CBA Patch Notes: What Will Be The New Meta?

An analysis of which team building strategies may prove most efficient in a new CBA landscape

I am a huge gamer. From first person shooters, to single player RPGs - I have always enjoyed hunting for the most efficient ways to “win”. In most games, there tends to be a prevailing strategy or two that is far more effective than others. This strategy, frequently referred to as a “meta”, can be anything from an exploit that lets you collect resources or experience faster, or simply a weapon that is overpowered relative to the rest. In many games, developers frequently release patches and updates to bring competitive balance. This usually comes in the form of nerfs or buffs to various strategies, weapons, or characters. These changes typically disrupt previous metas a give rise to new ones. Some new strategy will eventually win out and the player base will start shifting towards it.

The implementation of the new CBA is no different than a developer patch. Players and owners collectively bargained an agreement in which they assessed the strategic landscape and made changes in the name of competitive balance. There were two prevailing metas that this new CBA sought to address - teams that spend and spend and spend, and teams that don’t spend at all. More specifically - high spending contenders, and low spending tankers.

Now one of these was deemed a much larger problem than the other. The new CBA expressly seeks to crack down on teams with rampant spending. Small market owners complained loudly that teams such as the Warriors and Clippers held unfair advantages with their ability to spend without any real consequence. Lo and behold, the new CBA hardens the cap through a litany of mechanisms. For a detailed accounting on the major changes coming, see my prior post. Also, friend of the newsletter, Ryan Bernardoni, does a great job of capturing the specific mechanisms that will trigger a hard cap here.

The agreement also impacts teams that opted to remain below the salary floor and cash in on the league revenue share distributions while they were “tanking”. The correction isn’t as strong for these teams, but the new CBA will at the very least force teams to reach a salary floor if they want to partake in these cash payouts. The goal here is that if teams are forced to spend, they will spend it on decent players being squeezed out of the league’s more expensive teams. This in theory should lead to more “competitive balance” from the bottom. The implementation of the play-in tournament already has a compressing effect on league standings, and the new CBA ruleset should continue this movement towards the center.

Beyond the new CBA boxing the majority of the league into a salary band that is 90%-130% of the cap, there are a number of changes that impact team building in unique ways. I am going to explore these changes through what was “buffed”, “nerfed”, and what might give rise to a new meta.

Major Buffs

1. Cap Space: Cap space has traditionally been beneficial for two parties - marquee markets looking to attract free agents, and tanking teams looking to launder their space for assets. For most mid-level markets, cap space often presented a danger of overpaying for a player that would not normally be worth that contract or entertain that market. There were often more benefits associated with operating as an “above the cap” team, with access to the larger mid-level exception.

   With an increasing BRI pool and limits on spending, more mid-level teams with cap space will be able to secure players who otherwise would not entertain their market. Ironically, the tank and launder strategy will receive an indirect buff because of this as well. The immediacy of the CBA changes being implemented will have expensive teams looking to shed contracts in the near future. Teams fortunate enough to have cap space during this time period will be able to capitalize on these developments. A team like San Antonio likely has no plans to be “good” any time soon and can continue to accumulate assets as they begin their build around Victor Wembanyama.

   Here are a few other ways Cap Space was buffed:

   1. Room Mid-Level Exception Increase (R-MLE): The R-MLE will increase 30% to a projected $7.6 million from the previous $5.4 million. The length of contract permitted will increase from two years to three years, allowing room teams to secure full bird rights. Additionally, starting in 2024-25, the R-MLE can be used to acquire players via trade or waiver claim.

   2. More Flexible Salary Matching And Traded Player Exception Usage: This change actually benefits above the cap teams much more, but any kind of transactional flexibility will also benefit teams with cap space. I will detail the specific changes in the minor buffs section.

   3. Restricted Free Agency Offer Sheet Matching Period: The matching period will be reduced from 48 hours to 24 hours. This will prevent offering teams from having their cap space tangled for a few days while the matching team contemplates.

2. Building Through The Draft: The new CBA implements changes that will further strengthen developing and retaining players through the draft. While there is a clear ceiling to the amount of players a team can develop and pay because of the upper spending limits - the power of draft picks has generally been buffed. In any kind of environment where there is a spending ceiling, acquiring cost controlled players that exceed the production value of their contract will present a significant competitive advantage in producing wins. A top down squeeze financially means anything that skews the dollars to wins ratio in the direction of wins will be a plus. Teams enjoying all-star level production from rookie scale players will have more pathways to build than previously. Likewise, as mentioned in my previous article, rookie scale max contracts will offer greater team building advantages than larger maxes.

   Here are a few mechanisms that buff draft picks:

   1. Rookie Scale Extensions: All rookie scale extensions will allow for up to 5 new seasons. Previously only designated players were eligible for 5 new seasons. This change offers teams a chance to secure long term contracts with drafted players prior to them entering restricted free agency. Being able to secure these at rates less than the rookie max should offer a significant advantage in a new media deal landscape where the cap is slated to rise rapidly.

   2. Second Round Pick Exception: Up until now, teams had to use either cap space or a cap exception to sign second round players. The new CBA introduces a cap exception designed specifically to sign second round players, allowing teams to preserve cap space or other exceptions. The Second Round Pick Exception offers the following contract structures:

      1. Three Year Contract: This option will feature a three year contract including a third year team option. The first year of the contract could reach a salary of up to the minimum salary rate for a player with one year of service ($1,637,966 based on the 2022-23 scale) and will subsequently provide for the player’s applicable minimum salary for years two and three.

      2. Four Year Contract: This option will feature a four year contract with a team option in the fourth year. The contract could provide for salary in years one and two of up to the minimum salary applicable to a player with two years of service ( $1,836,090 and $1,927,896 based on the 2022-23 scale) and will provide for the player’s applicable minimum salary in years three and four.

   3. Two-Way Contracts: The number of two-way players a team may have on its roster has increased to three from two. There are a growing number of success stories in the league featuring two-way contracts (Pelicans Jose Alvarado being a prime example). Increasing the number of slots available will allow teams to evaluate more players without taking a hit on their cap space.

   4. Designated Player Restriction Removed: The cap on designated rookie scale and designated veteran players will be removed. Teams will now be able to have as many on their roster as they can afford within the confines of other rules they may or may not trigger. I’d consider this a minor buff, but a buff nonetheless for teams that draft well and want to retain their players.

Minor Buffs

Operating Above The Cap But Below The First Apron: In an effort to curb spending, the new CBA will institute a few mechanisms that benefit a salary band which is bound to encompass the majority of teams. These mechanisms fall under the “minor buff” category because the majority of them will trigger one hard cap or another. Reminder, check out the post by Ryan linked above to see what those triggers are.

Nonetheless, here is how these “above the cap” teams will stand to benefit:

1. Non-Taxpayer Mid-Level Exception (NT-MLE) Increase: the NT-MLE will increase by 7.5% and will be projected at $12.2 million for the 2023-24 season. Additionally, starting in 2024-25, teams will be able to use the NT-MLE and the Bi-Annual exception can be used to acquire players via trade or waiver claim.

2. Second Round Pick Exception : The benefits of the Second Round Pick Exception are detailed above. This will also benefit “above the cap” teams as they no longer have to dip into the NT-MLE to sign these players.

3. Trade Player Exceptions Increase: TPEs will see a boost that will allow for more flexible salary matching in trades. The following changes are being implemented.

   1. 175% Trade Allowance: The 175% trade allowance will be increased to 200%.

   2. $5 million Trade Allowance: The $5 million trade allowance will be increased to $7.5 million for the 2023-24 cap year. This amount will grow each subsequent year at the rate of the growth in the salary cap.

   3. $100k Allowance: The $100,000 TPE allowance will be increased to $250,000.

4. More Flexible Extensions: The maximum allowable salary in the first season covered by a veteran extension will increase from 120% to 140% of the greater of the player’s prior salary and the estimated average player salary. Additionally, starting in 2024-25 for extend-and-trade scenarios, the maximum allowed years for the extension will increase from three to four, while the maximum allowed salary in the first year will increase from 105% to 120%. These updates will allow teams greater ability to retain players they have traded for, as well as players reaching extension eligibility in line for a larger raise than the previous rules could accommodate.

Major Nerfs

Spending. They nerfed the shit out of spending. I’ve already covered the upcoming changes and linked out the articles above. The one thing I did not mention was the following nerf to the Tax-Payer Mid-Level Exception (T-MLE):

The maximum term for contracts signed using the T-MLE will DECREASE from three years to two. This means teams will no longer have full bird rights on these players.

This change is in addition to second apron teams no longer having access to the T-MLE.

So yeah, trying to operate above the first or second aprons is going to be a headache.

Predicting The New Meta

Based on the changes outlined above, I do not believe the tank and launder strategy is going anywhere. The timing of the changes in conjunction with the new media deal makes it extremely favorable for teams to head into 2025-26 asset rich and with copious cap flexibility. Teams attempting to peak after the new media deal kicks in will be able to ride the cash wave that should increase the cap at a significant rate on a yearly basis.

For teams that do not have the ability to become cap flexible, hitting on draft picks will remain an important pathway to improve. Being able to secure production during the first contract will be even more valuable - particularly with the implementation of the second round pick exception. Likewise, hamstrung teams finding the right “second draft” players will be able to capitalize on a market inefficiency. It will be exceedingly important to obtain low-cost role players that greatly outproduce their contract value. Smart teams will be scouting for these second and even third draft opportunities.

Despite additional mechanisms for player retention, I forecast greater turnover among the middle class of the league. Smart teams will hold onto stars and cycle cost controlled roles players around them until they feel ready to compete for a title. It will be the max or near max deals for non all-star level players that will continue to hurt. The Warriors and Heat can’t be happy with the money they have committed to Jordan Poole and Tyler Herro. Atlanta has tried to trade John Collins for years! Once again, smart teams will see this crossroads coming and make aggressive decisions to move off these players. It’ll be the teams left holding the bag that will find themselves on a path to nowhere.

Title windows will be smaller for teams as parity increases across the league. Dynasties will be MUCH more difficult to build (not that they were easy in the first place). Likewise I think teams will be much more hesitant in conducting “all-in” trades that compromise future flexibility and assets. Previously these teams were able to acquire the star and then continue to add around the edges through minor transactions while footing a growing bill that kept the team together. This will become prohibitively difficult.

Finally, to accommodate a higher turnover landscape, teams will really need to drill down into an identity. It will be increasingly important to have strong leadership from the team’s best players in addition to a coach who can engage buy-in. Teams that already have these foundations in place will have a head start over teams that have invested heavily in players and coaches who do not meet this criteria.

All in all, the overall strategic landscape of the NBA will not change much outside of high cost teams. Instead, sound team building strategies will see a renewed emphasis. Teams will no longer be able to outspend their competitors in pursuit of wins. Additionally, a strong foundation and development program will lead to more sustained success than the aggressive pursuit of stars at all costs. I don’t think stars are getting a nerf - in fact having the right ones actually got buffed. I do think the strategy of trying to construct super teams got nerfed heavily. Still, there are extremely wealthy owners in the league with championship aspirations and we shall see if the new spending deterrents actually have an impact.