The ongoing off-season in the NBA is playing host to a series of trades, acquisitions, and free agency moves, preparing for the year ahead. It was recently announced that small forward Paul George has opted for free agency and won’t be returning for a 6th season with the Los Angeles Clippers. According to the official statement by the franchise, the decision was made in light of a “significant” gap in contract talks, and a failure to land on a mutually agreeable ‘opt-in and trade scenario’ deal.

Both instances, according to the statement, were caused because the LA side possessed little value under the new CBA guidelines. With this, let’s take a look at what these new guidelines are, and if these franchises and their respective players should be worried.

What is the CBA?

In the last couple of years, wealthy franchises like the Los Angeles Lakers, Golden State Warriors, and Boston Celtics, have made use of their deep pockets to gain an edge in acquiring top players by outbidding other franchises. The latest ‘Collective Bargaining Agreement’ (CBA) guidelines provide assistance in rectifying this.

After the new deal was mutually agreed upon by the NBA and the NBPA (National Basketball Players Association), it came into effect from July 2023 onwards. The guidelines specified under the CBA introduced the establishment of two ‘aprons’, limits on the amount spent on contract extensions, and cap smoothing.

Second Apron

The most significant change that the deal will bring about is ‘The Second Tax Apron’. According to the guidelines, teams that will spend $17.5 million over the established luxury-tax line will be subject to severe penalties. This would involve losing access to the taxpayer mid-level exception, and a limit on taking back no more than 110% of the salary that the franchise sends out in trades. The previous CBA agreement marked the limit at 125%.

The restrictions imposed because of the penalties were taken to a new level after the 2023-24 season. Teams who have crossed the limit during this off-season reportedly cannot trade a first-round pick up to 7 years away, cannot provide an aggregate (combined sum) salaries during trades, and cannot welcome new players into their fold if they sign and trade away their respective free agents.

Luxury Tax

The new guidelines provide some additional restrictions for franchises by building on the existing luxury tax rules. With a limit set of $165 million, any franchise crossing it will be subjected to penalties under the amount they spent.

For repeat taxpayers, however, these same fines will see a sharp rise.

Hypothetically, if a team exceeded the limit by $12 million and they were repeat offenders, the bill would shoot up to $33.25 million.

The Golden State Warriors have reportedly taken in a 9-figure tax bill due to going beyond the limit in the last 3 seasons. To avoid their situation going from bad to worse under the new rules, Joe Lacob was clear in his wish to drop below. “It’s just so prohibitive,” Lacob said. “Not to say we wouldn’t do it if we had to, but you’ve gotta look at what the downside is to doing that.”

Salary Floor

Under the previous CBA guidelines, franchises were required to hit their salary floor, which is 90% of their annually allotted salary cap, by the LAST day of the regular season. In case a team failed to do so, the shortfall would be distributed amongst the individuals on their roster. Now, under the new rules, the salary floor has to be met within the FIRST day of the regular season.

Failing to do so will cause the team to not only distribute the shortfall but also forfeit the franchise’s share of the luxury tax disbursement. The previous rules have given teams the leeway to hold on to an 8-figure cap space till the trade deadline. Now, the money has to be out of their pockets before the commencement of the new play year.

How did the CBA cause the Clippers to not extend Paul George’s contract?

There is no denying that Paul George was a valuable asset to the LA Clippers. Despite performing at a slightly lower level than his previous years, he still managed to secure an average score of 22.6 points, 5.2 rebounds, and 3.5 assists last season. Unfortunately, complications from the CBA prevented the franchise from extending its relationship with the 34-year-old.

According to reports, the Clippers were prepared to give the player a 3-year $152 million extension after he declined his player option. However, Paul George didn’t budge and he was looking to secure a 4-year deal that would go up to $221 million.

For the 2024-25, they’ve reportedly brought their cap allocation all the way to $225.88 million. Of that, over 82.8 million is solely being spent on the salaries of Kawhi Leonard and James Harden. If George’s terms were to be accepted, then the franchise would have put themselves quite deep into the penalties jar, then causing acquisition problems for themselves going into the next season.

Another factor that played a key role in Paul George’s exit was his age. The 34-year-old would have been eligible to take up a four-year max contract with any other team in the NBA. Unfortunately, doing so with the Clippers would not have done him much favor due to the CBA’s ‘Over 38’ guideline. According to it, players at or above the age of 38 years cannot sign on for 4 or more years.

While George is still 34 years of age, offering him his ask at such a late stage would not be too profitable for the Clippers in the long run. Lawrence Frank, the Clippers President of basketball operations, admitted that team owner Steve Ballmer wouldn’t mind spending per their needs and not their limitations. But, unfortunately, he holds a belief in the opposite direction, claiming that the franchise has to now operate in a manner that would have them avoid CBA’s new penalties.

“This is a business and the reality of the new CBA impacts teams like us,” said Frank during a discussion with Adrian Wojnarowski.

What do you think about the new system? Let us know in the comments below.

Before leaving, be sure to check out some insights that Shaquille O’Neal’s ex-agent, Leonard Armato, shared about the Lakers legend’s infamous feud with the late Kobe Bryant.