Why NBA Trades Carry Massive Financial Risk

The New Restrictions on NBA Trades

The NBA trade deadline is quickly approaching and teams are finalizing their rosters for the postseason. However, this year's trade season comes with new restrictions and financial risks due to the recently ratified collective bargaining agreement. This is the last trade deadline before stricter spending regulations go into effect, making it crucial for teams to carefully navigate the trade market.

Over 20 teams are still vying for a playoff spot, adding more intrigue and storylines to the trade deadline. The heightened restrictions and the race to secure a postseason position create a complex landscape for teams to maneuver.

Front offices are particularly focusing on teams projected to be in the second apron, or just below the luxury tax apron, in the upcoming season. Major trades, like the Damian Lillard trade to the Milwaukee Bucks, have raised concerns about excessive spending and have triggered stricter roster and trade restrictions. Teams such as the Bucks, Celtics, Nuggets, Warriors, Clippers, Lakers, Heat, Timberwolves, and Suns are projected to fall into this category for the 2024-25 season.

Under the current rules, these teams will face limitations such as not being able to take back more salary in a trade, restrictions on aggregating contracts, limitations on sending out cash in deals, and restrictions on using preexisting trade exceptions to acquire players. The impending rules will make it tougher for teams to add players from outside their rosters, especially if they don't control their first-round draft picks. Failure to manage their spending and roster allocation can result in severe financial consequences for teams.

Impact on Trade Targets and Teams

The new restrictions imposed by the collective bargaining agreement are already influencing teams' approaches to trades. The financial risks and limitations have made teams more cautious about acquiring high-salary players. Zach LaVine of the Chicago Bulls, for example, didn't garner much interest from teams despite his talent and scoring ability. His hefty contract, which spans over three seasons, would push any team hitting the second apron, complicating their financial flexibility.

Teams such as the Lakers and Kings find themselves in a similar predicament. Acquiring a player like LaVine would limit their ability to take on additional salary due to their already sizeable contracts. The lack of flexibility has made teams wary of rushing into trades this season and instead considering long-term salary commitments and potential draft compensation.

As the trade deadline approaches, players like LaVine and Dejounte Murray of the Hawks remain potential trade targets. Their contracts, which are below maximum salary levels, make them attractive options for teams looking to avoid additional financial burdens. Other players mentioned by league executives include names like Malcolm Brogdon, Bojan Bogdanovic, Bruce Brown, Miles Bridges, DeMar DeRozan, Buddy Hield, Wendell Carter Jr., Jerami Grant, Kyle Kuzma, Tyus Jones, and Kelly Olynyk. These players offer more manageable contracts and trade assets for teams.

The impact of the new CBA rules is seen not only in trade targets but also in teams' roster construction. Teams like the Pacers have adopted a roster structure with two players on maximum contracts, followed by a group of players earning between $2 million to $19.9 million. This approach allows teams to allocate resources for a supporting cast while still having star players impact the game. The Thunder and Magic are also teams to watch, as they have built their rosters through the draft and have flexibility to make trades without facing the second apron restrictions.

Paths Forward for Major-Market Teams

The Lakers and Warriors, both major-market teams with high expectations, are facing disappointments this season. Their paths forward at the trade deadline will depend on how they navigate the financial landscape. The Warriors, who previously expressed confidence in overcoming the new rules, are now facing challenges in managing their payroll. With a record-breaking $400 million payroll, the Warriors are fighting to secure a spot in the Western Conference play-in. Their trade decisions will revolve around the team's willingness to continue spending in the future.

The Lakers, on the other hand, are not actively pursuing a third maximum salary player unless they are an All-NBA caliber player. The scarcity of players of that caliber on the trade market and the Lakers' limited trade assets have made it difficult for them to make significant moves. The team's focus is on preserving their current roster while being mindful of future financial obligations.

Both teams face restricted options to improve their rosters due to financial constraints and limited trade assets. Their approach to trades could impact their competitiveness this season and their ability to make long-term plans for the future.