The trade deadline and the hard cap

The trade deadline is at high noon (Pacific time) today, and some teams are going to be on the outside looking in.

Not necessarily by choice – some teams have a distinct need to shake things up, or are missing a key piece for the stretch run and the playoffs. It’s by necessity. They’re hard capped. And their options are limited.

The 2011 CBA changed the landscape by implementing the league’s first hard cap. And it wasn’t even a principal objective – rather, it was an afterthought, a consequence. They wanted things to be tougher on taxpaying teams as an additional incentive to keep payrolls down. So in addition to upping the financial penalties that come with being over the tax line, they put in some system changes as well.

Taxpaying teams now have a smaller Mid-Level exception, and can’t use the Bi-Annual exception at all. And starting this summer, they can’t receive a player in a sign-and-trade transaction either. In other words, all the tools that GMs of capped-out teams use to maneuver have become inaccessible.

The union did manage to negotiate a higher tripping point for these system changes. Rather than taking effect right at the tax line, they are triggered at a point $4 million over it – a point they call “the apron.” Once a team is over the apron, they can’t use their Bi-Annual exception, they can’t trade for another team’s free agent in a sign-and-trade, and their Mid-Level exception is a lot smaller than their peers’.

Here is where the hard cap comes in. Given these rule changes, a clever GM might have tried to make an end-run around the rules by changing the order in which he does things. Rather than, say, re-signing his own free agents and then spend the full Mid-Level, instead he might have spent the Mid-Level and then re-signed his own guys.

The hard cap is a way of telling teams that if they want to behave like a team that’s under the apron, then they have to commit to staying under the apron. If a team uses it’s BI-Annual exception, full Mid-Level exception (any amount above what the taxpaying teams get), or – starting this summer – receive a player in a sign-and-trade deal, then they can’t go above the apron for the rest of the season (through June 30).

It’s like the speed of light, or absolute zero. You can get close, but it’s a boundary that can’t be crossed.

The apron this season is $74.307 million. A team that’s subject to the hard cap is not allowed to do anything that would take them over that line. You have an injured player and need to sign a replacement? Tough. Miami just offered you LeBron James for Vladimir Radmanovic? You’re going to have to turn them down.

Hard-capped teams are allowed to make trades. They just can’t make any moves that add salary. In addition to trading down in salary, these teams have few alternatives if they want to create cap room. Since we’re past January 10 – they date all contracts become guaranteed for the rest of the season – they can’t waive a player on a non-guaranteed contract and reap the savings. However they can waive a player who was signed under the current CBA and utilize the Stretch provision. But that’s it – no other options exist.

So which teams are in this mess? Here are the teams that are now subject to the hard cap, how they got there, and how much spending room they have left. None of these teams are allowed to go above $74.307 million through June 30. That means, for example, that the Celtics can make trades that add an additional $2.7 million or less in salary, but they can’t make any deals that add more than that.

But on July 1, these teams’ shackles come off.

Team Used Room under apron
Atlanta Mid-Level (Louis Williams) $7.7 million
Boston Mid-Level (Jason Terry) $2.7 million
Chicago Mid-Level (Kirk Hinrich), Bi-Annual (Marco Belinelli) $0.2 million
Golden State Mid-Level (Carl Landry & Draymond Green) $3.2 million
LA Clippers Mid-Level (Jamal Crawford) $5.0 million
San Antonio Mid-Level (Boris Diaw), Bi-Annual (Nando DeColo) $4.6 million

2 thoughts on “The trade deadline and the hard cap

  1. Levi

    a clever GM might have tried to make an end-run around the rules by changing the order in which he does things. Rather than, say, re-signing his own free agents and then spend the full Mid-Level, instead he might have spent the Mid-Level and then re-signed his own guys.

    There is still the issue of cap holds from his free agents provides some restrictions, no?

    1. lcoon Post author

      For apron-related calculations they use a modified version of the team salary, which doesn’t include cap holds for free agents, first round draft picks or outstanding exceptions. See question number 14 of my FAQ for a full list of the differences between the regular team salary and the apron-related team salary.

Comments are closed.