Why the NBA should get rid of the luxury tax
This past NBA season may have been one of the most predictable of all time because of Kevin Durant signing with the Warriors as a free agent. Even casual NBA fans could have told you at the beginning of the season that the Golden State Warriors and Cleveland Cavaliers would end up meeting in the finals. That’s exactly what happened when the Warriors were crowned champions on June 12 after beating the Cavaliers in five games. These two teams have met three years in a row, and it appears that will be the case for years to come. There were many complaints about the lack of parity in the league during the season because everyone knew the end result. The league should get rid of the luxury and soft salary cap in favor of a hard salary cap like the NFL’s to gain better parity.
The salary cap in sports is a way for leagues to set a limit to the amount of money that teams can spend on players’ salaries, thus creating parity in the league for more competition. In the last NBA created collective bargaining agreement, or CBA, the salary cap will be at around $102 million for the 2017-18 season. This is a significant increase from just two years ago, when the salary cap was set to $84.74 million, creating more opportunities for teams to keep their players and giving the players a chance to make more money.
It’s a great thing to see teams be able to keep their best players and players earn more money for their efforts on the basketball court during the season. However, the soft salary cap and luxury tax rules have been damaging to the competitiveness at the top of the league. A soft salary cap means there are exceptions to the salary cap rule, allowing teams to go over the set amount. For example, if a player is already on a team, they can be paid over the salary cap limit to keep the player on the team by paying him more. The league tries to penalize teams for going over the cap with its luxury tax system, which forces teams to pay a fee according to how much they go over the cap. The idea is that the owners won’t want to pay that luxury tax fee, keeping their team’s salary at the salary cap limit. This has not been the case as of late for the top teams.
In order to pay the demanding salaries of their top players like LeBron James, Kevin Love and Kyrie Irving, the Cavaliers have the highest payroll in the league at over $128 million this past season. The team has been over the cap since re-signing James and acquiring Love via trade, and the team had to pay the luxury tax penalty of $54 million after the 2015-2016 season. That is ridiculous. Even more astounding is that the second highest penalty, paid by the Los Angeles Clippers, was $19.9 million, more than $30 million less than that of the Cavaliers. The Warriors were third highest on the list at $14.5 million. It appears that owners do not care about going over the soft salary cap and paying the luxury tax penalty when their team is successful because two of the top three most penalized teams have been in the finals every year now.
The NBA should consider removing this soft salary cap and luxury tax system in favor of a hard salary cap system. This would help prevent teams from spending ludicrous amounts of money because they won’t be allowed to just pay a fee for going over the salary cap, and it will help the league have more competition during the season and playoffs. The best teams will still get to the finals, as they should, but it won’t be a complete bore for fans like this past season.