While the NBA does not have a true hard cap on salaries, per se, the owners/governors implemented an incentive among each other to stay in a competitive balance.
“If you’re gonna spend a lot more than I do, you’re gonna pay me to let you do it.”
Once a year, they set a limit on salary spending, called the luxury tax line.
- 2021-22 Salary cap: $112,414,000
- 2021-22 Luxury tax line: $136,606,000
Any team that spends over that amount has to pay into a luxury tax ‘slush’ fund that is distributed evenly among all the teams who did not exceed that line. Each year, you see a team that’s just barely over the line who makes a small trade at the trade deadline to shed that salary — sending a player into another team’s cap space or trade exception — so that they can be among the teams receiving the tax payment rather than making it.
This year, the Suns will be among those teams receiving the tax share for the 15th time in 18 seasons.
Each of the 23 non-taxpaying NBA teams are expected to get a distribution of $10,456,987 by the end of today, sources said. Teams were first informed of the incoming payment via league-wide memo on June 30.— Jake Fischer (@JakeLFischer) July 26, 2022
Wondering how this all comes about?
Remember the luxury tax line of $136,606,000 for the 2021-22 season? According to Spotrac.com, 7 of the 30 teams went over the line, at least a little bit.
Look at the ‘Active Cap’ column...
Those 7 teams collectively paid into the luxury tax bucket, which turned into
almost $180 million in payments that hundreds of billions, some of which were evenly distributed to the 23 other teams who stayed under the tax line.
Next year, the Suns will likely be among a growing number of teams over the line.
While the final numbers are not determined until after rosters are finalized late next season — meaning the trade deadline will change out a team or two — it currently looks like 10 teams are over the luxury tax line.
Here’s how it looks for 2022-23, so far:
- 2022-23 Salary cap: $123,655,000
- Luxury tax line: $150,267,000
Look at the ‘Active Cap’ column...
The Hawks are just barely over the line, so you can expect them to shed some kind of salary before rosters are final next spring. It’s better to receive $10+ million from your fellow owners than it is to give them $3 million of your own money.
The other nine teams, including the Phoenix Suns, are so far over the line though ($10+ million over) that it appears they are all committed to paying the tax rather than receive it.
The list is a who’s-who of current and recent Conference Finalists whose roster is old enough to be making market-value money and their realistic dreams include contending for a championship in 2023.
The Suns currently have committed the 6th most amount of money in salaries next season and if they can acquire Kevin Durant they just might jump into the top five.
Notice that none of those 7 teams this past year nor the 10 teams projected over the tax this year are ‘hard capped’.
The Hard Cap is triggered — and requires a 2022-23 team to spend NO MORE than $156.98 million — when a team does one of the following:
- receives a player in a sign-and-trade (read: none of them are going to acquire Collin Sexton, and none of them wanted Deandre Ayton either)
- spends the FULL non-taxpayer mid-level (read: the Sixers spent the whole MLE on P.J. Tucker, so now they can’t overspend the rest of the year)
- spends the Bi-Annual Exception (read: Sixers, again).
The Sixers are now one of five teams already hard-capped for next year. None of those teams is in danger of hitting the $157 million threshold.
Back to your Suns.
They have blown past the luxury tax line, and currently project to be billed $34+ million for the ‘slush’ fund. This will only be the 4th in Robert Sarver’s 19 years of ownership of the team.