Ongoing CBA Negotiations Could Hamper The NBA's Trade Market

December 22, 2022

The NBA and National Basketball Players Association agreed last week to push back the deadline to opt out of the current collective bargaining agreement until Feb. 8. The CBA will expire on June 30 if either side exercises its right to opt out by the deadline, but it will otherwise run through the 2023-24 season.

That Feb. 8 date is particularly notable, as it's only one day before the 2023 NBA trade deadline. Unless the two sides reach an agreement by then, the tenor of the negotiations could wind up having an adverse effect on what happens at the trade deadline.

According to multiple reports, the NBA is pushing for an "upper spending limit"—in other words, a hard cap—in the new CBA. With the Golden State Warriors, Los Angeles Clippers and Brooklyn Nets all currently in line to pay nine-figure luxury-tax bills this season, the league believes "that the current system fails to provide a level enough playing field to make more of the 30 teams competitive and contends that the spending disparity of top teams has made the imbalance ultimately unsustainable," per ESPN's Adrian Wojnarowski.

Sports Illustrated's Howard Beck noted in late October that the league often floats some variation of a hard-cap proposal early in negotiations, only to eventually back down after fierce resistance from the NBPA. A source on the players' side told longtime NBA insider Marc Stein that there would be "a lockout before there's a hard cap," which has been the union's messaging in previous negotiations, too.

It's hard to imagine the league office jeopardizing its record-high revenue with its push for an upper spending limit, but early indications suggest it might do just that. Stein reported in early December that this latest proposal "does not appear to be the usual trial-balloon push for a hard spending limit that the NBA has been known to float in past negotiations and then suddenly drop to gain concessions in other areas."

That uncertainty might cause teams to think twice before adding long-term salary ahead of the trade deadline.

In the unlikely event that the league does succeed in implementing an upper spending limit in the new CBA, teams with bloated payrolls could be forced into making difficult decisions. They might not be able to re-sign key contributors without salary-dumping other contracts, which could make them especially reluctant to add players with multiple years left on massive deals. (Washington Wizards guard Bradley Beal and Chicago Bulls guard Zach LaVine, both of whom signed five-year deals worth more than $200 million this past offseason, fit into this category.)

Even if the league does eventually agree to drop its upper spending limit proposal, the imbalance between deep-pocketed and thrifty ownership groups appears to be a real concern. If nothing else, the NBA might look to stiffen the penalty for teams above the luxury-tax threshold in the new CBA, which could have the same functional effect as an upper spending limit.

Under the current CBA, teams only get hard-capped if they sign a player via the non-taxpayer mid-level exception or bi-annual exception or acquire a player in a sign-and-trade. When a team does any of those three things, it cannot exceed the luxury-tax apron at any point for the remainder of that league year. Otherwise, teams can go well above the salary cap and/or luxury-tax threshold using mechanisms such as the MLE or the traded player exception.

The Nets, Warriors and Clippers are all more than $30 million above this year's cap, but even they have limits in terms of how much they're willing to spend. In July, Warriors owner Joe Lacob told Tim Kawakami of The Athletic that a total roster bill (between salaries and luxury-tax penalties) north of $400 million was "not even remotely possible."

"You know, we kind of blew a hole in the system, and it’s not a good look from the league’s perspective," he added. "They don’t want to see it happen. And there are limits. I’m not going to say what they are, but there are limits to what you can do.”

The Warriors took advantage of a historic salary-cap spike in 2016 to sign Kevin Durant in free agency, which began a domino effect that led to their record-setting tax bill. The Clippers, meanwhile, simply have the richest owner in professional sports. When the Portland Trail Blazers went into sell-off mode last season, the Clippers sprung into action, adding nearly $20 million to their tax bill even though they were only battling for a spot in the play-in tournament.

Clippers owner Steve Ballmer might not bat an eye at the league's luxury-tax system even if it does stiffen the penalties in the next CBA. However, he'd likely be in the minority in that regard. If even Lacob is saying the Warriors have a limit in terms of total expenditure, few (if any) teams could afford to operate carte blanche with harsher tax payments.

Teams that are well below the luxury-tax threshold may be willing to take on bloated, long-term deals at the trade deadline as long as they come attached with draft picks and/or young prospects. It wouldn't be a surprise to see a number of financially motivated deals as teams look to clean up their books ahead of the new CBA.

However, blockbusters such as the Tyrese Haliburton-Domantas Sabonis and James Harden-Ben Simmons dels from last year's trade deadline may be far more unlikely this time around. Most teams will want to know the long-term parameters in which they're operating before making a multiyear commitment like that.

Unless otherwise noted, all stats via, PBPStats, Cleaning the Glass or Basketball Reference. All salary information via Spotrac or RealGM.

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