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Writer's pictureChas Phillips
13 minutes ago7 min read

Dynasty Destroyer: The NBA's Attempt to Improve Parity Through the Second Apron

 

As the final seconds came off the clock in the Denver Nuggets' (“Nuggets”) Game 5 victory against the Miami Heat to clinch the 2023 National Basketball Association Finals (“NBA") title, many anticipated this as being just the first of many years of the Nuggets’ dominance.[2] Denver had built a powerhouse, drafting their team from the bottom up including four of their five leading scorers in 2023.[3] They rounded out their rotation with seemingly minor trades for Aaron Gordon and Kentavious Caldwell-Pope to acquiring inexpensive free agents like Bruce Brown.[4]


The Nuggets were young, balanced, and had never been challenged on their path to a championship. Two years later, the Nuggets' current roster is a shell of its former self, and the pieces keep falling because of the NBA’s implementation of a “second apron tax” before the 2024 NBA season.[5] The Nuggets are not the only ones being forced to reconstruct theirroster because of this change.


The Second Apron: Explanation and Impact


In response to multiple dynasties dominating the NBA throughout the 2010s, the NBA introduced a new luxury tax level to the league’s Collective Bargaining Agreement (“CBA”) in 2024: the second apron.[6] Previously, teams faced a “salary max” of $178.1 million and a “luxury tax” for spending beyond this limit. 


Teams with payrolls in the luxury tax realm faced both (1) financial penalties and (2) restrictions on trades and signings. The second apron, set at $188.9 million, introduces even stricter penalties for exceeding the salary cap.[7] Second-apron teams are severely restricted in their ability to sign and trade players throughout the season.[8] These teams also have their first-round draft pick relegated to the end of the round if they remain above the second apron threshold through consecutive seasons.[9] Thus, if a team chooses to enter the second apron window to “win now”, they are potentially risking their ability to cultivate future prospects by doing so.[10]


A Self-Fulfilling Prophecy: The Nuggets Fall Apart


Some of the teams in the second apron currently include the 2024 champion Boston Celtics, the 2023 champion Nuggets, and the 2022 champion Milwaukee Bucks.[11] The correlation is obvious, teams boasting the best players respectively have to pay these players more than others pay for less proven and still developing talents. For instance, the Boston Celtics won the NBA Finals with a starting lineup of four Olympic team players, three on Team USA, including the Finals MVP, Jaylen Brown.[12] It is only natural that all of them would now demand a hefty salary increase due to their contributions to the championship-winning Boston Celtics.[13] 


This correlation, however, goes far deeper. Looking at the Nuggets, they already were forced to lose both Kentavious Caldwell-Pope and Bruce Brown.[14] These were two integral parts of their championship team lost with no compensation, as both were simply offered more lucrative contracts than the Nuggets could provide them.[15] Both of their salaries increased approximately 25% on their new teams, not because both significantly improved from their time on the Nuggets, but because the Nuggets’ championship inherently increased their value.[16] This vicious cycle highlights the impact of the second apron: the best teams, solely by virtue of winning, increase their players’ market value, making it impossible to find sustained success due to the additional second apron penalties. 


Now, the Nuggets are considering trading forward Aaron Gordon due to the hefty salaries of their core players. With the established core of Jamal Murray, Nikola Jokic, and Michael Porter Jr., the Nuggets are expected to spend approximately $400 million over the next three years on just these three players alone.[17] Jokic is a 3-time MVP and arguably the best player in the NBA currently, however, Porter Jr. and Murray, two of the highest-paid players at their positions, have never even been selected for an all-star game.[18] The Nuggets roster, because of their success, has become virtually unsustainable.


“It’s an Unfair Game”: Equity Amongst the League


The second apron aims to enhance competitiveness and create parity in the league; in this way, it looks like it will be successful.[19] However, it also highlights the broader issue of how financial constraints impact team development androster stability. The new tax level places significant pressure on successful teams, forcing them to navigate complex financial and roster decisions.[20] This mostly impacts their ability to retain key players and forces teams, especially in smaller markets, to incur significant financial and teambuilding penalties.[21] The only alternative is to be forced to lose some of the players who led these teams to success.[22]


Advertised as an attempt at fairness across the league, the introduction of the second apron tax has instead resulted in significantly less fairness for certain teams. Teams with owners unwilling to pay the significant luxury tax payments required by the second apron due to fear of the impacts on the future of their franchise, which often leads to organizations breaking up championship-caliber rosters.[23] The second apron, in its purest sense, does work to create parity, as it prevents successful teams from widening the gap between themselves and the rest of the league.[24] It acted as a response to roster dominance like when the Golden State Warriors in 2017 set the regular season record for wins and then added one of the best players in the league, Kevin Durant.[25] In this way, the second apron is beneficial. However, there must be an amendment to the second apron tax, so that this benefit of parity does not disproportionately impact teams with owners that are less willing to pay to sustain competitive, expensive, rosters.


Evening the Playing Field: Proposed Amendments


The penalties for exceeding the second apron level should not be monetary, in order to even the playing field amongst team owners’ financial status. Instead, penalties should be purely based on future assets. Thus, if a team goes over the second apron tax, they could, for example, forfeit their first-round pick a few years down the line, when the importance of that pick is unknown. This means that teams will be forced to decide not how much money they are willing to spend, but whether they are willing to go “all in” on their current roster construction, even if it may harm their franchise five years from now.


Along with this, the NBA should introduce a “hard cap” which would be the most amount of money any team can spend beyond the second apron and would be approved by all 30 team owners. Currently, the second apron and luxury tax act as the NBA’s “soft cap” which causes inequitable disadvantages for organizations with more frugal owners, as only teams with owners who will open their pockets incur these financial penalties.[26] Alternatively, the NFL and NHL, have a hard cap, which forbids any team from spending over a certain amount on their player salary every year.[27]


With a hard salary cap, ownership groups that want to form a competitive team know the amount of spending that is required to build a successful team, while still being smart with the amount of money given. This hard cap would allow the NBA to get assurance from its owners that a team like the Nuggets, whose players their fans have grown attached to and want to see continue to compete at a high level, will not be broken up due to an owner who is not willing to spend. It will also serve the purpose of the second apron to create parity in the league by not allowing teams like the Golden State Warriors in 2017 to drastically improve their team simply because they are willing to spend more.



Chas Phillips (staff writer) is a 1L at Villanova University Charles Widger School of Law. His interests include intellectual property, contract negotiations, and employment law. His ultimate goal is to work in the landscape of college sports, either for a university or the NCAA. 



References:

[2] Ben Morse, How to watch and everything you need to know about the 2023-24 NBA season | CNN, (Oct. 24, 2023),  https://edition.cnn.com/2023/10/24/sport/2023-nba-season-preview-how-to-watch-spt-intl/index.html.

[5] Nadkarni, Rohan. “Betting, Luxury Tax and an in-Season Tournament: Five Takeaways from the NBA’s New CBA.” SI, Sports Illustrated, 4 Apr. 2023, www.si.com/nba/2023/04/04/takeaways-new-cba-collective-bargaining#:~:text=Teams%20operating%20in%20the%20luxury%20tax%20will%20now,into%20the%20tax%20for%20championship%20contenders%20this%20year.

[6] James Dator, Why NBA’s controversial ‘second apron’ will lead to a better league, SBNation.com (July 11, 2024),  https://www.sbnation.com/nba/2024/7/11/24195869/nba-second-apron-new-cba-cap-rules-denver-nuggets.

[7]  NBA salary cap for 2024-25 season set at $140.588 million, NBA.com (June 30, 2024), https://www.nba.com/news/nba-salary-cap-set-2024- 25-season.

[8]  NBA salary cap for 2024-25 season set at $140.588 million, NBA.com (June 30, 2024), https://www.nba.com/news/nba-salary-cap-set-2024-

[9] Mike D Sykes, Why so many NBA teams are spooked by the collective bargaining agreement's 'second apron,' explained, (July 1, 2024),  https://ftw.usatoday.com/2024/07/nba-free-agency-second-apron-explained.

[10] Mike D Sykes, Why so many NBA teams are spooked by the collective bargaining agreement's 'second apron,' explained, (July 1, 2024),  https://ftw.usatoday.com/2024/07/nba-free-agency-second-apron-explained.

[12] Goss, Nick. “Celtics Trio Wins Gold at Paris Olympics as Team USA Beats France.” NBC Sports Boston, NBC Sports Boston, 10 Aug. 2024, www.nbcsportsboston.com/nba/boston-celtics/usa-france-olympic-basketball-highlights-score-celtics/639388/.

[14] Durando, Bennett. “Nuggets Lose Kentavious Caldwell-Pope, Who Agrees to Terms with Orlando Magic in Free Agency, According to Reports.” The Denver Post, The Denver Post, 1 July 2024, www.denverpost.com/2024/06/30/kentavious-caldwell-pope-magic-orlando-kcp-contract-nuggets/.

[15] Durando, Bennett. “Nuggets Lose Kentavious Caldwell-Pope, Who Agrees to Terms with Orlando Magic in Free Agency, According to Reports.” The Denver Post, The Denver Post, 1 July 2024, www.denverpost.com/2024/06/30/kentavious-caldwell-pope-magic-orlando-kcp-contract-nuggets/.

[19] Dator, James. “Why NBA’s Controversial ‘Second Apron’ Will Lead to a Better League.” SBNation.Com, SBNation.com, 11 July 2024, www.sbnation.com/nba/2024/7/11/24195869/nba-second-apron-new-cba-cap-rules-denver-nuggets.

 

[20] Sykes, Mike D., and Ii. “The NBA’s Second Tax Apron and How It’s Breaking Your Favorite Teams Apart, Explained.” USA Today, Gannett Satellite Information Network, 17 Oct. 2024, ftw.usatoday.com/2024/10/nba-second-apron-cba-explained.

 

[21] Sykes, Mike D. “The NBA’s Second Tax Apron and How It’s Breaking Your Favorite Teams Apart, Explained.” USA Today, Gannett Satellite Information Network, 17 Oct. 2024, ftw.usatoday.com/2024/10/nba-second-apron-cba-explained.

 

[22] Sykes, Mike D., and Ii. “The NBA’s Second Tax Apron and How It’s Breaking Your Favorite Teams Apart, Explained.” USA Today, Gannett Satellite Information Network, 17 Oct. 2024, ftw.usatoday.com/2024/10/nba-second-apron-cba-explained.

 

[23] Sykes, Mike D. “The NBA’s Second Tax Apron and How It’s Breaking Your Favorite Teams Apart, Explained.” USA Today, Gannett Satellite Information Network, 17 Oct. 2024, ftw.usatoday.com/2024/10/nba-second-apron-cba-explained.

 

[24] Toporek, Bryan. “Why Second Apron Concerns in the NBA Might Be Overblown.” Forbes, Forbes Magazine, 27 Aug. 2024, www.forbes.com/sites/bryantoporek/2024/08/26/why-second-apron-concerns-in-the-nba-might-be-overblown/.

 

[25]Hoffman, Benjamin. “How the Warriors Won Another N.B.A. Championship (and Built a Dynasty).” The New York Times, The New York Times, 12 June 2017, www.nytimes.com/2017/06/12/sports/nba-finals-game-5-warriors-cavs.html.

 

[26] Brandt, Andrew. “Business of Football: Understanding the Salary Cap, Dead Money and Impact of 2021 Decrease.” SI, Sports Illustrated, 2 Mar. 2021, www.si.com/nfl/2021/03/02/business-of-football-understanding-the-salary-cap-dead-money.

 

[27] Brandt, Andrew. “Business of Football: Understanding the Salary Cap, Dead Money and Impact of 2021 Decrease.” SI, Sports Illustrated, 2 Mar. 2021, www.si.com/nfl/2021/03/02/business-of-football-understanding-the-salary-cap-dead-money.


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