The Collapse of Player Leverage: The NBA Collective Bargaining Agreement and the Second Apron
Ratified during the beginning of the 2023 National Basketball Association (NBA) playoffs, the current NBA Collective Bargaining Agreement in the took effect at the beginning of the 2023-24 league season.[1] While many elements of NBA governance were tweaked, the most profound impact of the new agreement is currently being felt in the roster construction domain.[2] Unlike the NFL and other professional sports leagues, the NBA did not have a hard salary cap prior to the 2023 CBA.[3] A hard salary cap is a fixed limit teams are permitted to spend on player salaries on aggregate in a season.[4] While the current CBA does not have a hard salary cap either, the terms within the 676 page document may in fact serve as a hard salary cap packaged as a more forgiving threshold.[5]
The desire for more stringent salary cap rules may mark a shift in player empowerment in the league, serving as a response to players having unprecedented levels of leverage in determining which teams they want to play for next, either through free agency or via trade.[6] Two high water marks for player empowerment in the NBA can be seen when Lebron James televised his “decision” to sign with the Miami Heat in 2010, and when Kevin Durant jumped ship from an ascending Oklahoma City Thunder squad to join the already perennial powerhouse of the Golden State Warriors in Oakland.[7] NBA owners responded to superstar players’ ability to throw off the competitive balance of the league by baking in the concept of “supermax” deals in the 2016 CBA, which allowed teams to offer players they drafted more money than teams that did not draft that player, financially disincentivizing players from leaving the teams that drafted them.[8] The trickle-down effect of this change was high-profile players utilizing their leverage to request trades from their current teams, sometimes even after signing lucrative contract extensions, because other teams could offer the salaries the players wanted with the previously flexible salary cap structure.[9] Most notably, James Harden forced a trade from Houston to Brooklyn, Durant from Brooklyn to Phoenix, and Damian Lillard from Portland to Milwaukee, all within the last five years.[10] Common to all of these situations was the player effectively holding all of the leverage over their prior team—claiming they would not play until they were traded—which forced the team to broker a trade with a more talented team that would be able to match the players’ compensatory demands.[11]
The 2023 Agreement was an aggressive retaliation against this reality.[12] The new agreement incorporated the concept of a spending “apron.”[13] Now, the agreement incorporates two aprons into the salary cap structure.[14] In the 2024-25 season, if a team spends over $179 million on aggregate player salaries for the season, they are in the “first apron”, and if they spend over $190 million, they are in the “second apron”.[15] Teams in the first apron have to pay a “luxury tax” to the league for each dollar spent over the limit, and they also have some restrictions on player acquisitions and trades.[16] Teams in the second apron have a larger luxury tax sum to fork over, but more importantly, they are faced with extremely stringent player acquisition and trade limitations.[17] For example, teams in the second apron are unable to sign players to mid-level contracts, meaning the roster has to be constructed with a mixture of expensive and cheap players only.[18] Second apron teams are also not allowed to combine player contracts in a trade, trade multiple players in a single deal, nor trade first round picks seven or more years in the future.[19] Lastly, teams that remain in the second apron for two of the following four seasons have their draft pick seven years in the future automatically moved to the end of the first round, which can catastrophically reduce the value of that asset.[20].
While this agreement still does not impose a literal hard cap on the teams, the new apron rules effectively create a hard cap in practice, as teams have shown an initial aversion to taking on salaries that catapult them above the second threshold.[21] Teams have shown reluctance to accede to the demands of unsatisfied players who want to be traded with the new CBA in place, and nowhere was this more evident than the Jimmy Butler saga with the Miami Heat.[22] Butler attempted to utilize his perceived leverage and broker a trade of his choosing in the same manner Harden, Durant, and Lillard had done in prior years.[23] As Butler made his situation in Miami increasingly more untenable for the Heat, the team continuously tried to trade the player and failed as his trade value on the open market plummeted.[24] Butler made clear that he wanted to be offloaded to the Suns, and while prior to the current CBA that would have been a rather simple feat given Phoenix’s mutual interest in the player, a deal was infeasible.[25], In a piece following the trade deadline, ESPN commented on Butler’s desire to choose his next destination, “[t]he idea that Butler could orchestrate his exit from Miami and to a preferred destination is both audacious and perfectly on brand. The Suns are in salary cap purgatory, having brashly plowed over the second apron with their trades for Durant and Bradley Beal in the past two seasons.”[26]
Butler was ultimately unloaded to the Warriors right before the deadline, a team he had initially stated he would not want to be traded to.[27] This saga is symbolic of a substantial power shift in NBA trade negotiations, aggrieved players being unable to hand-pick their next destination because teams are handicapped by the new apron rules.[28] Other instances in the NBA show this is a growing trend: Brandon Ingram and Zach Lavine had less dramatic but longer periods of unhappiness on their former teams, and had to endure multiple trade deadlines before being offloaded to small-market teams that had room under the apron thresholds to take on their larger contracts.[29]
Whether teams will find a new way around the CBA’s restrictions in order to take on bigger contracts and attract the NBA’s best players remains to be seen, but it seems unlikely given the events immediately preceding the most recent trade deadline.[30] The days of all-star caliber players forcing their way on to teams of their choosing appear to be over, and the new CBA requirements may substantially hamper trades and player movement for the foreseeable future.[31] The NBA was very recently the professional sports league where the players held all of the chips, but sly negotiating on behalf of the representatives for the NBA owners has put the ball back in their own court.[32]
Footnotes
