Imagine you're an NBA general manager. You're offered a sweet deal at the trade deadline -- one that's too good to pass up. Only you have to turn it down. "Sorry, no can do" is your regretful response.
Welcome to life with a hard cap.
The hard cap was born with the 2011 collective bargaining agreement, and it's really a side effect of another rule. The league wanted to increase the penalties for high-spending teams because a dollar-for-dollar luxury tax hadn't been enough of a disincentive. It made the luxury tax markedly more punitive and added system restrictions for high-spending teams -- those more than $4 million over the tax line. Coupled with the higher tax rates, these system changes sent a much stronger message that teams need to toe the financial line.
These changes also created loopholes. The hard cap closes these loopholes by preventing teams from using exceptions reserved for low-spending teams and later racking up a huge payroll. With a hard cap in place, if a team uses one of the rules reserved for low-spending teams, then it has to remain a low-spending team -- not allowed to go more than $4 million above the tax line for the remainder of that season.
Some teams are hard-capped and simply don't care because they are comfortably below the limit or don't intend to take on additional salary. For other teams, the hard cap can be crippling. Last season, the Chicago Bulls were hampered by the hard cap all season -- making it tough even to sign enough players to bring to training camp. It's a mistake they didn't repeat this season.
The hard cap is lifted July 1, so right now it primarily affects teams' ability to make moves at the trade deadline. Once we hit free agency this summer, these teams once again can trade freely. And any team is free to make trades that give away salary; the hard cap prevents teams from adding salary only.
Here are the teams that are subject to the hard cap and how badly each is affected for the trade deadline.
Los Angeles Clippers
Reason for hard cap: Midlevel exception (Matt Barnes, Darren Collison), sign-and-trade (J.J. Redick)
Amount available: $1.91 million
Though the Clippers aren't favorites in the playoffs as constructed, they are only a backup, scoring-focused big man and some wing help from being a real contender. But with only $1.9 million left below the hard cap, their options are limited. They would want to find a trade that improves the team while reducing payroll, but such a deal will be hard to find.
Reason for hard cap: Sign-and-trade (Keith Bogans)
Amount available: $3.27 million
The Celtics are in a transition year and are thinking more about the future than the present. They have been dangling Rajon Rondo in trade talks, but their price is steep. If they move Rondo -- or make any other trades -- it will be to acquire cheap assets for the future, but sometimes teams have to take on another team's bad contract to make that happen. Their options are limited, but they aren't under pressure to make a deal by the trade deadline.
Reason for hard cap: Biannual exception (Ronny Turiaf), midlevel exception (Corey Brewer), sign-and-trade (Kevin Martin)
Amount available: $5.19 million
The Wolves are probably out of the running this season, and their focus for the future has to be on Kevin Love. If they want to persuade him to stay in Minnesota, they have to get better. Their discussions have been limited to cap-neutral deals, such as J.J. Barea for Andre Miller.
New Orleans Pelicans
Reason for hard cap: Sign-and-trade (Tyreke Evans)
Amount available: $8.47 million
Having $8.47 million gives the Pelicans a lot of space to work with, but there's a lot of work to be done, especially in the frontcourt. Eric Gordon and Austin Rivers are both available, but if Gordon is shopped, they likely will be looking for trades that lower their payroll.
Reason for hard cap: Midlevel exception (Tyler Hansbrough, D.J. Augustin, Dwight Buycks), sign-and-trade (Quentin Richardson)
Amount available: $6.02 million
By virtue of playing in the East, the Raptors find themselves in the middle of a playoff run. If the regular season ended today, they would have home court in the first round. They have a GM who recently inherited the team and may want to make more changes, and they have an asset in Kyle Lowry who will be a free agent this summer. All of this means that the Raptors may be very active in trade discussions. While $6 million gives them a fair amount of room to work with, the hard cap could become a factor in trade discussions, especially if those discussions include Rondo.
Reason for hard cap: Biannual exception (Eric Maynor), midlevel exception (Martell Webster)
Amount available: $3.85 million
The Wizards are another team in the playoff mix by virtue of playing in the East. They aren't planning any major moves by the trade deadline, but if a deal falls in their lap, the hard cap could be a problem. Their most likely target is a point guard to replace Eric Maynor, and any such deal likely will be cap-neutral.
Clear to trade
Reason for hard cap: Biannual exception (Nate Robinson), midlevel exception (J.J. Hickson), sign-and-trade (Randy Foye)
Amount available: $5.95 million
The Nuggets aren't in contention this season and are only $4.4 million under the luxury tax -- which they don't want to pay. There's no reason to add salary this season, so they really aren't affected by the hard cap. Any deals they are discussing -- Kenneth Faried and Andre Miller are the most frequently mentioned -- would dump salary or be cap-neutral.
Reason for hard cap: Sign-and-trade (Brandon Jennings)
Amount available: $13.05 million
The Pistons have had their share of turmoil this season and if anything are sellers rather than buyers (Josh Smith, anyone?). They're also so far under the apron that the hard cap really isn't a consideration. The Pistons could even be the third wheel in a larger deal between other clubs, taking on a player's salary to facilitate the trade.
Golden State Warriors
Reason for hard cap: Biannual exception (Jermaine O'Neal), midlevel exception (Marreese Speights, Toney Douglas), sign-and-trade (Andre Iguodala)
Amount available: $6.29 million
They are in the playoff mix and could be willing to make trades to improve their chances. But $6.3 million gives them a lot of breathing room, so they're probably not affected by the hard cap.
Reason for hard cap: Biannual exception (C.J. Watson), midlevel exception (Chris Copeland, Andrew Bynum)
Amount available: $4.83 million
The Pacers aren't going to break up a good thing. If anything, they're going to find a new home for Danny Granger -- and would likely save money in the process. They are very sensitive to paying luxury tax, which would be a problem long before the hard cap would affect them.
San Antonio Spurs
Reason for hard cap: Midlevel exception (Marco Belinelli, Jeff Ayres)
Amount available: $11.83 million
The Spurs aren't likely to make a big move, and even if they do something, they have a lot of room to work with. They may not even be aware that they are hard-capped.