In the NBA, a particular term has sparked considerable discussion and impact: the “second apron.”
Though part of the 2023 collective bargaining agreement (CBA), its full effect wasn`t felt until the most recent offseason. This second apron, a higher tier of the salary cap, aims to create a more balanced competitive landscape by limiting the roster-building options for teams that significantly exceed the salary threshold.
Essentially, franchises that heavily outspend rivals, accumulate star players, or acquire All-Stars via trade or free agency now face significant future restrictions on how they can construct their teams.
An unnamed general manager from the Eastern Conference noted, “The second apron rules prevent a team from simply fast-tracking its roster construction. Moreover, bringing in a high-salaried veteran through trade now effectively shortens your team`s competitive window.”
Recent events in 2023 and the current summer serve as prime illustrations of this rule`s profound and intended impact.
Prior to the implementation of these strict second apron regulations, we saw several high-profile trades: Kevin Durant and Bradley Beal moved to the Phoenix Suns; the Boston Celtics acquired Kristaps Porzingis and Jrue Holiday; the Milwaukee Bucks landed Damian Lillard; and shortly after, the LA Clippers traded for James Harden.
Crucially, none of these six transactions would have been permissible under the present second apron rules.
Fast forward two years: Durant, Porzingis, and Holiday have all been traded away. Beal is reportedly in talks for a contract buyout and waiver. The Bucks were compelled to waive Lillard, stretching his remaining $113 million over five seasons, a move that then allowed Milwaukee to sign Myles Turner. While Harden remains with the Clippers, the team chose not to re-sign Paul George, largely due to concerns over potential apron penalties.
Brad Stevens, the Boston Celtics` president of basketball operations, recently stated that their team`s proximity to the second apron has significantly constrained the tools available to them.
These limitations include being unable to send cash in trades, restricted use of the non-tax mid-level exception (specifically, less than $5.7 million), and, most critically, the inability to utilize more than 100% of a traded player exception or combine multiple contracts in trades. Furthermore, teams exceeding the second apron are prohibited from trading their first-round pick seven years into the future. That same future first-round pick can also be relegated to the end of the round if a team remains above the second apron for three out of four seasons.
Conversely, the rules do not prevent teams from re-signing their own players. For example, the Cleveland Cavaliers re-signed Sam Merrill to a four-year, $38 million deal despite already being over the second apron. This move, however, amplified their luxury tax penalty and pushed them deeper into the second apron territory. Teams with expensive rosters that underperform or suffer significant injuries find themselves severely limited in their ability to improve through free agency or trades, as exemplified by Boston and Phoenix recently.
To demonstrate the league-wide ramifications of the second apron, we will examine how high-spending franchises have adapted to these regulations, the challenges current “Apron Club” members face, and which teams might soon join their ranks.
The Three Founding Members
The Boston Celtics, Phoenix Suns, and Minnesota Timberwolves stand as the inaugural members of the second apron club. All three teams surpassed this punitive threshold in the 2024-25 season, incurring over $300 million in luxury tax penalties and having their 2032 first-round draft picks frozen.
This offseason, Boston and Phoenix deliberately sought to reduce their payrolls to fall below the apron. Meanwhile, the Timberwolves, despite losing key reserve Nickeil Alexander-Walker, retained the core starting five that reached the Western Conference Finals. As for their frozen 2032 first-rounder, they have significant work ahead to regain access to it.
Boston Celtics
Winning the 2024 championship temporarily overshadowed the challenging roster decisions awaiting the Celtics this summer.
With contract extensions for Jrue Holiday, Sam Hauser, Derrick White, and Jayson Tatum set to commence in the 2025-26 season, the Celtics were not only projected to incur a colossal half-billion-dollar payroll but, more critically, were headed for a second consecutive season over the second apron. Brad Stevens admitted, “We`ve known for a long time that hard decisions were coming.”
These difficult choices gained urgency when Tatum suffered a torn right Achilles in the second round of the playoffs.
With Tatum sidelined for much of the upcoming regular season and the Celtics facing a record $550 million payroll, Stevens initiated a roster overhaul, beginning with trading Holiday to the Portland Trail Blazers, followed by Kristaps Porzingis`s move to the Atlanta Hawks.
Stevens explicitly stated, “The second apron is why those trades happened. I think that is pretty obvious. And the basketball penalties associated with those are real. So that was part of making the decision to push and put our chips on the table and go for the last two years.”
These two transactions have reduced the Celtics` payroll from $550 million to $260 million, leaving them just $332,000 above the second apron. They have until the trade deadline to clear the remaining necessary salary.
Looking ahead, Stevens firmly rejects the notion of a “rebuild” for the Celtics, asserting, “That`s not going to be part of the lexicon in our building, and that`s the way we`re going to focus moving forward.”
Tatum, White, and Jaylen Brown are secured under contract for at least the next four seasons. Unlike recent offseasons, Boston now possesses the financial flexibility to engage in free agency (with access to a $15 million non-tax mid-level exception and $5.5 million) and execute trades (projected to be $40 million below the second apron next year). The Celtics also hold three picks (one first-round, two second-round) in next year`s draft.
Minnesota Timberwolves
The Minnesota Timberwolves executed two strategic moves that paved the way for them to exit the second apron in future years without dismantling their 2024 conference finalist roster.
The first involved trading Karl-Anthony Towns` $220 million over the next four years for former All-Star Julius Randle and sixth man Donte DiVincenzo last October.
The second key decision was extending Rudy Gobert at a reduced salary, paying him $12 million less than his projected 2025-26 earnings. This salary concession was compensated with a guaranteed $73.5 million across the 2026-27 and 2027-28 seasons.
Despite finishing last season over the second apron and incurring a franchise-record $90 million tax penalty, Minnesota has successfully positioned itself as a championship contender with enhanced roster flexibility and lower costs moving forward.
This offseason, the Timberwolves secured agreements to re-sign Naz Reid and Randle before the June 30 free agency period commenced. However, they opted not to sign reserve Nickeil Alexander-Walker, as a new contract for the guard would have pushed them back over the second apron. They currently sit $5.9 million below the threshold.
An Eastern Conference executive commented, “The apron rules compel teams to prioritize player retention and place a greater reliance on their own drafted talent to fill significant roles.”
For the Timberwolves, this means a heightened focus on their 2024 first-round draft picks, Rob Dillingham and Terrence Shannon Jr., to contribute to the rotation in Alexander-Walker`s absence.
Phoenix Suns
Recall the widely discussed remarks by Suns owner Mat Ishbia following the 2023-24 season?
Ishbia stated to Ramona Shelburne, “I comprehend all the regulations concerning the second apron. I fully grasp the CBA`s intent. I`ve studied it thoroughly, and we made a deliberate choice, believing that the team with the most skilled players ultimately triumphs. Given the option between having Bradley Beal, Kevin Durant, and Devin Booker, or just two of them, I would unequivocally choose all three every single time. I doubt any other GM, owner, or CEO would disagree.”
These comments came after the Suns, a year earlier, had aggressively bolstered their roster. They traded Chris Paul`s $30 million expiring contract and much of their remaining draft capital for Bradley Beal`s $200 million deal, which included a no-trade clause. Four months prior to Beal`s acquisition, Phoenix had already dismantled its roster of promising young players on team-friendly contracts (such as Mikal Bridges and Cameron Johnson) and numerous future first-round picks to secure Kevin Durant.
These two blockbuster trades, combined with the re-signings of Grayson Allen and Royce O`Neale, left the Suns in a precarious position: burdened by excessive salaries, underperforming on the court, and severely constrained by second apron restrictions.
Ishbia remarked after Phoenix missed the playoffs this past year, “If I didn`t believe we had a legitimate chance to win an NBA championship, I assure you we wouldn`t have the highest salary and highest luxury tax in NBA history.” Ishbia`s words resonated months later as the costly two-year experiment with Durant, Booker, and Beal proved unsuccessful, prompting Phoenix to justifiably pivot away from its expensive roster.
Durant was subsequently traded to the Houston Rockets in exchange for a package of players, including Jalen Green, Dillon Brooks, and Khaman Maluach, the 10th pick in the 2025 draft. Concurrently, reports indicate that the Suns and Beal are discussing a contract buyout. Beal is owed $111 million and would need to reduce his salary by at least $13.9 million for the Suns to stretch his remaining salary over the next five seasons. The CBA mandates that no more than 15% of stretched money can count against a team`s salary cap annually.
Should the waive-and-stretch scenario materialize, Phoenix would incur a cap hit of $19.4 million over the next five seasons but would effectively exit both the second and first aprons for the foreseeable future.
The Newest Member
Cleveland Cavaliers
Ordinarily, a team winning an Eastern Conference-best 64 games, exiting the playoffs in the second round, and then entering the offseason projected to be a second apron team would prompt its front office to dismantle the roster. However, President of Basketball Operations Koby Altman has taken the opposite approach. Despite facing a $375 million payroll (and paying the luxury tax for the first time since 2018) and being $20 million over the second apron, Cleveland chose to expand its payroll by signing Sam Merrill to a four-year, $38 million contract.
Altman conveyed his commitment to the team post-season, stating, “We`re not going anywhere. We`re going to keep fighting for that championship. The window is wide open, we believe. I love our foundation, I love our core.”
The Cavaliers` core quartet of Donovan Mitchell, Darius Garland, Evan Mobley, and Jarrett Allen are all under contract through at least the 2027-28 season, although Mitchell holds a player option that could make him a free agent in 2027.
The real challenge will emerge next offseason if the Cavaliers fail to make a deep playoff run, which would be necessary to justify their substantial financial outlay. For the 2026-27 season, Cleveland is projected to have a $240 million salary commitment, once again positioning them as a second apron team.
A positive aspect is that the Cavaliers aren`t entirely constrained in how they can enhance their roster. Despite the high costs, Cleveland has 11 of its 13 current players under contract for next season and will also incorporate a 2026 first-round draft pick.
Awaiting Formal Membership
Oklahoma City Thunder
A prevalent question among team executives and fans at the Las Vegas Summer League concerned the Oklahoma City Thunder: With nearly $800 million committed in extensions to Shai Gilgeous-Alexander, Chet Holmgren, and Jalen Williams, would the Thunder be compelled to dismantle their roster, similar to the Celtics` situation?
The answer is no, despite projections placing the Thunder $24 million over the second apron in 2026-27. Here`s why:
Oklahoma City has meticulously positioned itself for future financial flexibility. Since the 2020-21 season, the Thunder have maintained the fifth-lowest cumulative payroll across the league. For the sixth consecutive season, they will not incur a luxury tax penalty. Furthermore, beyond projected expansion revenue, OKC anticipates another significant income stream with the opening of its new arena in 2028, which will be 90% publicly funded.
While apron restrictions are designed to limit a front office`s ability to improve rosters through free agency and trades, Oklahoma City`s situation differs from other high-spending teams. They possess a staggering 13 first-round and 16 second-round picks over the next seven years, with four potential first-rounders in the 2026 draft alone. This robust draft capital allows the Thunder to offset roster costs by integrating players on rookie-scale contracts, exemplified by recent first-round selections Nikola Topic and Thomas Sorber.
Unlike the Celtics, who have two players on supermax contracts (Jaylen Brown and Jayson Tatum), the Thunder have only one: Shai Gilgeous-Alexander, whose supermax extension doesn`t even commence until the 2027-28 season. This means that for the next two seasons (and the preceding two), the current MVP will play on a salary that is less than 25% of the cap.
Holmgren`s and Williams` extensions are set to begin at 25% of the salary cap in 2026-27, which is $16 million less per year than a supermax deal. The Thunder have also safeguarded themselves in case either player earns regular-season honors.
Notably, unlike Paolo Banchero`s extension with the Orlando Magic, which includes a 30% escalator (increasing his $239 million extension to $287 million) if he earns All-NBA, MVP, or Defensive Player of the Year honors, Holmgren`s contract does not contain such a clause. Williams` salary for next season increases to the same amount as Banchero`s, but only if he is named MVP, Defensive Player of the Year, or All-NBA First Team. There are also escalators for second- or third-team selections, but at a lower percentage.
Crucially, the Thunder have staggered their contracts strategically for the next five seasons. Over the past two seasons, OKC has signed players like Isaiah Hartenstein, Isaiah Joe, Aaron Wiggins, Jaylin Williams, and Ajay Mitchell to contracts that decline, feature team options, or are partially guaranteed.
This strategy doesn`t guarantee that the Thunder will maintain the exact same roster for years to come. Lu Dort, Hartenstein, and Kenrich Williams all have team options next season, with Dort and Williams also eligible for extensions this offseason.
However, it`s important to remember that all championship teams undergo cycles of supporting cast turnover. During Michael Jordan and Scottie Pippen`s Chicago Bulls dynasty in the 1990s, that foundational superstar duo was consistently surrounded by different supporting players across their two sets of three championships.
Orlando Magic
The Orlando Magic deserve commendation for their disciplined and patient roster-building strategy. Prior to acquiring Desmond Bane, Orlando primarily constructed its team through the draft rather than trades. A league-leading nine players who concluded the 2024-25 season on their roster were selected by Orlando in either the first or second round. Only two players, Wendell Carter Jr. and Gary Harris, were obtained through trade.
However, two consecutive first-round playoff exits prompted Orlando to adopt a different approach this offseason.
The trade for Bane from Memphis, involving four first-round picks, a future pick swap, Kentavious Caldwell-Pope, and Cole Anthony, could be seen as an all-in move or one precisely aligned with the current roster`s development timeline. President of Basketball Operations Jeff Weltman views it as the latter.
Weltman informed reporters after the trade, “I think we`re ready to kind of walk into the next phase of our team. It`s more of a win-now philosophy, a win-now approach.”
While adding Bane undoubtedly improves the Magic, it comes at a cost. Entering the 2026-27 season, Orlando is projected to become a second apron team due to four players — Bane, Paolo Banchero, Franz Wagner, and Jalen Suggs — having salaries exceeding $32 million.
Banchero recently signed a $239 million extension that could escalate to $287 million if he earns All-NBA, MVP, or Defensive Player of the Year honors. An additional $8 million in salary for 2026-27 is contingent on one of these achievements.
Nonetheless, the Magic`s aggressive strategy does not appear reckless.
These four key players are under contract through at least the 2028-29 season, with Banchero, Suggs, and Wagner yet to turn 25. Bane celebrated his 27th birthday in June.
Orlando maintains flexibility to potentially dip below the second apron next season, notably due to Jonathan Isaac`s $14.5 million non-guaranteed salary.
Furthermore, despite being unable to trade a first-round pick until 2032, Orlando benefits from having five players—Anthony Black, Jett Howard, Tristan da Silva, Jase Richardson, and Noah Penda—on their roster who were drafted in the past three seasons.
Not Yet Members, But Major Decisions Loom
Denver Nuggets
Denver Nuggets vice chairman Josh Kroenke recently drew attention with his remarks regarding the second apron.
In June, Kroenke stated to reporters, “For us, entering that second apron isn`t necessarily something we fear. However, there are rules around it that demand extreme caution, especially given our injury history. The wrong player getting injured could swiftly lead to a situation I never wish to consider, which is trading Nikola Jokic.”
He continued, “We are highly mindful of that, moving forward and providing the resources we can when the opportunity arises. Is that second apron a hard cap? I`m not entirely certain, but it`s something teams are acutely aware of going forward.”
This statement foreshadowed the Nuggets` offseason strategy.
While the Nuggets are certainly not trading Nikola Jokic, they demonstrated foresight in balancing their current and future finances while simultaneously bolstering their roster.
At the expense of their 2032 unprotected first-round pick (their only tradable pick), Denver sent Michael Porter Jr. to the Brooklyn Nets in exchange for Cameron Johnson. This transaction reduced the Nuggets` payroll by $17 million this year and $18 million in 2026-27.
These savings enabled Denver to enhance its depth by signing veterans Tim Hardaway and Bruce Brown Jr., and reaching an agreement in principle to acquire center Jonas Valanciunas. The trade also provides the Nuggets greater flexibility to pursue extensions with Christian Braun and Peyton Watson. Denver is projected to be $34 million below the second apron in 2026-27 and could generate an additional $10 million in savings, albeit by potentially moving Valanciunas.
Houston Rockets
There`s a degree of uncertainty regarding Houston`s inclusion in the second apron club.
For the upcoming season, the Rockets have $143 million in committed salary, significantly below the projected $222.3 million threshold. However, this figure does not account for Kevin Durant and Tari Eason`s potential future earnings.
Durant is eligible for a two-year, $118 million extension, with a first-year salary of $57.4 million. Eason, meanwhile, can sign a rookie extension until October 20. Should these scenarios unfold, Houston would indeed cross into the second apron in 2026-27, though their stay there is expected to be brief.
The Rockets anticipate significant cap relief upon the expiration of Fred VanVleet`s contract and with Dorian Finney-Smith`s non-guaranteed salary in 2027-28, which coincidentally is the same season a potential Amen Thompson extension would commence.
New York Knicks
For two consecutive seasons, the New York Knicks have skillfully navigated the vicinity of the second apron.
Last offseason, the Knicks acquired Towns via trade and recently utilized part of the tax mid-level exception to sign Guerschon Yabusele. These two transactions effectively hard-capped New York at the second apron.
While the Knicks are set to remain below the second apron this year, their status could change in 2026-27 if they aim to retain their top seven players. New York benefits from being $52 million below the second apron next season, a favorable position largely due to Jalen Brunson`s decision to take a $12 million salary reduction. This discount provides the Knicks the necessary space to sign Mikal Bridges to a four-year, $156.1 million extension.
Nevertheless, a new contract for Bridges, starting at $34.8 million, might necessitate moving Mitchell Robinson. Similar to Bridges, Robinson is eligible for up to a four-year extension and would become a free agent if a new agreement isn`t reached by June 30.
