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How re-signing James Harden would affect the Sixers’ long-term financial outlook

As the Sixers attempt to re-sign James Harden this summer, they’ll need to remain mindful of the NBA’s new collective bargaining agreement.

2023 NBA Playoffs - Philadelphia 76ers v Boston Celtics Photo by Jesse D. Garrabrant/NBAE via Getty Images

James Harden’s reported interest in returning to the Houston Rockets in free agency this summer is common knowledge at this point. Whether it’s legitimate or a leverage play to get more money from the Sixers is anyone’s guess, although the Sixers have expressed confidence in their ability to re-sign him.

The NBA’s new collective bargaining agreement could impact how much they’re willing to offer Harden this offseason, though.

The current CBA featured only one salary-cap apron, set roughly $7 million above the luxury-tax line. Teams above that line were limited to a smaller mid-level exception (the taxpayer MLE), lost access to the bi-annual exception and couldn’t receive a player via sign-and-trade, but those were the primary restrictions. The new CBA introduces a second apron, $17.5 million above the tax line, with even more onerous limitations.

Beginning this summer, teams above that line will lose access to the mid-level exception and can only take back 110 percent of the salary they send out via trades (as opposed to 125 percent under the current CBA), according to HoopsHype’s Yossi Gozlan. Beginning in 2024-25, they won’t be able to take back more salary than they send out via trades, can’t aggregate salaries in trades or receive players on existing contracts if they sign-and-trade their own free agents, among other restrictions.

In other words: Teams that go over the second apron will be severely limited in the ways they can round out their rosters. That could be a major issue for the Sixers both this summer and in future offseasons if they do re-sign Harden.

The Sixers already have $121.4 million on their books in guaranteed salary for next season, and Montrezl Harrell could add to that total by picking up his $2.8 million player option. The current 2023-24 salary-cap and luxury-tax projections are $134 million and $162 million, respectively, which means the second apron would be $179.5 million.

Regardless of whether Harrell opts out or picks up his player option, signing Harden to his $46.9 million max salary this offseason would push the Sixers well over the tax line and would leave them with roughly $11.2 million of wiggle room below the second apron. They’d have to take that into account while weighing whether to re-sign any of Paul Reed (restricted), Georges Niang, Jalen McDaniels and Shake Milton.

Although the Sixers will have a new head coach in Nick Nurse next season after parting ways with Doc Rivers, they might otherwise be running back effectively the same core if they cross the second apron. They wouldn’t have access to the taxpayer mid-level exception, which means they’d only be able to offer veteran-minimum contracts to external free agents, and they don’t have a first- or second-round pick in this year’s draft. It’s also unlikely that all four of Reed, Niang, McDaniels and Milton will return, which means they might have less reliable depth than they did last season.

If the Rockets or another suitor aren’t willing to offer Harden a max contract—whether it’s a full four-year max or a shorter-term deal—the Sixers might be able to bring him back for less than $46.9 million next season. Doing so would give them more flexibility under the second apron, although he might need to take significantly less than his max for them to re-sign the rest of their free agents and still maintain access to the taxpayer MLE.

Unless the Sixers re-sign Harden to only a one-year deal, they’ll also need to remain mindful of their long-term financial outlook while negotiating with him. Tyrese Maxey becomes eligible to sign an extension this offseason and figures to receive a starting salary around $30 million (if not higher) on his new deal, which will kick in ahead of the 2024-25 season. Tobias Harris’ $39.3 million salary will come off the Sixers’ books that offseason, which will give the Sixers more financial wiggle room, but they could be paying Harden, Maxey and Joel Embiid upward of $130 million combined by then.

The NBA hasn’t released an official projection for the 2024-25 salary cap yet, although the new CBA stipulates that it can’t be more than 10 percent above next year’s cap. If the 2023-24 cap lands at $134 million, that means the 2024-25 cap could be $147.4 million at most, which should put the tax line in the neighborhood of $175 million (if not higher). That means the second apron would be north of $190 million, giving the Sixers plenty of flexibility to round out their roster around Harden, Maxey and Embiid.

However, De’Anthony Melton is eligible to sign a four-year extension worth more than $70 million this offseason, and we’ll see whether any of Reed, Niang, McDaniels and/or Milton return on multiyear deals this summer. If Melton doesn’t sign an extension, he’ll be an unrestricted free agent in 2024 as well, adding another variable into the Sixers’ long-term financial outlook.

In the best-case scenario, the Sixers would sign Harden to a below-max contract this summer that gives them more control over the back half of the deal, similar to the four-year, $120 million contract that Chris Paul signed with the Phoenix Suns in July 2018. ESPN’s Brian Windhorst said on a late-May episode of Pardon the Interruption that the Sixers “have not shown the appetite to pay Harden the max,” which is “why they asked him to take a paycut last year.”

“There’s been a very hard rumor out there in the NBA about Harden’s intent to go back to Houston, and it makes you wonder if it’s being sold a little bit too hard,” Windhorst added. “... The Sixers are not really motivated to pay him that max salary if they don’t think anybody else is gonna do it.”

The Sixers are almost certain to be over the luxury-tax threshold if they re-sign Harden this offseason, which would put them into repeater-tax territory in 2024-25. Depending on where the exact tax brackets and penalties land in the new CBA, they might be reluctant to cross the tax threshold that season, which would give them one year to get their books in order.

The Sixers likely have a ballpark target for Harden’s annual average value on a new contract, just as they should for the rest of their free agents, Maxey and Melton. Getting one or more of those players back for less than expected could allow the Sixers to overpay elsewhere if needed. All of these decisions will be interconnected for that reason. The new CBA demands as much.

The Sixers are projected to have only $66.2 million on their books for 2024-25 if P.J. Tucker picks up his $11.0 million player option and they pick up their $4.0 million team option on Jaden Springer. They can work backwards from there to determine how much they’d be able to offer Harden, Maxey, Melton and the rest of their free agents before crossing the second apron.

Running the same core back with a new coach might make sense one time, but another postseason flameout next year could result in more significant changes. Being over the second apron in 2024-25 would limit the Sixers’ flexibility to make those moves, which likely hints at where their upper spending limit might be over the next two offseasons.

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

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