The NBA uses a “soft” salary cap system. This means teams can legally exceed a set spending limit to keep their current rosters together, but they face escalating financial and team-building penalties when they do. For the 2026-27 season, the baseline cap sits at roughly $165 million. Teams are required to spend at least 90% of that money—about $148.5 million—by the start of preseason training camp.
But you cannot just swap players like trading cards. Every trade requires matching salaries.
How NBA Salary Caps and Trade Math Work
Unlike the NFL or the NHL, which force teams to stay strictly under a hard cap limit, the NBA allows flexibility. Front offices can use Mid-Level Exceptions (MLEs) once a year to sign outside free agents even if they are out of cap space. The size of that MLE shrinks the higher a team’s total payroll goes.
Trading is basically a math equation. Under the rules ratified in the 2023 Collective Bargaining Agreement, teams operating below the luxury tax have plenty of freedom. If a team trades away a player making up to $7.25 million, they can bring back 200% of that salary plus an extra $250,000, according to Eric Pincus at Sports Business Classroom. For a player making over $29 million, the team can take back 125% plus $250,000.
This formula is why fans often see low-level role players thrown into blockbuster deals. GMs need the salaries to match perfectly before the league office approves the trade.
Why Teams Use the Aprons and When They Apply
The math changes completely once a team spends heavily. The NBA introduced two penalty thresholds above the luxury tax called “aprons.”
The first apron triggers at roughly $209 million for the 2026-27 season. If a team crosses this line, they lose their trade flexibility. They are limited to exactly 100% salary matching. They cannot take back a single dollar more than they send out. They are also banned from signing buyout players during the season if that player previously made more than the Mid-Level Exception.
Then there is the second apron. Sitting at nearly $221.7 million, this threshold operates almost entirely like a hard cap.
Teams in the second apron lose their taxpayer MLE completely. The rules bar them from aggregating multiple cheap contracts together to trade for one expensive star. They cannot send cash to other teams in trades, and they cannot acquire players via sign-and-trade deals. If a player declines their player options in free agency, a second-apron team often has zero financial tools available to replace them.
Famous Examples from Major Games
The second apron exists primarily because of the Golden State Warriors. During the late 2010s, the Warriors kept a historically dominant, highly expensive core intact by repeatedly paying extreme luxury taxes. The league wrote the new rules to stop wealthy ownership groups from buying long-term competitive advantages.
The Phoenix Suns found out exactly how harsh these rules are. They traded for Bradley Beal, pushed their payroll well past the second apron, and instantly lost all roster-building flexibility. The situation became so restrictive that the Suns eventually bought out Beal. They willingly chose to eat $19.4 million in dead money on their salary cap every single year through 2030 just to get under the second apron.
On the flip side, the New York Knicks planned ahead. They deliberately structured their roster and extensions to sit roughly $17 million under the second apron going into the 2026 season. They prioritized keeping their draft picks and trade flexibility over maximizing every possible dollar.
Common Misconceptions
Many casual fans think draft picks count as salary in trades. They do not. Draft picks have a monetary trade value of exactly zero dollars. If a team over the salary cap wants to trade a first-round pick for a player making $10 million, they cannot just send the pick. They must include a player making a matching salary in the deal.
Another common error involves the traded player exception (TPE). A team generates a TPE when they trade away a player making more money than the player they get back. This gives them a one-year window to acquire someone who fits into that empty financial slot. But teams operating over the second apron are completely barred from using these exceptions.
There is also a debate about who these rules hurt most. While the aprons target superstars and wealthy owners, they actually squeeze mid-tier role players. Because rich teams can no longer bundle salaries, the trade market for average players has slowed down considerably.
Finally, the harshest penalty involves frozen draft picks. If a franchise exceeds the second apron for three out of any five years, their first-round pick seven years in the future is automatically moved to the very end of the first round. Their actual win-loss record that year does not matter at all.
Key Takeaways
- The NBA uses a soft salary cap that requires teams to match outgoing and incoming money in trades, with the math getting stricter as total payrolls increase.
- The second apron effectively acts as a hard cap, stripping heavy-spending teams of the ability to bundle contracts or use standard free-agency exceptions.
- Draft picks carry a monetary trade value of zero dollars and cannot be used alone to match incoming salaries for teams operating over the cap limit.