How A Hard Cap Saves The NBA

Just when it sounded like cooler heads might prevail and we might actually get this lock-out thing over with this week, the NBA owners took a step back in negotiations yesterday. Now a hard salary cap is back on the table, which the players quickly stepped away from.

For those of you who care more about the game than the business of the NBA (a group that usually includes Yours Truly), here’s what we’re talking about. Last season the NBA salary cap was set right around $58 million. Sounds like a lot of money, but when you consider that there was no penalty for spending more until you hit roughly the $70 million figure (the luxury tax threshold), things start to get stupid. Teams who spend more than the luxury tax pay a dollar-for-dollar tax to the league, which splits the proceeds up amongst the teams who were not over the cap.