NBA’s second apron is not going to interrupt up the Thunder, and here is why it would really assist OKC

On Wednesday, the Oklahoma City Thunder agreed to a five-year extension with All-NBA ahead Jalen Williams that would pay him as much as $287 million. That they had already re-signed Chet Holmgren on an analogous five-year pact value a possible $250 million, and league MVP Shai Gilgeous-Alexander tacked 4 years and $285 million onto his personal contract earlier in July. All advised, they dedicated as much as $822 million in new cash to their three finest gamers. In doing so, they secured all three by way of a minimum of the 2030-31 season.

It is a terrifying proposition for the remainder of the league. The Thunder are a 68-win defending champion that simply posted the very best single-season level differential in league historical past. Their high three gamers are all between the ages of 23 and 26, and none of them are going wherever. Few groups in historical past have ever been this well-positioned for sustained successful, even when we exist in an period designed to discourage sustained successful.

Chet Holmgren just signed a huge extension, but he potentially did the Thunder a favor while doing so

Sam Quinn

Be trustworthy, you are desirous about the second apron proper now, aren’t you? It is the boogeyman that is been tearing up groups for the previous a number of offseasons, the collectively bargained device designed to stop the type of dynasty that the Thunder are attempting to construct. Oklahoma Metropolis simply dedicated almost a billion {dollars} to a few gamers. The second apron has torn by way of cheaper rosters than that. That might recommend that it ought to be a supply of hope for Oklahoma Metropolis’s opponents. If different groups cannot beat the Thunder, absolutely the second apron can, proper?

Nicely, no. Whereas there shall be monetary penalties for Oklahoma Metropolis’s current spending that may manifest over time and will trigger potential issues later, the second apron isn’t going to interrupt up the Thunder. In reality, as terrifying as this sounds, the second apron may really assist the Thunder greater than it hurts them. To know why, we have to look at their funds and the precise impression of those new guidelines on roster-building.

The place are the Thunder now, and what are the foundations to know?

Very first thing’s first: we have to outline our phrases. There are two guidelines that you must perceive if you are going to dig into Oklahoma Metropolis’s long-term funds.

• The repeater tax is an additional cost utilized to the posh tax when a workforce has paid the tax in a minimum of three of the earlier 4 seasons. Beginning this season, the posh tax system has modified to make the repeater penalty considerably extra punitive than it as soon as was. Additional, the upper a workforce’s payroll rises above the tax line, the extra these tax charges rise. Due to this fact, if a workforce is persistently paying the tax and going properly above the road to take action, it may well anticipate to finally pay lots of of hundreds of thousands of {dollars} in taxes on high of its payroll commitments. That is primarily what occurred to the Celtics. They solely shed round $20 million in precise wage by way of their offseason trades, however doing so saved them roughly $200 million in payroll with the tax factored in.
• The second apron is a workforce wage threshold roughly 10% larger than the posh tax line. Going above that line triggers numerous roster-building restrictions. Groups above the marginally decrease first apron can not use the total mid-level exception, absorb extra money than they ship out in trades, or signal buyout gamers through the season who have been beforehand making greater than the mid-level exception. As well as, groups above the second apron can not mixture salaries in trades or use the taxpayer mid-level exception. When a workforce finishes a season above the second apron, its first-round choose seven years sooner or later will get frozen. This implies it can’t be traded. If a workforce is over the second apron in two of the following 4 seasons, that choose routinely drops to No. 30 general.

Acquired all that? Good. Because the Thunder have neither paid the tax nor gone above the second apron but, this implies they’re nonetheless 4 taxpaying seasons away from the repeater penalty and three second apron seasons away from seeing a first-round choose drop to No. 30 general. This begs the query of when that cycle will really begin for them.

It will not be the 2025-26 season. Oklahoma Metropolis at present has a full 15-man roster that may be a bit lower than $1.5 million under the tax line. That is the good thing about drafting younger stars. Whereas Williams and Holmgren have each signed long-term extensions, they will not kick in till the 2026-27 season begins. For now, they’re each nonetheless underpaid on rookie offers, and that principally bankrolls the remainder of the roster.

Issues will get more durable for the 2026-27 season. We cannot know simply how a lot more durable will probably be till the 2025-26 season ends. Each Holmgren and Williams signed offers with reported potential values above the projected 25% max of $239 million. That is as a result of each offers embody Rose Rule escalators, which permit gamers with their degree of expertise to leap as much as 30% of the cap in the event that they hit sure standards: All-NBA, Defensive Participant of the 12 months or MVP. They will each be paid properly throughout that season, however simply how properly will depend upon what kind of season they’ve.

At this stage, the posh tax is prone to turn out to be unavoidable. Nonetheless, the Thunder have an ace within the gap in terms of ducking the second apron: workforce choices. Isaiah Hartenstein ($28.5 million), Lu Dort ($18.2 million) and Kenrich Williams ($7.2 million) all have workforce choices for the 2026-27 season. That is round $54 million in cash the Thunder can unilaterally offload if wanted. That does not essentially imply all three are gone, however the Thunder can maneuver across the second apron as wanted. Perhaps some get their choices declined and depart. Perhaps they re-sign on team-friendly offers. Or possibly some are traded. However the level is that the Thunder can get off cash as wanted.

The 2027-28 marketing campaign is when the second apron most likely begins to return into play. That is when Gilgeous-Alexander’s supermax deal kicks in, together with a possible rookie extension for Cason Wallace. By this level, the Thunder will probably have began to maneuver veteran function gamers, which is a part of their design. The thought right here is to dump function gamers as soon as they turn out to be costly and exchange them with their monumental stockpile of future draft picks. They’ll probably proceed so as to add to that inventory within the coming years. In any case, even when they do not need to pay for key veterans like Hartenstein or Dort, different groups absolutely will, and the Thunder will probably discover methods to money a few of their gamers in for picks earlier than they threat shedding them for nothing. The thought right here is to create a self-sustaining cycle: draft gamers, develop these gamers, profit from these gamers, commerce these gamers for extra picks to begin the cycle anew. Nonetheless, we are able to presume that there’s some chance that the Thunder are above the second apron in both the 2027-28 or 2028-29 season, and probably each.

As an example that is the case. All of this might imply that the Thunder may have used up their three pre-repeater tax seasons and their two second apron seasons earlier than picks begin dropping to No. 30 by the tip of the 2028-29 season. Conveniently sufficient, although, that is the earliest level at which the present CBA can finish. Each the gamers and homeowners can choose out of the CBA after the 2028-29 season, so the complete system may change earlier than it even actually begins to punish the Thunder.

We will not anticipate that, although. There may be additionally the prospect the system stays largely intact. And that is what we’re right here to cowl. So primarily based on what we have coated to this point, you’d anticipate the CBA to essentially begin hurting the Thunder proper across the finish of the last decade. However here is the kicker… it is most likely going to harm everybody else an entire lot extra.

Okay… so how would the second apron assist the Thunder?

Take into consideration all of these second-apron restrictions we coated. Use of a mid-level exception. Matching salaries in trades. Including buyout gamers. What they largely have in widespread is that they make it more durable for a workforce to accumulate gamers from the surface. However that is the important thing to this. The Thunder do not really want exterior additions. They have already got a dominant workforce. That workforce is remarkably younger, as nobody on final yr’s roster other than Williams and Alex Caruso was above the age of 26. And when they should exchange anybody, they will simply use the mountain of future first-round picks they’ve collected to take action by way of the draft. None of these restrictions is prone to impede all of them that a lot. They’re primarily trying to draft and retain expertise, fairly than import it.

There may be nonetheless one vital method during which the second apron is designed to discourage retention: the potential for future first-round picks dropping to No. 30 general. To a standard workforce, that is tantamount to giving freely an unprotected choose. Whereas the workforce would nonetheless have a first-round choose, the automated slotting would forestall it from tanking or utilizing that yr’s choose as a commerce chip for additional enhancements. Keep in mind, these frozen picks begin seven years out. Most groups should not comfy sacrificing the power to rebuild seven years into the longer term for the sake of short-term competition. They simply haven’t got the power to forecast the place they will be at that time. No person desires to seek out themselves ready during which their window closes earlier than that choose comes up; they’re organically unhealthy, however they cannot profit from it as a result of their choose is caught in the back of the order.

However the Thunder aren’t a standard workforce. They have no actual motive to care if first-round picks within the mid-2030s drop to No. 30 general. That is a big loss to a standard, win-now workforce. To a attainable dynasty, it is simply the price of doing enterprise. They’ll presumably have such excessive championship odds as long as this core stays wholesome that the optimum basketball transfer could be to shrug away the longer term and proceed to put money into the current. In addition to, Oklahoma Metropolis has so many picks from different groups that it may well afford to lose worth by itself. So in as a lot as any workforce will be, the Thunder are virtually resistant to the worst results of the second apron a minimum of as they exist within the present CBA.

You realize who is not? Their competitors. To catch as much as Oklahoma Metropolis’s present expertise degree, most groups fairly want so as to add veteran expertise from the surface. When that expertise turns into costly, most groups will not have an infinite cycle of prospects in place to switch them. Most of these groups must construct their rosters the traditional method, the best way that the CBA deliberate the second apron round. These groups are extraordinarily susceptible to the aprons. They want flexibility so as to add cash by way of trades and signal free brokers. They must be cautious in regards to the second apron in ways in which the Thunder do not.

Simply have a look at the workforce Oklahoma Metropolis beat within the Western Convention finals. The Timberwolves entered this offseason with three key potential free brokers: Julius Randle, Naz Reid and Nickeil Alexander-Walker. They have been in a position to retain Randle and Reid, however doing so took them virtually as much as the second apron. They elected to let Alexander-Walker depart and hope that Rob Dillingham and Terrence Shannon can exchange him. If not, properly, powerful luck. Minnesota is out of tradable first-round picks. Even when they’ll, that probably would not be sufficient to bridge the hole between them and the Thunder. They’d want a big addition to try this. That is why they tried to get Kevin Durant. A part of the rationale they could not achieve this through the season was that each they and the Suns have been second-apron groups, making buying and selling collectively almost unimaginable.

These are the dilemmas dealing with virtually each different aggressive workforce within the NBA. The Cavaliers are round $20 million above the second apron, and that is after shedding Sixth Man of the 12 months candidate Ty Jerome. Even when they wished to attempt to commerce for LeBron James, they’re functionally unable to do so with out gutting their depth. Orlando simply traded 4 first-round picks for Desmond Bane. In doing so, they set themselves to go above the second apron as quickly because the 2026-27 season except they transfer different contracts. Denver did not have Kentavious Caldwell-Pope when it confronted Oklahoma Metropolis within the second spherical, largely due to the second apron. Which may have been the distinction between the Thunder successful and shedding the 2025 championship.

The second apron is not serving to the Thunder instantly. It is simply hurting them far lower than it is hurting the groups which might be attempting to beat them. In that sense, its existence may really be a web optimistic for them. The NBA got down to create a system meant to stop sustained dominance from a single workforce. As a substitute, it created one during which constructing and sustaining a roster ok to problem that one, dominant workforce goes to be far harder than it was once. There are just a few groups following variations of the Thunder mannequin. The Spurs and Rockets come to thoughts as groups much less susceptible to apron-related considerations than most, given how properly they’ve each developed younger expertise and stacked future draft picks. However no person has but skirted the impression of the aprons as successfully because the Thunder.

In order that brings us to the query followers of the opposite 29 groups are absolutely asking proper now: is something on this widely-disliked CBA going to have the ability to decelerate the Thunder? The reply to that’s… possibly.

So what are the actual penalties of all this spending?

We have so far centered totally on the roster-building constraints created by the second apron. Whereas these probably will not have an infinite impression on the Thunder, the repeater tax simply might. It raises a quite simple query: What number of billions of {dollars} value of participant salaries and taxes is Oklahoma Metropolis’s possession prepared to pay with the intention to fund a attainable dynasty?

You may be considering that my use of the phrase “billions” is hyperbole. I guarantee you, it is not. The luxurious tax primarily works on a progressive bracket system. You begin out paying a low charge per greenback within the earlier brackets, however these charges enhance the deeper into the tax you go. The brackets change yearly primarily based on cap development, however let’s use this season for instance. The primary bracket covers each greenback spent between the tax line and $5,685,000 above it. Due to this fact, each $5,685,000 above the road a workforce goes, it enters a brand new bracket. Beneath is a desk evaluating the usual tax charge and the repeater tax charge.

Each successive bracket after that tacks on one other 50 cents. So let’s apply that to this season’s most costly workforce. Proper now, the Cleveland Cavaliers have a payroll of $226,287,886 with incentives factored in, in line with Yossi Gozlan’s cap sheets. That units them up, a minimum of at current, to pay roughly $149 million in luxurious taxes. However the Cavaliers should not a repeat taxpayer. In the event that they have been, that tax invoice would vault as much as round $226 million, proper round the place their payroll lands, making their whole wage expenditure over $450 million, and that is earlier than even filling out their 14th roster spot. One thing like this might need been sustainable for a yr. Boston was on this vary earlier than its offseason strikes and might need stayed there with a wholesome Jayson Tatum. However doing so for a number of years at a time would price billions of {dollars} in general payroll.

This is not an issue for the Thunder but. It is going to be down the road. A part of the irony right here is that the NBA modified these tax charges particularly to make it more durable on the NBA’s wealthiest, big-market homeowners. Joe Lacob (Warriors), Joe Tsai (Nets) and Steve Ballmer (Clippers) flexed their monetary muscle to such an extent over the last CBA that the league was decided to make doing so considerably extra punitive within the new one. However as a substitute of them getting punished for his or her spending, it is the small-market Thunder.

Furthering this irony? This is not even the primary time one thing like this has occurred. The 2011 CBA was designed to make it more durable to construct and maintain superteams after LeBron James and Chris Bosh joined the Miami Heat. Earlier than that, the tax was merely a dollar-for-dollar cost. However in 2011, the league adopted the progressive construction nonetheless in use as we speak. The primary workforce to face punishment for this was the Thunder, as their wariness of the potential tax implications performed a job of their resolution to not provide James Harden a max contract after the 2012 Finals. They in the end traded him to Houston thereafter.

That has led some followers to imagine Oklahoma Metropolis’s possession is reasonable. That is not totally truthful. The Harden state of affairs was extra advanced than simply the tax considerations. The Thunder paid appreciable tax payments through the Russell Westbrook-Paul George years, and so they’ve had years to arrange for what’s about to return. They don’t seem to be going to draw back from the tax at first. However this workforce is so younger and due to this fact positioned to be so good for therefore lengthy that finally, possession might very simply attain a breaking level. Only a few homeowners are ready to pay the repeater tax indefinitely, particularly if the workforce plans to remain far above the road.

So primarily based on every part we have coated, the CBA most likely will not do a lot to discourage the Thunder by way of the 2028-29 season. They’ve assembled sufficient younger expertise to plausibly preserve competing for championships into the 2030s. The query shall be whether or not or not possession is prepared to pay for them to do it.