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NBA Salary Cap 101: Hard Vs. Soft Cap

Your guide to the nuances of the CBA.

Understanding the financial side of the NBA can be a daunting task. The collective bargaining agreement (CBA) is filled with rules and exceptions that can be confusing to say the least. The goal of the Salary Cap 101 series is to explain the NBA’s financial side in a way that is simple and easy to comprehend. 

To fully understand all the nuances of the CBA, one must first know exactly what a salary cap is and what types of caps there currently are.

What Is A Salary Cap?

A salary cap is a maximum amount of money any given team is allowed to expend on player contracts. For the 2015-16 season, the NBA has a salary cap set at $70 million. The purpose of a salary cap, for the most part, is to maintain competitive balance between big and small market teams.

What Is A Hard Cap?

A hard cap, simply enough, means that under no circumstances is a team allowed to exceed the salary cap. The NHL, for instance, is a professional sports league with a hard salary cap.

What Is A Soft Cap?

In a league with a soft cap, like the NBA, teams are allowed to spend over the salary cap in certain situations. Teams that do elect to exceed the salary cap though are subject to paying a ”luxury tax.”

The main benefit of a soft cap is that it allows teams to spend past the set salary cap in order to retain its own players using Bird Rights (which will be explained in depth in an upcoming Salary Cap 101 article). This is how the Cleveland Cavaliers currently have a payroll that is almost $40 million dollars past the cap. The Cavs were allowed surpass the set $70 million dollar cap in order to re-sign its free agents this offseason, which included Tristan Thompson, JR Smith, Kevin Love, and Iman Shumpert.

There are also certain exceptions, such as the mid-level exception, that allows a team that is above the cap to still pursue a free agent. Sticking with the Cavs example, this offseason Cleveland had a “mini mid-level exception,” which allowed them to sign Mo Williams to a two-year, $4.3 million dollar contract even though the Cavaliers where already above the cap. 

The NBA salary cap is set at $70 million dollars for the 2015-16 season, and teams can only exceed that number if they are doing one of the following three things: retaining its own players, preforming a sign-and-trade, or using an exception, such as the bi-annual or mid-level. In any other case, teams are not allowed to exceed the $70 million dollar cap.

Now lets get into this week’s five facts.

1. Through Miami’s first 11 games, Hassan Whiteside is averaging more blocks per game than seven NBA teams.

2. In the Warriors Thursday night win against the Los Angeles Clippers, Golden State had a 100 percent effective field-goal percentage in the fourth quarter (via Kevin Pelton).

3. The Kings franchise record for triple-doubles in a season is five, held by Chris Webber. Rondo, in 13 games, already has four.

4. In 48 total minutes on the season, the Curry-Klay-Iggy-Branes-Draymond lineup has an offensive rating of 153.7 and a net rating of +61.8 (via Michael Gallagher). 

5. Tim Duncan vs. Anthony Davis: 

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Edited by Ben Zolna, Jazmyn Brown.

What is the first year the NBA had a salary cap?
Created 11/22/15
  1. 1946-47
  2. 1960-61
  3. 1952-63
  4. 1975-76

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