The National Basketball Association, or NBA, has a power imbalance created by the salary cap. The NBA currently runs on a soft cap system, which gives teams a flexible cap to work with when signing players. The league sets a cap level and luxury tax level, and if a team’s salary exceeds the tax level, they will receive a financial penalty. Teams are not penalized for exceeding the salary cap as long as they stay below the tax level. For the 2018-2019 season, the salary cap is set at $101.869 million, and the tax level is at $123.733 million.
The NBA is the world’s premier basketball league that attracts the best players from around the globe. The league has a worldwide following because of international fan favorites like Giannis Antetokounmpo and Ben Simmons, as well as American stars, including LeBron James, Chris Paul, and Stephen Curry. The league’s top players typically have salaries that take up a good portion of a team’s salary cap, and the best teams typically have multiple all-stars that are paid at a high level.
For the past four seasons, the NBA was dominated by the Cleveland Cavaliers and Golden State Warriors. The Cavs, led by LeBron James, and the Warriors, built around Steph Curry, played in four straight NBA Finals, with Golden State winning three championships. According to Spotrac, in the 2017-2018 season, the Cavs and Warriors had the highest payrolls in the NBA and were both over $36 million over the salary cap, which was set at $99.093 million with a tax line of $119.266 million.
Photo Credit: Cleveland.com
The Warriors paid so much for their starting five players – Steph Curry, Kevin Durant, Klay Thompson, Draymond Green, and Andre Iguodala – that they were $9.63 million over the salary cap, excluding the other two thirds of the players on the team. Golden State finished their season $16.016 million over the tax line, which resulted in an extra $34.475 million in penalties paid back to the NBA. In the end, Golden State spend just under $170 million to field a team of fifteen players last season. The Cleveland Cavaliers were worse.
The Cleveland starting five of LeBron James, Kevin Love, George Hill, Tristan Thompson, and JR Smith were paid a combined $106.088 million last season – nearly $7 million more than the salary cap allows – and spent $16.667 million over the tax line. While their total payroll was nearly identical to Golden State’s, Cleveland had to pay almost $51 million in luxury tax due to an additional penalty for them paying luxury tax for at least four of the last five seasons. Their fifteen-man roster cost them $186.815 million for the season.
In 2017-2018, the soft salary cap, set at $99.093 million, was exceeded by $87.722 million by the Cavaliers. The payroll of the lowest spending team was $90.106 million, a number set by the Chicago Bulls who only won 27 games.
The NBA’s top teams are often the ones who spend the most money, and this power imbalance needs to be countered by implementing a hard salary cap to prevent some teams from spending practically $100 million more creating their roster than others. Having a soft cap essentially functions as having no cap if a team is willing to pay the extra penalties.
The soft salary cap functions as a guideline rather than a mandate, and there is not a penalty for exceeding it until a team hits the tax line, which is currently over $20 million over the salary cap. There is a strong correlation between spending and record, as well as talent. For the 2017-18 season, just seven teams were under the salary cap. The Indiana Pacers were the lone team under the cap to make the playoffs, and the other six – Chicago, Phoenix, Orlando, Brooklyn, Dallas, and Sacramento – had a combined record of 152-340. On the other end of the spectrum, four teams exceeded the luxury tax line. These teams – Washington, Oklahoma City, Golden State, and Cleveland – all made the playoffs, combining for 206 wins and just 122 losses. They also had ten all stars combined, according to nba.com. Only one team under the salary cap, Indiana, had an all star.
The teams with the strongest record spent the most money, and the teams who stayed under the cap were among the worst in the league last season. Therefore, the teams unwilling or unable to spend money over the salary cap suffer due to their inability to attract talent.
A hard salary cap is inflexible, giving teams a maximum budget to spend on their fifteen-man roster. Teams like the Cavaliers and Warriors would be incapable of spending over $100 million on five players, forcing them to pay each player much less or have one superstar instead of multiple. Other teams like the Chicago Bulls and Phoenix Suns would then be able to compete for a superstar player. Separating the talent out evenly would allow the league to begin to balance out and have many talented teams instead of a couple superteams at the top of each conference and a larger portion of teams that can’t compete.
The formation of superteams has increased TV ratings and revenue for the NBA, which have made the sport more popular in recent years. In 2017, LeBron James said, “Is it fair? I don’t care. I think it’s great. . . Our fans are loving the game.” Fans of these superteams have enjoyed watching their teams constantly make the playoffs, but teams like the Utah Jazz, who have had recent success, are unable to take the next step to win championships due to their smaller source of revenue in a small market.
The teams who have more ability to pay should not be able to spend tens of millions of dollars that other teams don’t have and never will get. The NBA needs to implement a hard salary cap to restore the balance of power in the league and allow competition from all 30 teams.
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