NBA Owners Want Tighter Luxury Tax Line In New CBA

While CBA negotiations may not get people jumping out of their seats of excitement, the importance of them are forever underappreciated. Without a Collective Bargaining Agreement, we’d flat out have zero NBA basketball to enjoy, as neither the owners (represented by the NBA), nor the players (represented by the National Basketball Players Association) would be willing to move on without one.

Shams Charania of The Athletic provided the basketball world with an update on these negotiations, which include three major components:

– A lowering of the current age limit from 19 to 18 years old, essentially opening the door for high school seniors to once again make the jump straight to the NBA.

– Players seeking a sort of equity opportunity after they’re finished playing.

– A potential tightening of the luxury tax, further restricting teams in how much money they can spend on their roster.

In this piece, we’ll focus exclusively on the luxury tax discussion.

NBPA likely pushes back against restrictions

While no report has surfaced about the player union’s stance on a tightened luxury tax barrier, it’s fairly clear that any further restrictions would be an incentive for owners to spend less money on payroll.

Given that a lesser financial commitment to any team’s roster means less money for players overall, it stands to reason the NBPA would likely fight it, or at least seek compensation in other areas, such as the aforementioned equity ask.

Regardless, the union isn’t just going to accept less available money for their players, and as further luxury cap restrictions would mean just that, the owners will have to make a convincing argument to get that included in the new CBA.

Of course, from a purely competitive perspective, tightening the luxury tax barrier would be a good idea that promotes parity. While the highest-earning teams will always have a leg-up in what they can afford to sacrifice financially, more teams would feel compelled to lower payroll, opening the door for talent to become more spread-out.

(Whether there even is a problem with a lack of parity is a question for another day, given that the league’s talent level has never been stronger than it currently is.)

Even the Warriors have limits

The Golden State Warriors aren’t known for just their dominance over the past seven years, they’re also known for being willing to spend ungodly amounts of money on their roster, having paid $311 million in luxury tax bills over the past two years alone.

Yes, $311 million solely in luxury tax payments. That’s not even taking into account the costs of the roster before reaching the luxury tax threshold.

General Manager Bob Myers even indicated that the Warriors are very “case specific” in regards to their spending, and made no assurances that they’d continue to spend like they’ve done before:

For owners, the argument is easy. The stricter penalties, the less temptation to spend wildly. We’ve seen similar arguments made in the past when owners negotiated for shorter contract lengths, fearing mistakes.

As it turned out, the shortening of contracts turned into an own goal for owners, as shorter contractual obligations for players allowed them greater mobility in changing teams. As a result, stars began finding new homes on a more regular basis, often leaving their incumbent teams high and dry.

As such, it would be wise for owners to identify any long-term consequences before they dig in their heels in. Because what the owners are really doing – once again – is negotiating with the union to help them save them from themselves, as was the logic with the contract shortening.

The union will undoubtedly push back in some regard. As mentioned, we don’t know if they demand for the owners to maintain the status quo, or to seek an offset somewhere else by using the luxury tax as a bargaining chip. It’s highly likely that the union has a laundry list of items they wish to see happen, and if the owners’ desire of tightening the luxury tax limit is big enough, surely the union can gain elsewhere.

It appears unlikely that the NBA and NBPA will head to a lockout, due to immense figures currently being talked about. The league is looking for a new TV deal in the range of $75 billion, which would make both owners and players a lot richer than what they already are.

As such, it’s expected the two sides will eventually come to terms, as both understand the upside of continuing their relationship.

Unless noted otherwise, all stats via NBA.com, PBPStats, Cleaning the Glass or Basketball-Reference. All salary information via Spotrac. All odds via FanDuel Sportsbook.