How did the Warriors sign Nick Young after giving Stephen Curry a $200 million deal and re-signing Kevin Durant?
$1.50 for every $1 they are over, and rises at various levels if they soar $5 million or more past the tax line. But that starts at $2.50 for every $1 if a team is a repeater, having been a taxpayer for the previous three seasons.
Is $99.1 million the most a team can spend in payroll next season?
No, teams can exceed the cap. Unlike the NFL, the NBA has what’s considered a soft cap, allowing teams to exceed the cap through the use of various spending exceptions. In some cases, the more a team spends, the bigger its tax break. Teams can use one of three midlevel exceptions this season: There is a $5.2 million exception granted to teams with payrolls exceeding $119 million, an $8.4 million exception for teams with payrolls under $119 million but over the $99.1 million cap; there is a $4.3 million exception for teams with payrolls under $99.1 million.
Will teams that signed players to big free-agent deals now have to make trades because of the luxury tax?
Yes and no. Yes, if teams that are in danger of paying the luxury tax want to avoid penalties, they will have to make deals. The answer is no if teams don’t mind paying the luxury tax. Before signings picked up momentum Thursday, only two teams were over the $119 million payroll that triggers the tax — Cleveland and Portland. Several more will be over once they finish signing free agents. But teams have the coming season to adjust payrolls via trades, buyouts and other moves. The luxury tax won’t kick in until the end of the season because it is based on players’ salaries.
What does the cap have to do with salaries?
Veteran players can get a percentage of the cap to determine the first year of their salaries in a contract. For a player who has been in the league 10 or more years, that can be 35 percent of that season’s cap. The cap doesn’t really affect contracts for rookies or minimum-salary players. Their salary levels are predetermined.
The Warriors’ payroll will exceed $119 million once they are done, so they will use the $5.2 million midlevel exception to slot in Young.
Are only legitimate championship contenders willing to pay the luxury tax?
Not necessarily. Portland, which is paying a combined $50 million next season to guards Damian Lillard and CJ McCollum, gave big deals during last summer’s spending spree to Evan Turner and Allen Crabbe. The Trail Blazers are looking at a payroll of more than $130 million next season for a team that didn’t even win a playoff game this past season.
What’s the benefit of staying under the cap?
A team can sign players without using exceptions and has a better chance to make trades. The Jazz needed to send only a first-round pick to Minnesota to get Ricky Rubio because they were under the cap. A team that stays under the cap this season would be better able to pursue a 2018 free-agent class that could include the likes of LeBron James, Durant, Russell Westbrook, Paul George, Chris Paul, Carmelo Anthony, Isaiah Thomas and DeMarcus Cousins.