NBA offseason: What is the CBA’s second apron? And how does it limit high-spending teams?

With several expensive rosters, most notably the Phoenix Suns, being eliminated from the playoffs, the NBA’s hazy line between season and summer is fast approaching. Every offseason, combining the annual rookie draft and free agency, pits front offices against one another within a competitive marketplace featuring restrictive rules regarding how teams can conduct business. This upcoming transaction cycle, the difficulties of roster construction will only increase as the league’s new collective bargaining agreement takes full effect. Most noteworthy: The NBA’s new “second apron” becomes an actual salary threshold for front offices to truly consider, with varying punitive limitations for teams that do decide to shell out that top dollar.

What exactly is the second apron? Beginning with the 2011 CBA, the league only had a single tax apron, a limit to how far teams could spend above the salary cap and luxury tax line without having to pay added penalties that brought other restrictions as well. The second apron is a new, additional threshold, slated as roughly $11 million ($190 million total) above the first apron for 2024-25, which will handicap team decision-makers more than ever before.

Previously, being a tax team meant clubs were charged an additional dollar per dollar over the limit, in proportion with subsequent tax brackets, and then forced to sacrifice access to the full mid-level exception — a valuable contract mechanism that allows teams without cap space to sign rotation-caliber players. Under the new CBA, teams over the first apron will now also be limited to just matching salaries in trades to 100% of their outgoing money, while non-taxpayer teams can make the math worth within 125%. In short, teams can’t take in more money than they’re trading out. First-apron clubs are also barred from signing a player waived during the regular season if his salary exceeds that year’s mid-level exception. This year, for example, that impacted the Boston Celtics, Denver Nuggets, Golden State Warriors, Miami Heat, Milwaukee Bucks, Phoenix Suns and the LA Clippers.

Phoenix Suns forward Kevin Durant pauses on the court during the first half of Game 4 of an NBA basketball first-round playoff series against the Minnesota Timberwolves, Sunday, April 28, 2024, in Phoenix. The Timberwolves won 122-116, taking the series 4-0. (AP Photo/Ross D. Franklin)
Kevin Durant and the Phoenix Suns are projected to be a second-apron team. (AP Photo/Ross D. Franklin)

The second-apron repercussions will begin in earnest once the league calendar flips to 2024-25, with teams above that threshold now losing any mid-level exception entirely. They aren’t just limited to the 100% salary matching in trades, but second apron teams will also be prohibited from combining multiple players’ salaries into trades as well. Phoenix, as a specific example, could not trade both Jusuf Nurkić and Nassir Little for one player making $24.8 million. Second-apron teams also can’t utilize trade exceptions from previous years or send cash to help get deals over the finish line.

Just how punitive this final element of the second-apron punishments turns out is what has league executives most curious about this summer’s activity – and how the next few seasons of roster construction unfold. Second-apron teams won’t be able to trade their first-round pick seven years into the future. So, if you’re in the second apron by season’s end of 2024-25, you’ll automatically have your 2032 first-round pick frozen and unable to be dealt. That might seem like a way-off draft asset, but those picks are valuable for contending teams that have already emptied much of their war chests. The Bucks, for instance, sent their 2030 first-round pick to the Portland Trail Blazers as part of their September 2023 blockbuster to acquire Damian Lillard.

And here’s the tricky part: If a team then remains in the second apron for two of the following four seasons, its first-round pick seven years out won’t just be frozen, it will automatically be moved to the end of that first round — or the 30th pick.

So far, there seems to be a growing consensus among team strategists that championship-contending teams will be willing to go into the second apron for two years of that total five-year window — the first season in the second apron, and then the next four cap years after that. If you’re competing for championships and generating the revenue that comes with it, deep-pocketed owners will likely be willing to pay the tax increments, and front offices will be willing to sacrifice that future draft capital in order to do so. But there’s a school of thought shaping around the league that teams might have just two years over a half-decade to go all-in before jumping back below the second apron, especially if that team has not reached its lofty expectations.

It doesn’t seem to be a coincidence that Minnesota signed Mike Conley Jr. to a two-year extension this spring that takes the Timberwolves point guard through the 2025-26 season. That could very well mark the second straight year Minnesota goes past the second apron to fund a contending team behind rising superstar Anthony Edwards — and 2025-26 also marks the last year of Rudy Gobert’s huge contract if the three-time Defensive Player of the Year picks up his player option. Sixth Man of the Year Naz Reid also has a player option for that season. Only Edwards, Karl-Anthony Towns and Jaden McDaniels have guaranteed money on the books for the Wolves beyond ’25-26, presenting Minnesota with some flexibility to evade the penalties of the second apron should it choose to do so.

This seems in part why we saw Milwaukee and Boston take huge swings last summer — Lillard for the Bucks, Jrue Holiday and Kristaps Porziņģis for the Celtics — before this new tax landscape sweeps across the league. Boston will almost certainly be a second apron team for 2024-25, after inking Holiday to a four-year, $135 million extension, which has left rival executives more than curious what Boston’s appetite will be in paying to retain versatile guard Derrick White once the final year of his deal concludes after ’24-25.

The Warriors will have to make serious considerations this summer about how much of a tax bill they are willing to afford and how many team-building ramifications their front office is willing to suffer for an aging, expensive roster that failed to make this year’s playoffs. For that, rival executives expect the Warriors to try to improve their team while avoiding the second apron for 2024-25. Denver’s projection toward becoming a second-apron team also has opposing front-office personnel curious to see if the Nuggets will pony up to keep two-way veteran Kentavious Caldwell-Pope beyond this season, when he will have to decide on a $15 million player option for ’24-25 he appears very capable of exceeding on the open market.

This is an added advantage Philadelphia personnel believe the Sixers have with their upward of $60 million in cap space this summer, sources said. While many competitors with championship aspirations have to consider every penny on their cap sheet, Philadelphia only has Joel Embiid’s guaranteed salary on the books for ’24-25 and beyond.