fair to say Denver was hard done by because they weren’t able to have a fifth top salary on their roster? Especially considering they’re already going to be a contender in the West without KCP in 2024-25?
For a team like Orlando though, where Caldwell-Pope signed in free agency, it’s a lifeline the team desperately needed to take the next step. A 47-35 team a year ago, it was clear in the playoffs that shooting was their limiting factor in a seven game series. This now gives them two players making over $20M a year, surrounding Paolo Banchero and Franz Wagner with more talent while they are still on their rookie contracts.
If the Magic become dominant because of this then their ceiling will kick in when Banchero and Wagner are on the middle of their large extensions — because if they hit the second apron they will be forced to shed salary, and a new team will rise from the ashes as a result.
This is the half-step the NBA needed to take. One that stops short of having an NFL-style hard cap that limits all teams, but prevents wild spending from manipulating the balance of the league. While it certainly hurts right now for teams to adjust to this new normal, the end result of the second apron is poised to lift up more struggling teams, create a cycle of new contenders, and force organizations to become better talent evaluators to stock their systems with impactful players through the draft — rather than simply treat picks as a means to an end to land high-profile stars.
Change is always scary, but when the dust settles on the second apron we’re seeing the dawn of a new NBA where in a few short years everyone has the chance to be competitive, and teams willing to stay pat in the hubris of the second apron will need to take their lumps if their team building doesn’t pan out.
This new NBA is going to change your life for the better if you’re a fan of the 23 or 24 teams who never felt like they really had a shot because of spending. That’s what this is all about.