Photo by Lauren Leigh Bacho/NBAE via Getty Images
Taking a closer look at the challenges Koby Altman and company will face this off-season.
The NBA salary cap is confusing. Terms like first and second apron will be used often when talking about the
Cleveland Cavaliers this offseason and into next year. Now is as good a time as any to take a closer look at what exactly it is and how it affects the Cavaliers.
What is the second apron?
The NBA has a soft salary cap. Teams can exceed the salary cap under various exceptions, such as the mid-level exception and Bird Rights which can be used to re-sign players that meet certain criteria.
The NBA instituted a luxury tax threshold above the salary cap nearly 15 years ago. This placed financial penalties on a team that exceeded the luxury tax line. There were also increased financial repercussions for teams that repeatedly stayed above the luxury tax.
The most recent CBA, which was instituted for the 2023-24 season, provided stricter penalties for teams that go above the luxury tax. A first and second apron were installed that attached more than financial penalties for teams that exceeded the salary cap and luxury tax by a certain amount.
First apron restrictions
Teams that exceed the first apron
have the following restrictions in addition to the standard financial penalties:
- Teams cannot execute a sign-and-trade for a player that keeps them above the first apron threshold.
- You cannot sign a waived player whose previous contract was above the midlevel exception.
- Teams aren’t able to send out salaries that are within 125% in a trade, as is the normal standard. Instead, they must be within 110%.
- You don’t have access to the full mid-level exception to sign free agents. You can, however, use a smaller version — the taxpayer mid-level exception — to sign free agents.
Second apron restrictions
Teams in the second apron have all of the penalties from the first apron
with the following ones as well:
- You do not have access to the mid-level exception, and you don’t have access to the taxpayer mid-level exception to sign free agents. You’re only able to sign outside free agents to a minimum contract.
- You cannot aggregate multiple contracts in a trade. For example, the Cavs wouldn’t have been able to send out both Caris LeVert ($16.6 million) and Georges Niang ($8.5 million) for De’Andre Hunter ($21.7 million) if they were a second-apron team during the 2024-25 league year.
- You cannot include cash in a trade.
- You cannot use a trade exception generated in a previous year.
- First-round picks seven years out cannot be traded. This means that the Cavs can’t move their 2031 first-round pick. They can only trade their ‘30 one in a trade.
- Your first-round pick is moved to the end of the first round if you remain in the second apron for three out of five seasons.
Are the Cavs currently above the second apron?
Yes. They’re
$5.1 million above the second apron according to Spotrac. This is with just 11 out of 15 roster slots filled for next season (counting Chuma Okeke’s team option for next season). Signing unrestricted free agents Ty Jerome, Sam Merrill, Tristan Thompson, and Javonte Green would only increase how much Cleveland is over the second apron.
It’s worth noting that the Cavs were under the luxury tax in the 2024-25 season. They haven’t had to pay the luxury tax since 2017-18.
So what does that mean for this upcoming season?
Cavs President of Basketball Operations, Koby Altman, mentioned in his after-season media availability that
he wasn’t sure if the Cavs would be a second-apron team for next year.
They’re able to try to salary dump contracts like Isaac Okoro ($11 million) and Dean Wade’s ($6.6 million) in trades to help get them under the threshold.
But the Cavs don’t have to do that. They’re able to run back the entire team from 2024-25 next season if they want to and if Jerome accepts what the Cavs can fully offer.
The Cavaliers can use Merrill’s Bird rights to sign him to any contract amount. They can use Jerome’s Early Bird rights to sign him to a contract of up to
$14.3 million in the first season of the multi-year contract.
They could do this while making moves around the edges. They would be able to trade someone like Jarrett Allen for multiple players (you just can’t aggregate your own players for a higher-contract player) if they wanted to. They could also attach their ‘30 first-round pick to a player and get someone back with an equal salary.
There would be ways to improve the team if they were in the second apron this upcoming season. There would just be narrow paths to doing so.
Additionally, there will be a large luxury tax bill for the 2025-26 season if they stay this far into the tax. They’re currently projected to have a tax bill of
nearly $57 million, according to Spotrac. That number will only increase if they re-sign Jerome and Merrill.
Getting under the second apron wouldn’t help the Cavs on the court next season
There are avenues for Cleveland to get under the second apron. They could trade away a player for someone with a lower salary slot or trade someone into another team’s cap space entirely if they found someone who wanted to do that.
They also don’t have to open up the checkbook to retain guys like Merrill and Jerome. Not doing that wouldn’t automatically get the Cavs under the second-apron threshold, but it would give them fewer salaries that they needed to shed to do so.
The issue is, getting under the second apron likely wouldn’t make them a better team in the short term or maximize the title-contention window they have next season. It would just be a way to maintain flexibility long-term.
How the Cavs manage the second apron will tell us what they feel about this group
Altman has mentioned that they aren’t afraid to go into the second apron if this were a championship caliber team. We’ll find out if he and ownership actually believe that they are. If they are, they’ll need to open the checkbook and risk the enhanced restrictions for this core.
This team won’t be better in 2025-26 if they salary dump rotation players or don’t retain their unrestricted free agents. Even if they got under the second apron, they wouldn’t have room to sign an impactful free agent with the taxpayer mid-level exception or easily add meaningful pieces in the way that the second apron would restrict them from doing.
They could remain competitive with their core if they duck under the second apron. They would still have the top-end talent to remain a good regular-season team. But there would be less reason than there already is to believe that they could get over the hump in the playoffs if they don’t committ financially to this group. Not continuing to blow past the second apron would essentially be punting on this current window and hoping that they could re-align the pieces for a better run down the road.
Additionally, running it back next season doesn’t mean you can’t duck under the tax in coming years by dumping salaries then. Whether or not they want to be a luxury tax or second-apron team will be an annual choice.
The only reason not to go into the second apron this upcoming season would be if you fundamentally didn’t believe in this group and there was no way to make them a championship team next season.
We’ll see what direction ownership and front office go in the coming months.
