While the Sixers try to dig their way out of an early-season hole, the front office has bigger fish to fry. It has to weigh which moves to make at the trade deadline (if any) despite not knowing what changes could be forthcoming in the league’s upcoming collective bargaining agreement.
The league’s current CBA runs through the 2023-24 season, but either the NBA or the National Basketball Players Association can opt out and have it end on June 30, 2023. The original deadline for that opt-out decision was Dec. 15, although the two sides “mutually agreed” on Wednesday to push it to Feb. 8.
The league is angling to institute an “upper spending limit”—in other words, a hard cap—according to multiple reports, which is a non-starter for the NBPA. Other topics up for debate include removing the age limit in the NBA draft, a cap-smoothing proposal ahead of the next national TV contracts and “finding mechanisms to incentivize to players” to play in more regular-season games, ESPN’s Adrian Wojnarowski reported in October.
With so many potential changes on the horizon, Sixers fans should want either the NBA or NBPA to pull the trigger and opt out of the CBA so it expires after the 2022-23 season.
The Sixers have a number of pivotal decisions to make this coming offseason, including whether to re-sign James Harden and how much money to give Tyrese Maxey in an extension. Georges Niang, Shake Milton, Paul Reed and Matisse Thybulle are all set to become free agents as well, and Danuel House Jr. and Montrezl Harrell could join them by declining their respective player options for the 2023-24 season.
In the unlikely event that the league does successfully institute its proposed hard cap—which we’ll explore more in detail later this week—it would behoove the Sixers to know exactly how much they’re allowed to spend before they make those decisions. If the CBA doesn’t expire until after the 2023-24 season, they could be forced to allow free agents such as Tobias Harris or De’Anthony Melton to walk in 2024 because they don’t have enough room under the hard cap to re-sign them.
The more likely outcome is that rather than implementing a hard cap, the league will further stiffen luxury-tax payments. That could have a similarly chilling effect on how much teams (including the Sixers) are willing to spend on their rosters each year.
The current tax system begins at $1.50 per dollar spent for the first $5 million and goes up incrementally from there. If a team has paid the tax in three of the past four seasons, it becomes subject to a more punitive “repeater” tax, which begins at $2.50 per dollar and goes up in the same increments as the normal tax.
The Sixers are only $1.2 million over the luxury-tax threshold this year, but that’s likely to change next season. They already have $117.1 million in guaranteed salaries on their books in 2023-24 committed to only seven players. They’ll likely vault back into tax territory if they re-sign Harden and any of Milton, Niang, Reed or Thybulle, barring another unexpected discount from Harden.
If the new CBA is in place by July 2023, the Sixers will know exactly how any of those signings will affect their long-term financial outlook. But if the NBA and NBPA wait to enact the new CBA until after the 2023-24 season, the Sixers will have to make several critical decisions without having a clear picture of the potential ramifications.
While changes to the luxury-tax system and/or the implementation of a hard cap are among the biggest concerns to the Sixers’ team-building strategy, they aren’t the only ones. The NBA could also make smaller changes to its extension rules, which might have significant implications for Melton in particular.
Under the current CBA, teams are limited in how much they’re allowed to offer a player as a starting salary in a new extension. They can offer no more than 120 percent of their salary in the final year of their current contract or 120 percent of the estimated average player salary, whichever is greater.
Melton signed a descending contract extension with the Memphis Grizzlies back in November 2020, which means he’s being paid $8.25 million this season and only $8.0 million in 2023-24. While that helps the Sixers’ cap outlook for now, it also decreases the likelihood that they’ll be able to sign him to an extension.
The estimated average salary for the 2022-23 season is nearly $10.8 million, so it might be closer to $11-12 million for the 2024-25 campaign. Even if it lands on the high end of that estimate, the Sixers couldn’t offer Melton more than roughly $54 million in a four-year extension. Other teams would likely be able to offer the same using the non-taxpayer mid-level exception alone, much less salary-cap space.
Draymond Green and Jaylen Brown are higher-profile examples of how the NBA’s current extension rules can backfire on teams at times. It wouldn’t be a surprise if the new CBA tweaked how much teams can offer players in extensions. One alternative would be allowing teams to offer players the same starting salary in extensions that they’re able to receive in free agency.
It’s unclear whether any changes to rookie-scale extensions are on the table, but it would similarly benefit the Sixers to know that ahead of negotiations with Tyrese Maxey. He becomes extension-eligible in July and is likely headed toward a max or near-max extension. Both sides may prefer to punt on finalizing a deal until the new CBA is ratified, but that could backfire on the Sixers.
Even if Maxey does become a restricted free agent in 2024, the Sixers will have the right to match any offer sheet he signs with another team. However, he might prefer signing a shorter-term deal to capitalize on the influx of revenue from the league’s new national TV contracts beginning in 2025-26. Those TV deals should cause the salary cap to soar, although the exact impact is unclear for now.
Before the current national TV contracts began, the league attempted to get the union to agree to fixed cap amounts to smooth out the impact of the revenue windfall. The NBPA rejected that proposal, setting the stage for a historic $24 million salary-cap spike that allowed the Golden State Warriors to sign Kevin Durant and led to egregious overpays of Timofey Mozgov and Luol Deng (Los Angeles Lakers), Joakim Noah (New York Knicks) and Bismack Biyombo (Orlando Magic), among others.
If the NBA and NBPA agree to a cap-smoothing proposal this time around, it should prevent another one-year spike and perhaps deter players from lining up to become free agents in 2025. Otherwise, Maxey might structure his extension in such a way that he’s able to cash in on the new TV deals sooner.
The choices that the Sixers make with Maxey, Harden and Melton (among others) could shape their trajectory over the next half-decade. It would be far better for them to be making those decisions under the new CBA so they aren’t blindsided by any major changes.