CBA opt-out extension adds more uncertainty to 2023 NBA trade deadline

PHILADELPHIA, PENNSYLVANIA – DECEMBER 19: OG Anunoby #3 and Fred VanVleet #23 of the Toronto… [+] Raptors speak during the third quarter at the Wells Fargo Center on December 19, 2022 in Philadelphia, Pennsylvania. NOTICE TO USER: User expressly acknowledges and agrees that by downloading and/or using this photograph, the user agrees to the terms of the Getty Images License Agreement. (Photo by Tim Nwachukwu/Getty Images)

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On Monday, the NBA and National Basketball Players Association “mutually agreed to extend the deadline” to opt out of the league’s current Feb. 8-March 31 contract, according to an official release. The CBA would expire on June 30 if a side opts out, and would otherwise run through the 2023-24 season.

The decision to delay the CBA opt-out deadline may complicate teams’ plans ahead of the Feb. 9 NBA trade deadline. Without a new CBA, teams don’t know the long-term financial implications of trading players signed after this season.

The league initially pushed for the introduction of a “spending cap” — in other words, a hard salary cap — as some teams are increasingly concerned about being able to keep up with their cash-strapped peers. The Golden State Warriors and Los Angeles Clippers are currently in line to pay nine-figure luxury tax bills this season, and so did the Brooklyn Nets until they sold Kyrie Irving to the Dallas Mavericks.

According to ESPN’s Adrian Wojnarowski, the NBA is now “ready to deviate from its original push for a spending cap on teams’ payrolls.” The NBPA has viewed this as a non-starter in negotiations, to the point that it has “little chance of implementation without the NBA’s willingness to endure a lockout and work stoppage,” he added.

Although teams no longer seem to have to worry about implementing a hard cap that will force difficult decisions in the years to come, that doesn’t mean the current system will remain in place. According to Wojnarowski, both sides are discussing “other ways to limit the mechanisms spend-happy teams use to retain and attract talent”. Meanwhile, the union wants to “create more opportunities for mid- and low-spend teams to sign players as well.”

Details on the exact mechanics the two sides are discussing to limit high-spending teams have yet to emerge, though a tighter luxury tax regime is likely on the table. If they increase the rates at which teams above the luxury tax threshold are penalized, it could create a hard cap for even the wealthiest team governors.

Golden State Warriors Gov. Joe Lacob, who just won the NBA championship last year, told The Athletic’s Tim Kawakami that a payroll in excess of $400 million (when salary and luxury tax fees are combined) is unrealistic.

“I’ll tell you that your numbers are kind of messed up,” Lacob said. “They threw numbers like 400, 500… those numbers aren’t even remotely possible. They just aren’t.”

“There are limits,” added Lacob. “I won’t say what they are, but there are limits to what you can do.”

Teams don’t know how the luxury tax regime will change in the new CBA (if at all) and when those changes will be implemented (whether 2023-24, 2024-25 or later). This uncertainty could make it less palatable to acquire players with long-term contracts at close, such as Atlanta Hawks big man John Collins (signed until 2025-26).

However, that’s not the only CBA-related complication teams need to consider at the close. The league’s current renewal rules could also play a role in the acquisition of a player who is only contracted for the 2023/24 season.

Under current rules, teams can offer a starting salary of no more than 120 percent of a player’s previous salary or 120 percent of the estimated average salary upon renewal, whichever is greater. When these players become free agents, they are eligible to sign a contract with a starting salary of between 25 percent and 35 percent of the salary cap, depending on how many years of NBA experience they have.

Toronto Raptors forward OG Anunoby, who has been buzzing around the trade rumor mill for the past few weeks, is emblematic of this dilemma. Since he’s slated to make $18.6 million next season, the Raptors — or the team that trades him — can’t offer him a starting salary of more than about $22.4 million on an overtime basis. His four-year renewal offer is approximately $100.2 million.

If Anunoby becomes a free agent in July 2024 by declining his $19.9 million player option for the 2024-25 season, he may be eligible for over $40 million in starting salary on a new contract . Even if no team is willing to offer him a maximum free agency contract, he could be giving away tens of millions of dollars by signing an extension under current rules.

However, there is no guarantee that the new CBA will have the same renewal rules. Perhaps the two sides will agree to allow teams to offer a higher percentage of a player’s previous salary or offer what they can earn as a free agent. In either scenario, teams like the Raptors (featuring Anunoby), Boston Celtics (featuring Jaylen Brown), and Philadelphia 76ers (featuring De’Anthony Melton) could be in a far better position to sign their respective players for overtime before they ever get the Achieve Freedom -Agent Market.

Had the NBA and NBPA reached an agreement on a new CBA before the trade deadline, teams would have known if the current extension rules would remain in effect. Instead, the Raptors must weigh whether to trade Anunoby, not knowing how the new CBA could affect their ability to sign him for an extension this offseason. Teams interested in acquiring it also face the same problem.

Each team deals with the same problems, so neither of them has an advantage over the other. Some front offices may be willing to throw caution to the wind and deal with the ramifications later, while others may prefer to wait for the full long-term financial picture of the league before going all-in.

How teams navigate this dynamic over the next few days will be one of the more interesting subplots of this year’s trading period.

Unless otherwise noted, all statistics via NBA.com, PPBStats, cleaning the glass or Basketball Reference. All salary information per Spotrac or RealGM. All odds over FanDuel Sportsbook.

Source: www.forbes.com