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NBA Agent License 2024 (1)
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NBA Agent License 2024 (1)
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NBA Agent License 20241. What is a salary cap? Why have one? - ANS-- [ ] A salary cap is a limit on the amount
teams can spend on player contracts, which helps to maintain competitive balance in
the league. Without a salary cap, teams with deeper pockets could simply outspend the
remaining teams for the better free agents. The basic idea behind a salary cap is that a
team can only sign a free agent if its total payroll will not exceed the cap -- so a team
with deep pockets is on a more level playing field with every other team.
While this is true in theory, NBA teams in big markets nevertheless have been able to
significantly outspend teams in small markets. For example, for the 2016-17 season
(the final season under the previous CBA) the lowest team payroll was approximately
$80.5 million1 and the highest was over $127.5 million (plus an additional $27.3 million
in luxury tax).
As a result, there is now a weak to moderate correlation between team payroll and
regular season wins. For the 2016-17 NBA season the correlation coefficient was about
0.35. It was much stronger in the past -- for example, in 2010-11 (the last season under
the 2005 CBA) the correlation coefficient was 0.53, indicating that deep-pocket teams
were able, to a certain extent, to buy their way to success.
Interestingly, this correlation was only 0.13 (nearly orthogonal) in the 2001-02 NBA
season. One possible explanation for this variation is the changes in the league's luxury
tax and revenue sharing systems over time.
What is a soft cap? What is the difference between a soft cap and a hard cap? Which
does the NBA have? - ANS-The NBA has a soft cap. A hard cap cannot be exceeded
for any reason. A soft cap like the NBA's contains exceptions which allow teams to sign
players or make trades that exceed the cap under certain conditions. In practice, few
NBA teams are under the cap during a season.
Certain components of the NBA's system function as a hard cap under specific
circumstances. See question number 20 for more information.
Why have a soft cap? - ANS-A soft cap promotes a team's ability to retain its own
players. Nobody likes it when a player plays with one team his entire career, the fans
love him, he wants to stay and the team wants to keep him, but he has to leave
because the team cannot offer him a satisfactory contract. The exceptions under a soft
cap allow teams to keep players under these kinds of circumstances. In addition, they
allow teams to make a limited number of changes (replacing department players,
improvements, etc.) every year.
, What is the Collective Bargaining Agreement? - ANS-- [ ] It's the legal contract between
the league and the players association that sets up the rules by which the league
operates. (It's commonly abbreviated as "CBA," which is not to be confused with either
the Chinese Basketball Association or the Continental Basketball Association. The
abbreviation CBA will be used in the remainder of this document.)
The CBA defines the salary cap, the procedures for determining how it is set, the
minimum and maximum salaries, the rules for trades, the procedures for the NBA draft,
and hundreds of other things that need to be defined in order for a league like the NBA
to function.
The CBA also prevents the NBA from being in violation of federal antitrust laws. Many of
the league's practices (such as the salary cap and draft) would violate antitrust laws
were they not agreed to via collective bargaining (see question number 118).
Has there always been a salary cap? - ANS-It may surprise you to learn that the NBA
first had a salary cap in 1946-47, its first season. The cap that season was $55,000,
with most players earning between $4,000 and $5,000. Star player Joe Fulks earned
$8,000, and Tom King earned a league-highest $16,500 for his combined duties as
player, publicity director and business manager for the Detroit Falcons.
The "modern" NBA salary cap began in 1984-85, at $3.6 million. It made steady but
gradual increases of around $1-2 million each season until 1994-95, when it was
$15.964 million. Armed with a big TV contract from NBC, the salary cap jumped to
$23.0 million in 1995-96, and increased to $26.9 million in 1997-98, the last season of
the 1995 CBA (a 647% increase in 13 years). The ABC/ESPN TV contract, which took
effect with the 2002-03 season, provided $4.6 billion over six years, but less in 2002-03
than NBC paid in 2001-02. As a result, the salary cap went down for the first time ever
in 2002-03.
Under the 2005 CBA the salary cap started at $49.5 million, and finished at $58.044
million, a 17.26% increase, and averaging 3.45% per year. However the salary cap
decreased in 2009-10, dropping from $58.68 million to $57.5 million. Under the 2011
CBA the salary cap started at $58.044 million and finished at $94.143, a 62.19%
increase. This was driven largely by the new national TV deals that took effect in 2016.
See question number 6 for more information on NBA labor history.
What's the history of the CBA? - ANS-Bob Cousy began to organize the NBA players in
1954, although the league refused to recognize the union until 1957. A near strike at the
1964 All-Star game forced the league to adopt a pension plan. The first CBA was
established in 1970, and new agreements followed in 1973, 1976 and 1980. The 1976
CBA coincided with the settlement of the "Oscar Robertson" suit, which was filed by the
players association in 1970 to block the NBA-ABA merger. The 1976 agreement also
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