At the beginning of the 2020/21 season, the NBA and the players' union reached a fundamental agreement and a revised collective agreement, both sides announced on Monday evening.
The deal stipulates that the free agency starts at 6 p.m. ET on Friday, November 20, two days after next week's NBA draft.
As agreed last week, the regular season starts on December 22nd and there are 72 games on the program.
The salary cap will be set at $ 109.1 million and the luxury tax will be $ 132.6 million – the same numbers as in the 2019-20 season before a drastic blow to the league's finances as a result of ongoing COVID have suffered. 19 pandemic. Teams had been expecting both numbers to stay the same next season for some time, as it was better for both teams and players to avoid a massive drop in the salary cap for next season due to the unplanned drop in sales.
The upper salary limit is guaranteed to rise by at least 3% per year and a maximum of 10% in the further course of the collective agreement.
The two sides have also found a compromise on the escrow system to spread the losses over several seasons. The typical trust refusal of 10% remains. If players' salaries have to be reduced by more than this 10%, this loss will be spread over this and the following two seasons – and players can never withhold more than 20% of their salaries in a single season. The hope on both sides is that the league can return to a normal financial situation in the coming seasons when the pandemic subsides.
Sources also said that in an attempt to reduce the tax burden on teams that had planned a steadily increasing salary cap and luxury tax, the NBA would reduce the luxury tax burden on teams at the end of the 2021 season to the percentage that the league's basketball-related income was deviates from the original forecast.
For example, if it drops from a projected $ 8.45 billion to $ 5.9 billion – a 30% decrease – the projected luxury tax burden on the Golden State Warriors will drop from $ 60 million to $ 42 million.
Another way the luxury tax break could benefit the Golden State is to potentially take advantage of its $ 17.2 million trade exemption created by trading with Andre Iguodala last summer. If the Warriors bought a player for that full amount in one trade, their tax burden would increase to $ 149 million. However, reducing revenue across the league could save up to $ 45 million from that total.
As of now, there are four teams – the Warriors, Brooklyn Nets, Boston Celtics, and Philadelphia 76ers – included in the luxury tax, although that number is likely to increase as the cap and tax now remain unchanged.
The teams are unlikely to receive formal numbers from the league until later this week after a final deal is officially reached. The league's current transaction moratorium is expected to be lifted early next week – just before the NBA draft is due to take place on November 18th.
This is the beginning of a hectic and compressed off-season. The free agency is expected to start soon after the draft – all less than two weeks before the training camp starts on December 1st.