The NBA tends to adapt to new collective bargaining agreements in a fairly cyclical way. The immediate aftermath is caution. The last CBA began during the 2018 season. The biggest contract any free agent got by changing teams in the 2018 offseason went to LeBron James, who earned a predictable four-year max. The second-biggest deal? That went to Kyle Anderson, who got a four-year mid-level contract from the Grizzlies. In 2011 only four total free agents got contracts worth eight figures annually. Teams know what the new rules are before the deal is even signed, but it takes a year or two for them to learn how to actually apply them in practice. They tend to get a bit more aggressive in the years that follow.
That’s going to be tricky under the 2023 CBA because the new rules were designed to be restricting. In exchange for a few minor allowances given to lower-payroll teams, the NBA made it significantly harder for teams at the higher end of the payroll spectrum to add talent. Those changes are already rippling outward. The slower free agent market is creating a leverage imbalance when it comes to contract extensions. Teams are struggling to trade their high-end veterans because so many of the suitors who might normally be interested are financially locked out of the trade market, which in turn lowers prices for teams that do have clean books. Some of the harshest of these new rules hasn’t even taken effect yet. The league’s luxury-tax code is becoming more punitive for the heaviest spenders starting the 2025-26 season.
With time, teams will learn to adapt to some of the 2023 CBA’s changes. Some of them have altered the league’s financial landscape for the rest of the decade in irreversible ways. We’ve now more or less finished our first offseason with the bulk of these new rules in place. So what are the lessons teams can take away from the summer of 2024 that they may be able to apply moving forward? Here are some of the biggest.
1. The end of the speculative contract
A possible Denver Nuggets dynasty may have been killed in the crib by one of the worst players on the team. Zeke Nnaji played 576 minutes last season. He wasn’t in the playoff rotation. None of this was especially surprising. He hadn’t shown much in his first three seasons either. But he was the No. 22 pick in the 2020 NBA Draft. The Nuggets were high enough on his long-term outlook to give him a four-year, $32 million extension last offseason. The thought process was straightforward and relatively common in the old world: if he pans out, he’s a rotation player at a sub-rotation price. If he doesn’t? He’s matching salary that can be used in a trade down the line, a luxury winning teams don’t always have.
The Houston Rockets have two promising young players in Alperen Sengun and Jalen Green who are eligible for rookie extensions, but according to The Athletic’s Kelly Iko, it is unlikely that they will receive max contracts. This decision makes sense given their performance and the Rockets’ long-term goals. Sengun and Green have not yet been All-Stars, and while they show promise, the Rockets have other young talents to consider. Rather than paying for potential, the Rockets are taking a more cautious approach, which may set a new trend in the NBA.
On the other hand, the Orlando Magic quickly offered Franz Wagner a max contract, despite his less impressive stats compared to Sengun and Green. This decision reflects a more traditional approach to rookie extensions, where teams pay top dollar for players they believe have star potential. However, the NBA landscape is changing, with teams becoming more discerning about who they offer max contracts to.
The 2021 draft class has seen several players receive max contracts, despite not yet reaching All-Star status. This shift in mindset is evident in how teams are approaching contract negotiations with young players. The days of automatically offering max contracts to players who meet a certain threshold of productivity are over, as teams are now more cautious about investing in potential stars.
The difference in value between players like Wagner, Ingram, and Markkanen highlights the changing landscape of NBA contracts. The criteria for earning a max contract are becoming more stringent, with teams more hesitant to commit to long-term, high-value deals. This recalibration of the “max vs. non-max” line reflects a new era in NBA contract negotiations, where the consequences of overpaying for potential are greater than ever. If there was an easy compromise to the Ingram situation, it would have been found by now. Teams no longer view slightly sub-max players as slightly sub-max contracts. It’s either you’re a max player and you get treated as such, or you’re not, and negotiations become much more complicated. Ingram is looking for around $50 million per year, but the league sees him more in line with a $30 million per year player like Murray. There’s no middle ground anymore in the NBA.
The Pelicans are feeling the effects of this change with Ingram’s lack of trade value, but they are fortunate that his contract is expiring. The Timberwolves, on the other hand, may face a tougher situation with Towns and his max contract if they don’t succeed in the playoffs. Teams are now more cautious with max contracts for veterans, as the risk is too high if they don’t perform up to expectations.
The new CBA has teams wary of operating above the second apron due to the consequences of freezing their future first-round pick. The Celtics and Timberwolves have decided to go all-in for the next two years, staying above the second apron to maintain their chances at a championship. The Nuggets, on the other hand, are looking to delay their second-apron clock by making tough decisions on player contracts.
Moving forward, teams will have to carefully balance their championship aspirations with financial constraints, leading to more short-term, two-year windows of contention. Each team will have to evaluate their situation and make decisions based on age, health, and the overall state of the league. This is the new reality for NBA teams going forward. Once teams surpass the second apron, they typically only do so in consecutive years over a four-year span. This results in intense two-year windows of aggressive spending before teams need to take a step back.
The mid-level exception, a supposed growth area for players in the 2023 CBA, has not lived up to expectations. Despite its expanded value and newfound usability in trades, few teams have utilized it in the past two offseasons. The limitations at the top of the market and the fear of exceeding the second apron have deterred teams from investing in mid-level players, causing a decline in the market for veteran role players.
With nine teams above the first apron, player-for-player trades between them are practically forbidden due to hard-cap restrictions. This limitation restricts trade opportunities and makes trade deadlines less exciting, as surprise sellers may find it difficult to make deals with teams near the apron. This could lead to a decrease in star trades and a shift towards offseason trades instead.
Overall, the harsh trade restrictions imposed by the 2023 CBA may be a point of contention for teams in the future, as it limits their flexibility and ability to make significant player trades. Trades in the NBA are crucial for maintaining fan interest and keeping teams flexible. While some players may benefit financially from trades, it is ultimately in the best interest of the league to allow for player movement. However, the current trade restrictions, particularly the dollar-for-dollar rule at the first apron level, may be too restrictive. It may be necessary to consider alternative restrictions, such as a second-apron limit or a 105% allowance for all trades. Until this rule is revised, teams will continue to push for a change that better suits the needs of the league.