Making Sense of the NBA Salary Cap

In the NBA, there are many ways to get creative and maximize the talent you put on a roster. The NBA has a salary cap but it is flexible. For example, the cap for this season is $70 million. Now, you don’t need to spend all of that. You, at minimum, need to spend $63 million. That $63 million represents the league minimum (90%) of the cap in which a team can spend. Should a team choose not to, (cough) the Philadelphia 76ers (cough), they’ll have to send a check to the NBA at season’s end for the and money

There are ways to however go over the salary cap. Let’s say you finish a season with a team payroll of $70 million, right at the cap. Now you have 2 players whose contracts are expiring and are looking to increase the amount they make on a yearly basis. Provided you contain their bird rights, you have the opportunity to bring them back and go over the salary cap. Teams that are under the cap are given a mid-level exception. This allows teams to sign a player for $5 million annually for 4 years and take them over the cap. Teams already over the cap are given a mini mid-level exception valued at 3 years and $3 million per year. Teams are also still allowed to draft players and sign them if already over the cap. Once over the cap, the only way to bring players onto the roster is through mid-level/mini mid-level, the draft, or signing players to the veteran’s minimum which is approximately $1.3 million.

There is a catch for going over. For every dollar over the salary cap, teams are penalized approximately three times the amount over. In 2013-2014, the Brooklyn Nets were all in having brought in Paul Pierce, Kevin Garnett and Jason Terry to add to the expensive core of Deron Williams, Joe Johnson and Brook Lopez. With the salary cap that season set at approximately $71 million, the Nets had exceeded the cap with a team payroll just north of $100 million. That meant because they were over by about $30 million, they would have to pay the penalty. Some teams are willing to do this if one, ownership signs off on it, and 2, the front office believes this team has what it takes to win it all. The Nets luxury tax bill was somewhere around $80 million which ultimately meant that the Nets roster that year cost them $180+ million.

Next summer, the NBA salary cap is set to skyrocket due to a lucrative television deal. I have no doubt that all of this will become even more confusing than it already is. We’ll just have to wait and see what kind of new rules, regulations and restrictions the NBA can come up with.