Salary Cap (NBA)
As a salary cap (English for salary cap) is referred to in the NBA , the salary cap , each team is allowed to spend on players.
This cap changes every year and depends on the league's total revenue in the previous year. In the 2015/16 season , the salary cap per team was 70 million dollars , and in 2016/2017 it is expected to increase to around 90 million. As in other sports , this regulation serves to limit the total expenditure for players and also to discourage financially stronger teams from signing all the stars of the league. In this way, the league should remain more exciting and varied overall.
history
The NBA introduced a salary cap as early as the mid-1940s, but it was abolished after just one year. There were no salary restrictions in the NBA for the next four decades. It was not until the 1984/85 season that the salary cap was reintroduced in its current form. That season, teams were allowed to spend a maximum of $ 3.6 million in player salaries . The NBA was the first of the North American professional leagues to introduce a salary cap.
Type of salary limit
There are different versions of a salary cap. In the NFL and the NHL, for example, there are absolute upper limits that must not be exceeded under any circumstances ( hard caps ). In the NBA, on the other hand, there are numerous exceptions, under which higher total salaries can be paid ( soft caps ). This rule was chosen to allow teams to keep their own players even if the limit is exceeded. Experience has shown that the loyalty of the players to their club also improves the loyalty of the fans and thus increases the overall turnover of the NBA.
Collective agreement
Between the NBA (represented by the Stewards and the 30 team owners) and the players' union of the NBA , a collective agreement (Engl. Is Collective Bargaining Agreement , shortly CBA ) completed. This contains all the regulations on player contracts, transfer modalities, income distribution, drafts , the salary cap and other details. In June 2005, the collective agreement concluded in 1999 expired, so that new negotiations took place. After similar negotiations in the 2004/05 NHL had led to a protracted strike, a quick agreement was reached in July 2005. The contract ran until the end of the 2010/11 season with an option for a one-year extension by the league, which was not exercised. The changes between the two collective agreements were marginal with regard to the salary cap. To compensate for the controversial increase in the minimum age of the players, they received a slightly higher share of the league's income. In addition, the maximum wage for individual players fell slightly. Since there has been no collective agreement between the players and the club owners since July 1, 2011, the league imposed a " lockout " that lasted 149 days and shortened the 2011/2012 season to 66 games.
Exceptions
The design of the upper salary limit as a "soft cap" results in the need to define the exceptions under which a team can conclude a contract with a player, even if they exceed their salary cap.
Average wage rule
A team can enter into a contract with a player who receives the average NBA salary, even if the salary cap of the team is exceeded or has already been exceeded. The average wage in the NBA for the 2009-10 season was $ 5.854 million. Individual free agents can be obliged to pay the average wage or several free agents whose total salary must not exceed the average wage. Any team that exceeds the upper salary limit at the beginning of the season break may make use of this rule. Examples of the application of this rule are the obligation of Antonio McDyess by the Detroit Pistons in the summer 2004 or the signing of Ron Artest by the Los Angeles Lakers in the summer of 2009. The negotiated in December 2011 new collective agreement were introduced some changes: For Teams that are below the luxury tax limit have a mid-level exception of $ 5 million in the first year of their contract and a maximum length of 4 years. For teams above the luxury tax limit, there is a slimmed-down version of this exception with a salary of $ 3 million in the first year and a maximum length of 3 years. In addition, there was a third exception for teams that are even below the upper salary limit and cannot use either of the two exceptions mentioned above: For such teams, they are allowed to use their space below the upper limit and, in addition, one or more players for 2.5 million annual salary above commit for a maximum of 2 years. These 3 exceptions are set in their amount until the end of the 2012/2013 season and only then will increase by 3% annually.
Two-year rule
The two-year rule allows a free agent to be hired for a starting salary of 1.672 million US dollars (as of 2009/10) for up to two years. Like the average wage rule, the two-year rule can be split between different players. A salary increase may not exceed 8% per annum. An example of the application of this rule is when Karl Malone was signed by the Los Angeles Lakers prior to the 2003-04 season .
Rookie rule
Regardless of whether the salary cap is exceeded, a team may always sign a rookie in the first draft round to the usual rookie scale salaries (rookie salary depends on the draft position).
Larry Bird Rule
Probably the best-known exception rule is named after the player Larry Bird . The Boston Celtics were the first team to be allowed to cross the salary cap to sign a new contract with their player Larry Bird. Free agents who are eligible for this rule are referred to in the collective agreement as qualifying veteran free agents or bird free agents . The scheme allows an NBA team to exceed their salary cap in order to offer one of their own free agents a new contract that can go up to the maximum wage . For a player to become a Bird Free Agent , they must have played for the same team for at least three consecutive years without being fired or changing teams as a free agent. The design of the contracts, e.g. B. consisting of three consecutive one-year contracts or a three-year contract is irrelevant. If the Bird Free Agent is traded to another team, he retains his rights so that his new team can continue to use the Larry Bird Rule and break or exceed the upper salary limit. Contracts based on this rule can be concluded for a maximum of five years. The current collective agreement also makes it unattractive for players with Bird rights to sign a new contract before the old one has expired, as the maximum salary for an extension is lower than a new so-called maximum contract .
Early bird rule
The early bird rule is a weakened form of the Larry bird rule. Free agents for whom this rule can be applied are called early qualifying veteran free agents . After two consecutive seasons with no dismissal or change as a free agent, the team can offer their own free agent a new contract on modified terms, according to which the player receives either 175% of his old wage or the NBA average wage, depending on which of the two amounts is higher. Early bird contracts must have a term of at least two and a maximum of four seasons. The early bird rights expire if the player is traded to another team. However, the player reserves the right to veto a trade affecting him.
An example of this is Devean Georges' refusal to accept a trade from the Dallas Mavericks to the New Jersey Nets in the 2007-08 season.
Non-bird rule
Free agents who are suitable for the application of the non-bird rule are called non-qualifying free agents in the collective agreement . This means that they do not qualify for either the Larry Bird Rule or the Early Bird Rule. According to the non-bird rule, teams can sign a new contract with their own free agent, which guarantees the player either at least 120% of the previous year's wage or at least 120% of the minimum wage defined by the NBA. The highest of the two amounts is chosen for this. Contracts based on this rule can last up to four years.
Rule for the minimum wage
A team can commit a player to the minimum salary of the NBA for up to two years even if the salary cap is exceeded. With a 2-year contract, the player receives the minimum wage for this season in the second year. No bonus may be paid for the contract upon conclusion of the contract. In the event of a trade by the player who receives the minimum wage, the regulation and thus the contract for his new team remain in place. Any number of players can be committed under the guise of this exception.
Trade rule
Assuming that a team exchanges a player # 1 for a player # 2 whose salary is less than that of player # 1, that team can use the salary difference for other trades within one year. This rule applies above all when draft picks (right to vote in NBA drafts) are traded directly against another player. Since draft picks have no salary value, the only way to compensate for the salary is by applying the trade rule. Furthermore, this rule can be used to compensate for the loss of a free agent in that the team affected by the loss concludes a contract with its free agent, then trades the player and thus receives financial leeway for later player obligations. This rule does not apply to trades involving more than two players, although additional payments or draft picks are permitted as part of the trade. An example of the application of this exemption is when Lamar Odom was signed by the Dallas Mavericks , who previously sent Tyson Chandler to New York.
Rule for injured players
This regulation allows a team that has already exceeded the upper salary limit to sign a replacement for an incapacitated player on favorable terms. To apply this rule, the estimated downtime must be confirmed by an NBA-selected doctor. The maximum salary of the substitute player is either 50% of the injured player's salary or that of the average wage for teams under the luxury tax limit, whichever of the two amounts is lower.
Although each team is free to sign multiple players with one exception, it is not possible to combine multiple rules to sign a single player. In the 2009/2010 season Trevor Ariza was signed by the Houston Rockets through this exception . Since 2011, the player or players signed as substitutes can be signed for a period of one year. Previously, up to 5 years were possible.
Luxury tax
Thanks to the numerous exceptions, it is possible for a team to exceed the salary cap almost indefinitely. In order to keep the teams from doing so, the NBA demands a levy called luxury tax if the salary cap is significantly exceeded. The amount by which the teams can put on the salary cap without having to pay the luxury tax is determined in a complicated formula. For every dollar paid in player salaries above this tolerance limit, a team had to pay another dollar to the NBA. While most teams exceeded the salary cap, very few were outside the tolerance limits. In the 2005/06 season these were $ 61.7 million. The New York Knicks have been the highest-paid team for a number of years. In the 2005/06 season these amounted to $ 124 million, which is 74.5 million above the salary cap and 62.3 million above the tolerance range. James L. Dolan , the owner of the Knicks, had to transfer this amount to the NBA. All luxury taxes paid are shared among the teams that did not have to pay anything. These teams often receive several million euros, which help improve the chances of financially weaker teams.
In the summer of 2005, the new collective agreement was supplemented with an amnesty clause. This gives each team the unique opportunity to dismiss exactly one player and thus exclude him from the luxury tax calculation. This decision is only relevant for calculating the luxury tax. The team must continue to pay the dismissed player his salary in full and it continues to be included in the calculation of the salary cap. During the term of the terminated contract, the team may not re-sign the player. Otherwise, the player will be treated like any other dismissed player.
The amnesty clause was also derisively called the "Allan Houston Rule", as Allan Houston was regarded as the symbol of a free agent who was given a dramatically inflated contract before the luxury tax was introduced. However, the New York Knicks decided against Allan Houston and instead fired Jerome Williams . Michael Finley , Brian Grant and Derek Anderson were also released to apply the amnesty clause . While Williams and Grant ended their careers immediately, Finley and Anderson moved on to other teams while continuing to receive top wages from their old teams .
There was also an amnesty clause in the new CBA (2011/2012), which is only effective for players who signed their contracts before the 2011/2012 season. Gilbert Arenas , Charlie Bell , Baron Davis and Chauncey Billups , among others , fell victim to this clause. Players who have been dismissed in this way can then be engaged by the teams in a bidding process below the upper salary limit. If there are no interested parties, the player concerned becomes a free agent and can be signed by any team (for the minimum salary).
Luxury tax will continue to be charged ($ 1 for a dollar) through the end of the 2012/2013 season. Then this is tightened as follows:
Luxury tax from the 2013-14 season
| Amount above the tax limit | Standard tax rate | Increased tax rate |
|---|---|---|
| under $ 5 million | $ 1.50 | $ 2.50 |
| $ 5-10 million | $ 1.75 | $ 2.75 |
| $ 10-15 million | $ 2.50 | $ 3.50 |
| $ 15-25 million | $ 3.25 | $ 4.25 |
Explanation:
The increased tax rate applies to teams that have already paid luxury tax in the previous 4 years. A maximum of 50% of this tax revenue is distributed to the teams, which did not have to pay any additional tax. What exactly is to be done with the remaining 50% is not explicitly regulated in the current CBA.
Examples:
If an NBA team that does not fall under the increased tax rate has player salaries that are $ 7 million above the luxury tax limit in total, this must be $ 1.50 per dollar for the first 5 million, i.e. $ 7.5 million , and pay $ 1.75 per dollar for the remaining 2 million. A total of $ 11 million in luxury tax would be due in the example, compared to only $ 7 million in salaries.
Another NBA team has been crossing the luxury tax limit for 5 years. Player salaries are now 18 million above this limit. As a result, the first $ 5 million will be charged $ 12.5 million in luxury tax. The next 5 million would be $ 13.5 million in tax. Then there would be 17.5 million for the third tranche of 5 million and a further 12.75 million for the last 3 million. In total, such an excess would cost 56.25 million euros in luxury taxes alone.
In the long term, it is unattractive, even for financially stronger franchises, to permanently exceed the luxury tax limit, since the advantage of theoretically better players is offset by a disproportionately large additional financial burden.
development
With the exception of the 2002/03, 2009/10, 2011/12 and 2012/2013 seasons, the salary cap has been increased every year so far. The following diagram shows the development since the introduction of the salary cap in 1984.
NBA Salary Cap in US dollars
See also
Web links
Individual evidence
- ↑ Salary Cap 2016/17 estimated. In: basketball.de. Retrieved June 19, 2016 .
- ↑ a b [1] Collective Bargaining Agreement 2011 from Steve Ashburner
- ↑ http://hoopshype.com/salaries/golden_state.htm
- ↑ a b NBA Board of Governors ratify 10-year CBA ( English ) NBA .com. December 8th, 2011. Archived from the original on December 12th, 2011. Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved February 4, 2012.
- ↑ NBA Sets Salary Cap and Luxury Tax Level for 2012-2013 Season
- ↑ Chad Ford: Salary cap for 2006-07 season set at $ 53,135M ( English ) ESPN .com. July 11, 2006. Retrieved June 14, 2011.
- ↑ NBA Salary Cap for 2008-09 Season ( English ) NBA .com. July 9, 2008. Retrieved June 14, 2011.
- ↑ Marc Stein: 2010-11 cap $ 2M higher than thought ( English ) ESPN .com. July 8, 2010. Retrieved June 14, 2011.
