The NBA Trade Deadline used to be an exciting day with fans waiting to see which big-name player would get traded to a team that was contending for a championship. This year, the league’s new tax system was the big winner as no true star was traded and financially cognizant deals were made.
GMs are weary of the tax system in place under the new collective bargaining agreement (CBA), and those penalties go into effect at the start of next season. Teams are going to be hit hard with penalties if they go over the tax threshold, and now there is an even stiffer penalty for the repeat offenders.
Larry Coon's NBA Salary Cap FAQ provides a chart that breaks down the penalties.
Here is a quick summary of the rates applied to first-time violators:
- $0 to $4.99 million over pays a rate of $1.50 for every dollar above the tax level
- $5 million to $9.99 million over pays a rate of $1.75
- $10 million to $14.99 million over pays a rate of $2.50
- $15 million to $19.99 million over pays a rate of $3.25
- $20 million and above pays $3.75 and an additional $0.50 for every additional $5 million
Most of the deals that went down before the trade deadline were by teams that were sitting on the border of the $70.3 million tax level. They want to escape the possibility of getting the “repeater” tag placed on them if they are even a dollar over the tax threshold going into next season.