If the NBA has its way, it could impose a harsh new rule that could have a major impact on how teams build and maintain their rosters year by year.
According to ESPN’s Adrian Wojnarowski, it is considering imposing a hard limit on team salaries, instead of the current luxury tax system.
In wake of large market contenders Golden State, Brooklyn and the Los Angeles Clippers running up massive payrolls and luxury tax penalties, the NBA's proposing a system that would replace the luxury tax with a hard limit that teams could not exceed to pay salaries, sources said.
— Adrian Wojnarowski (@wojespn) October 28, 2022
The league’s luxury tax system has been in effect since the early 2000s, and it imposes a penalty on teams that exceed a certain threshold in terms of annual spending.
This penalty greatly increased in recent years, but it is in effect a “soft cap” that still allows teams to spend as much as they’re able to in order to field a winning roster.
The Golden State Warriors, which are now reportedly the most valuable franchise in the league, have been able to navigate this luxury tax since their owner, Joe Lacob, is worth in excess of $1 billion.
It is nearly impossible to see the player’s union agreeing to any type of a hard cap or limit when it negotiates a new collective bargaining agreement with the NBA, which is expected to happen within the next two years.
Such a hard cap is presumably a response to the perception that big-market teams such as the Warriors, Los Angeles Clippers and Brooklyn Nets have an unfair advantage when it comes to stockpiling talent.
This is a perception that dates back to the 1980s, when the Los Angeles Lakers, Boston Celtics and Philadelphia 76ers won almost every championship and kept adding new stars and key players.
The NBA first instituted its salary cap in 1983 in order to fight that perception, as well as to implement a revenue-sharing program that helped save it from financial ruin.