The NBA and the National Basketball Players Association are currently negotiating their next collective bargaining agreement, which is set to expire after the 2023-24 season. Both sides have the right to opt out of the current CBA, which would push the expiration date up to June 30.
The league and the players union agreed Wednesday to push the opt-out deadline back to February. While the two sides are widely expected to reach an agreement without a protracted lockout, news broke in October that could endanger the projected labor peace.
ESPN’s Adrian Wojnarowski reported that the NBA is “pursuing the implementation of an upper spending limit”—in other words, a hard cap—which has “been met with significant union resistance.”
“In the wake of large-market contenders Golden State, Brooklyn and the L.A. Clippers running up massive payrolls and luxury tax penalties, the NBA is proposing a system that would replace the luxury tax with a hard limit that teams could not exceed to pay salaries,” he wrote. “The league’s proposal has been met with the firm resistance of the NBPA, to the point of the union considering it a nonstarter in discussions, sources said.”
As Sports Illustrated’s Howard Beck noted, the NBA routinely floats the idea of a hard cap early in CBA negotiations, which the NBPA proceeds to shoot down. But if the league does succeed in implementing an upper spending limit—the league prefers not to call it a hard cap “since those words carry such a negative stigma, according to longtime NBA insider Marc Stein—it could have major implications for the Sixers’ team-building strategy moving forward.
Before we venture too far into hypotheticals, let’s lay out a few things right off the bat. For one, the odds of the league successfully implementing this proposal are about in line with Kyrie Irving getting through an entire season drama-free. The specifics of the proposal also haven’t leaked, particularly regarding where the upper spending limit would be set relative to the salary cap.
Under the current CBA, teams are allowed to re-sign certain players or acquire players via trade even when they’re over the salary cap. As a result, teams such as the Los Angeles Clippers, Golden State Warriors and Brooklyn Nets are tens of millions of dollars over the current $123.655 million salary cap, and they have nine-figure luxury-tax bills to show for it.
There are only three ways for a team to get hard-capped at the moment: signing a player using the non-taxpayer mid-level exception, signing a player using the bi-annual exception or receiving a player in a sign-and-trade. The Sixers did two of those three this past summer by signing P.J. Tucker with the NTMLE and Danuel House with the bi-annual exception. (They’re only one sign-and-trade away from the hard-cap cycle!)
When a team does one of those three things, it becomes hard-capped for the remainder of that league year, which means it cannot exceed the luxury-tax apron under any circumstance. Since the Sixers are hard-capped this year, they can’t go over the $156.983 million apron at any point between now and June 30, 2023. If they tried to pull off a signing or a trade that would push them over that line, the league office would prohibit them from doing so.
It’s unclear whether the apron would serve as the upper spending limit under the NBA’s proposal or if the league would come up with a new line which no team could cross. This year’s apron is roughly $6.7 million above the luxury-tax line, and it increases or decreases in proportion to how much the cap rises or falls each year.
Looking ahead to 2023-24, the Sixers already have $117.1 million in guaranteed salary committed to Tobias Harris ($39.3 million), Joel Embiid (an estimated $46.9 million), P.J. Tucker ($11.0 million), De’Anthony Melton ($8 million), Furkan Korkmaz ($5.4 million), Tyrese Maxey ($4.3 million) and Jaden Spring ($2.2 million). If James Harden declines his $35.6 million player option as expected and re-signs for anywhere close to his $46.9 million max salary, he’d push the Sixers close to luxury-tax territory by himself.
If the upper spending limit was in place for next season and was set at the value of the luxury-tax apron—to be clear, both of those things are highly unlikely—the Sixers would be screwed. They wouldn’t even have enough money left over to round out their roster with minimum contracts, much less re-sign any of their other free agents (Matisse Thybulle, Danuel House Jr., Georges Niang, Shake Milton, Montrezl Harrell or Paul Reed).
The Sixers’ financial outlook beyond that is even murkier. Embiid is their only player who’s on a guaranteed contract beyond 2023-24, although they’ll likely sign Maxey to a max or near-max contract extension next summer as well. Those two alone could take up $85-plus million in cap space, which could make a three-star model difficult to sustain depending on where the upper spending limit ultimately lands. If they did re-sign Harden to a long-term deal, Tobias Harris would all but certainly be a goner once his contract expires in 2024.
In an ideal world, the NBA will either drop its push for an upper spending limit or the two sides will agree to the parameters of one by the Dec. 15 CBA opt-out deadline. Having that knowledge could help inform what the Sixers do ahead of the Feb. 9 trade deadline and next offseason, when they’ll have plenty of critical decisions to make.
Considering how much the league office appears to love screwing over the Sixers, though, don’t be surprised if the next CBA implements the upper spending limit solely for them and keeps the status quo in place for all 29 other teams.