- Larry Coon, NBA
Imagine you're an NBA general manager. You're offered a sweet deal at the trade deadline -- one that's too good to pass up. Only you have to turn it down. "Sorry, no can do" is your regretful response.
Welcome to life with a hard cap.
The hard cap was born with the 2011 collective bargaining agreement, and it's really a side effect of another rule. The league wanted to increase the penalties for high-spending teams because a dollar-for-dollar luxury tax hadn't been enough of a disincentive. It made the luxury tax markedly more punitive and added system restrictions for high-spending teams -- those more than $4 million over the tax line. Coupled with the higher tax rates, these system changes sent a much stronger message that teams need to toe the financial line.
These changes also created loopholes. The hard cap closes these loopholes by preventing teams from using exceptions reserved for low-spending teams and later racking up a huge payroll. With a hard cap in place, if a team uses one of the rules reserved for low-spending teams, then it has to remain a low-spending team -- not allowed to go more than $4 million above the tax line for the remainder of that season.
Some teams are hard-capped and simply don't care because they are comfortably below the limit or don't intend to take on additional salary. For other teams, the hard cap can be crippling. Last season, the Chicago Bulls were hampered by the hard cap all season -- making it tough even to sign enough players to bring to training camp. It's a mistake they didn't repeat this season.
The hard cap is lifted July 1, so right now it primarily affects teams' ability to make moves at the trade deadline. Once we hit free agency this summer, these teams once again can trade freely. And any team is free to make trades that give away salary; the hard cap prevents teams from adding salary only.
Here are the teams that are subject to the hard cap and how badly each is affected for the trade deadline.
Amount available: $1.91 million
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