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New NBA Collective Bargaining Agreement Ratified, Released

The league is coming into a lot of money. Here’s how they’re taking care of it.

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2023 NBA Finals - Miami Heat v Denver Nuggets Photo by David Dow/NBAE via Getty Images

The 2023 NBA Collective Bargaining Agreement, or CBA, has been ratified by the league and the National Basketball Players Association, binding both parties to an updated set of rules and procedures beginning next season, extending through 2030. The league and the union released copies of the new agreement, 560 pages of light summer reading covering everything from contracts to drug testing to exhibition game procedures.

Given the July 1st start to free agency, the most important parts of the agreement cover the salary cap and luxury tax. Mike Vorkunov of The Athletic posted a basic rundown of the new rules [subscription required], but the most illustrative paragraph from it might have been the summation of an unnamed NBA executive:

The new CBA will likely have some significant changes on how the NBA operates. One team executive called it a “soft hard cap” for how he expects it to change the behavior of the league’s highest-spending teams. But it was designed to pull up spending at the bottom too, perhaps erasing any team that wants to dive below the salary-cap floor and giving incentives to teams to inch near or even just above the luxury-tax line. Even though all of the new rules will not go into effect next season, they will still be top of mind for teams.

Perhaps the most significant change comes to the luxury tax system. Already semi-draconian, the penalties for crossing the tax threshold flagrantly and repeatedly have become near-prohibitive.

As Vorkuov explains and the CBA document details, taxpaying teams are now divided into three tiers.

Franchises above the tax line by less than $7 million simply pay tax and forfeit the windfall that non-taxpaying teams receive at the end of the year. Exceeding the $7 million mark over the threshold triggers the “first apron” penalties. This includes a lower mid-level exception and now, because of the new CBA, a prohibition against signing buyout players and restricted rules for salary matching in trades (down to 110% this season, even 100% beginning in 2024-25).

Franchises that exceed the tax threshold by more than $17.5 million trigger “second apron” restrictions, all new with the current agreement. They will forfeit their mid-level exception entirely. Beginning in 2024-25, they will not be able to send out players in sign-and-trade deals and cannot use cash in trades. They will not be able to trade their first-round pick in the seventh season out from the year they exceeded the second apron. If they continue to push past the second apron in two of the following four years, that same pick that cannot be traded will also drop to the bottom of the first round automatically, regardless of organic draft position.

Teams passing either apron will also be “hard capped”, as provided for in the former CBA, inhibiting their ability to take on more salary.

Both “apron” figures will fluctuate along with the salary cap, year by year.

Other notes on the agreement...

The new CBA also alters the level of cap exceptions and, beginning in 2024-25, will allow teams to trade their non-taxpayer midlevel, room midlevel, and bi-annual exceptions to acquire players from other teams or use those same exceptions to sign players off of waivers.

The CBA also raises the level of compensation for contract extensions and allows players with contract options to “fold” the option year into a new extension. Qualifying offers for restricted free agents will also rise.

Teams and players reaching agreements under “Bird Rights” can now waive the obligation that the player has to consent to any trade in the first year of the new contract. The CBA restricts how many minimum contracts can be put into a single trade offer and puts in a six-month restriction on trading players after renegotiating a contract or renegotiating a contract with players for whom a team just traded.

We expect more details about the Collective Bargaining Agreement to come to light in the weeks ahead, as more sets of eyes get on the massive document.