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The Art of the Apron: What’s New With the NBA Luxury Tax in 2023-24

Boardroom sets the table for the 2023-24 season with what you need to know about the NBA luxury tax’s new second apron and how new CBA rules impact team-building.

When the NBA‘s new collective bargaining agreement took effect in April, one particular adjustment stood out as one that would impact the league through the duration of the deal.

In an effort to keep some teams from spending astronomically more on payroll than others, the league instituted two luxury tax aprons that come with punishments and restrictions. The first NBA luxury tax apron is $7 million above the luxury tax level, and the second apron is $17.5 million above the tax.

For 2023-24, the salary cap is $136 million and the tax level is $165.294 million. So to be above the second apron, a team’s payroll this season would have to be over $182 million.

As the new season tips off, here’s what it would mean for teams whose payrolls rise above the first apron:

  • Salary matches in trades have to be within 110% of the outgoing salary — that number is 125% for non-taxpayer clubs — and teams can’t take more money in a trade than it sends out.
  • Teams can’t acquire players in sign-and-trade deals in the offseason if the incoming salary keeps them above the apron.
  • Teams can’t sign a player waived during the regular season if his salary exceeds the mid-level exception, which this season is $12.2 million. This will limit tax teams during the annual buyout season, as veterans not dealt before the trade deadline generally look for new teams for the playoffs.

For the NBA’s second apron teams, the above restrictions apply. In addition:

  • Teams will no longer be able to use the taxpayer mid-level exception.
  • If a team remains in the second apron three out of five seasons, their first-round pick will automatically move to the end of the round, beginning next season.
  • First-round picks seven years out — a valuable asset for capped-out contenders — cannot be traded beginning next season.
  • Salaries cannot be aggregated or combined to trade for a single player making more money.
  • Teams can’t use trade exceptions created from a prior year.
  • Teams can no longer use cash in trades.
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According to Spotrac’s NBA luxury tax payrolls as of Oct. 24, 2023, let’s take a closer look at who’s spending above each tier of the tax line.

Teams Above the First Luxury Tax Apron to begin 2023-24

Teams Above the NBA’s Second Apron

For teams like the Warriors, Suns, Bucks, and Celtics, money may as well be no object in their pursuit of a championship. Next season, teams like Memphis and Minnesota have players set to receive salary bumps with the potential to move them into first or second apron territory next season. Will that change their short- or long-term team-building strategies?

As it relates to that question, we’re in uncharted waters.

These new NBA luxury tax aprons are not only designed to increase parity in the Association; they will inevitably force even the league’s biggest spenders into making tough choices regarding whether they can afford to keep multiple star players for the long haul — and in some cases, even young players whose upcoming rookie extensions could be too pricey. Team executives will now have to be more creative and judicious when they make signings and trades, lest they incur penalties that force their championship windows shut prematurely.

Looking ahead, the NBA salary cap and player salaries in general will continue to rise, especially when the league signs a new national media rights deal set to begin in 2025. These aprons are designed to pace with any potential leaps in revenue

As a new season takes hold, keep in mind that these new CBA rules are likely to impact just about every major signing, trade, and transaction going forward in some form or fashion, and the front offices that navigate them with the least friction are likely to be the ones best suited to compete for championships not just this season, but in the next several to come. Buckle up!

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