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Bobby MarksJul 16, 2025, 09:21 AM ET
Two words have become a lightning rod in the NBA:
Second apron.
Introduced in the 2023 collective bargaining agreement but not phased in until last offseason, the salary cap's second apron has leveled the playing field by reducing roster mechanisms for high-spending teams that are at or over the threshold.
In other words, teams outspending their competition, stacking their roster or adding an All-Star in a trade or free agency comes with future roster-building consequences.
"The second apron rules do not allow a team to jump to the head of the line in how you build a roster," an Eastern Conference GM told ESPN. "And if you do add a veteran with a high salary in a trade, your roster timeline is shortened."
What transpired in 2023 and then this summer is a perfect example of this rule in its full -- and intended -- effect.
Before the stringent second apron rules were implemented, Kevin Durant and Bradley Beal were traded to the Phoenix Suns. That was followed by the Boston Celtics acquiring Kristaps Porzingis and Jrue Holiday. The Milwaukee Bucks then acquired Damian Lillard. A month later, the LA Clippers would trade for James Harden.
Those six deals would not have been allowed under the current rules.
Two years later, Durant, Porzingis and Holiday were traded. Beal is in discussion to be bought out of his contract and waived. The Bucks had to waive Lillard, the $113 million still owed to him getting waived and stretched over five seasons. The move cleared the way for Milwaukee to sign Myles Turner. Harden is still on the Clippers roster, but LA elected not to re-sign Paul George because of the potential apron restrictions.
"We've been limited in what tools we can use with where we are right around the second apron," Celtics president of basketball operations Brad Stevens told reporters last week.
Those limited tools are the inability to send cash in a trade, use at least $5.7 million of the non-tax midlevel exception and, most importantly, use more than 100% of the traded player exception and aggregate contracts in trades. A team also has the inability to trade their first-round pick seven years out if they finish over the second apron. And that same first also could be moved back to the end of the round if a team finishes over the second apron in three out of four seasons.
However, there are no rules that prohibit a team from retaining their own players. The Cleveland Cavaliers re-signed Sam Merrill to a four-year, $38 million contract despite being over the second apron, but it increased the team's luxury tax penalty and put them further over the second apron. Expensive rosters that underachieve or incur a significant injury are restricted to improve in free agency or trades, case in point Boston and Phoenix most recently.
To illustrate the impact the second apron is having across the league, here is a look at how recent high-spending franchises have navigated the rules, what pitfalls current apron teams are trying to avoid and who could join them in the near future. In other words: the Apron Club.
The three charter members
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The Celtics, Suns and Minnesota Timberwolves are the original members of the second apron club. All three exceeded the punitive threshold in 2024-25 and not only paid $300 million in luxury tax penalties but saw their 2032 first-round picks frozen.
This offseason, Boston and Phoenix made a conscious effort to shed salary to get under. Meanwhile, the Wolves lost key reserve Nickeil Alexander-Walker but returned the same starting five that lost in the Western Conference finals. As for their 2032 frozen first-rounder? They have some work to do before getting back access to it.
Boston Celtics
Winning the 2024 championship served as a distraction to the tough decisions the Celtics would face with their roster this summer.
With extensions to Holiday, Sam Hauser, Derrick White and Jayson Tatum set to begin in the 2025-26 season, the Celtics not only were projected to spend half a billion in salary, but more importantly, they were headed over the second apron for a consecutive season. "We've known for a long time that hard decisions were coming," Stevens said.
Those hard decisions became clearer when Tatum tore his right Achilles in the second round of the playoffs.
With Tatum out for at least most of next year's regular season and the Celtics facing a record-high $550 million payroll, Stevens has begun retooling the roster, starting with trading Holiday to the Portland Trail Blazers and then Porzingis to the Atlanta Hawks.
"The second apron is why those trades happened. I think that is pretty obvious. And the basketball penalties associated with those are real," Stevens said. "So that was part of making the decision to push and put our chips on the table and go for the last two years."
With those two moves the Celtics have seen their payroll decrease from $550 to $260 million, and they are now just $332,000 above the second apron. They have until the trade deadline to clear the needed salary.
As for what is next, Stevens does not want to hear the word rebuild when describing the state of the Celtics. "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 under contract for at least the next four seasons. And unlike recent offseasons, Boston has the flexibility to add in free agency (the Celtics will have access to its $15 million non-tax midlevel and $5.5 million) and to conduct trades (the Celtics are projected to be $40 million below the second apron) next year. The Celtics also have three picks (one first, two seconds) in next year's draft.
Minnesota Timberwolves
Two moves served as a precursor for the Timberwolves getting out of the second apron in future years without tearing down their 2024 conference finalist roster.
The first was swapping out the $220 million owed to Karl-Anthony Towns in the next four years for former All-Star Julius Randle and sixth man Donte DiVincenzo last October.
The second was extending Rudy Gobert, but at a salary that pays him $12 million less than what he was set to earn in 2025-26. Gobert's salary cut was rewarded with a combined $73.5 million in guaranteed money for the 2026-27 and 2027-28 seasons.
Minnesota still finished last season over the second apron and paid a franchise-record $90 million tax penalty but has now positioned itself to compete for a championship -- and with more roster resources available at a lesser cost.
This offseason, the Timberwolves reached a deal to bring back Naz Reid and Randle before free agency began on June 30 but elected not to sign reserve Alexander-Walker. A new contract for the guard would have put the Timberwolves over the second apron once again. They are currently $5.9 million below the threshold.
"What the apron rules do to teams is force you to prioritize what players to retain and also put a greater emphasis on your former draft picks to play a greater role," an Eastern Conference executive told ESPN.
In the case of the Timberwolves, there is now a greater emphasis on 2024 first-round draft picks Rob Dillingham and Terrence Shannon Jr. to be part of the rotation in the absence of Alexander-Walker.
Phoenix Suns
Remember the now-infamous comments by Suns owner Mat Ishbia after the 2023-24 season?
"I understand all the rules that come with the second apron. I understand exactly what the CBA tried to do," Ishbia told ESPN's Ramona Shelburne. "I read it, I know it inside and out, and we made a calculated decision that we think the team with the best players wins. Would I rather have Brad Beal, Kevin Durant and Devin Booker than just having two of those guys? I'd rather have all three a hundred times out of a hundred, and I don't think there's another GM or owner or CEO that wouldn't say that exact same thing."
This was after the Suns, a year earlier, had doubled down on their roster and traded the $30 million expiring contract of Chris Paul (and what was left of their draft equity) for the $200 million owed to Beal and his no-trade clause. Four months before Beal's addition, Phoenix gutted its roster of young players on team-friendly contracts (Mikal Bridges and Cameron Johnson among them) and future first-round picks to acquire Durant.
The two trades, along with re-signing Grayson Allen and Royce O'Neale, left the Suns in an unfavorable position: overpriced, underachieving and buried in second apron restrictions.
"If I didn't feel we had a chance to win an NBA championship, I promise you we wouldn't have the highest salary and highest luxury tax in NBA history," Ishbia said after Phoenix missed the playoffs this past year. The comments by Ishbia resonated months later, and the two-year costly experiment with Durant, Booker and Beal proved to be a failure, resulting in Phoenix rightfully pivoting from its expensive roster.
Durant was traded to the Houston Rockets for a package of players including Jalen Green, Dillon Brooks and Khaman Maluach, the 10th pick in the 2025 draft. Meanwhile, sources confirmed to ESPN that the Suns and Beal are discussing a buyout. Beal is owed $111 million and has to reduce his salary by at least $13.9 million if the Suns want to stretch his money over the next five seasons. The CBA requires that a team cannot have more than 15% of stretched money counting against the salary cap each season.
If the waive and stretch does happen, Phoenix would have a cap hit of $19.4 million over the next five seasons but would be out of the second apron (and also the first) for the foreseeable future.
The newest member
Cleveland Cavaliers
Winning an East-best 64 games, losing in the second round of the playoffs and then entering the offseason as a projected second apron team would usually see a front office break up its roster. But president of basketball operations Koby Altman has done the opposite despite entering the offseason with a $375 million payroll (they will pay the tax for the first time since 2018) and $20 million over the second apron. Instead of reducing payroll, Cleveland signed Merrill to a four-year, $38 million contract.
"We're not going to go anywhere," Altman told reporters after the season. "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 core of Donovan Mitchell, Darius Garland, Evan Mobley and Jarrett Allen is under contract through at least the 2027-28 season. (Mitchell has a player option and could become a free agent in 2027.)
The true test will come next offseason if the Cavaliers do not advance far into the playoffs to justify such a hefty bill. In 2026-27, Cleveland has a projected $240 million in salary and is once again set to be a second apron team.
A positive? The Cavaliers are not boxed into a corner in how they add to their roster. Despite the high costs, Cleveland has 11 out of 13 players on the current roster under contract next season and will add a 2026 first-round pick.
Waiting for membership to kick in
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There was one question that team executives (and also fans) at the Las Vegas summer league wanted to ask ESPN: In light of the nearly $800 million in extensions to Shai Gilgeous-Alexander, Chet Holmgren and Jalen Williams, will the Thunder be forced to pivot from their roster like the Celtics did?
That answer is no, despite the Thunder being a projected $24 million over the second apron in 2026-27. Here is why:
Oklahoma City has positioned itself to spend in the future. Since the 2020-21 season, Oklahoma City has had the fifth-lowest cumulative payroll. For the sixth straight season, the Thunder will not pay a luxury tax penalty. In addition to projected revenue from expansion, OKC will have another revenue stream in the future, as its new arena opens in 2028. (The Thunder's new arena will be funded 90% by the public.)
The apron restrictions, as designed, work to take away the tools a front office has to improve the roster via free agency and trades. But unlike other high-spending teams, Oklahoma City has 13 first-round and 16 seconds in the next seven years. Four of those firsts could be in the 2026 draft alone. The Thunder have the option to offset the cost of the roster with players on rookie-scale contracts. Two examples are Nikola Topic and Thomas Sorber, first-round picks in the past two seasons.
The Celtics have two players on supermax contracts (Jaylen Brown and Jayson Tatum), while the Thunder have only one: Gilgeous-Alexander, whose supermax extension does not even begin until the 2027-28 season. That means that for the next two seasons (and also previous two years) the current MVP will play on a salary that is less than 25% of the cap.
Holmgren's and Williams' extensions start at 25% of the salary cap in 2026-27, $16 million less per year than a supermax. The Thunder have also protected themselves in case either player earns regular-season honors.
Unlike Paolo Banchero's extension with the Orlando Magic that includes a 30% escalator (his $239 million extension increases to $287 million) if named All-NBA, MVP or Defensive Player of the Year, Holmgren does not have that in his contract. Williams' salary 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 escalators for being named second- or third-team, but at a lesser percentage.
Most importantly, the Thunder have staggered their contracts for the next five seasons. In the past two seasons, OKC has signed Isaiah Hartenstein, Isaiah Joe, Aaron Wiggins, Jaylin Williams and Ajay Mitchell to contracts that decline, have a team option or are partially guaranteed.
This doesn't guarantee the Thunder will run it back for the next several years. Lu Dort, Hartenstein and Kenrich Williams all have team options next season. Dort and Williams are also extension-eligible this offseason.
But remember: All championship teams go through a cycle of turning over the supporting cast. During Michael Jordan and Scottie Pippen's Chicago Bulls title runs of the '90s, that superstar foundation was surrounded by different players in each set of three championships.
Orlando Magic
Give the Magic credit for trying to build their roster with discipline and patience. Before adding Desmond Bane, Orlando had primarily built its team through the draft and not trades. A league-high nine players who finished the 2024-25 season on the roster were selected in the first or second round by Orlando. Only two players, Wendell Carter Jr. and Gary Harris, were acquired via a trade.
But, two straight first-round playoff exits saw Orlando take a different approach this offseason.
Bane's trade from Memphis for four first-round picks, a future pick swap, Kentavious Caldwell-Pope and Cole Anthony can be viewed as a push-all-your-chips-to-the-middle move or one that fits the current roster's timeline. President of basketball operations Jeff Weltman sees it as the latter.
"I think we're ready to kind of walk into the next phase of our team," Weltman told reporters after the trade. "It's more of a win-now philosophy, a win-now approach."
Adding Bane improves the Magic, but at a cost. Entering the 2026-27 season, Orlando is a projected second apron team, a result of four players on salaries that exceed $32 million: Bane, Paolo Banchero, Franz Wagner and Jalen Suggs.
Banchero recently signed a $239 million extension that would increase to $287 million if he is named All-NBA, MVP or Defensive Player of the Year. There is an additional $8 million in salary in 2026-27 if one of those is met.
The Magic's aggressiveness, however, does not fall into the category of recklessness.
The four players are under contract through at least the 2028-29 season, with Banchero, Suggs and Wagner having not yet reached their 25th birthdays. Bane turned 27 in June.
Orlando has the flexibility to jump out of the second apron next season. Jonathan Isaac's $14.5 million salary is non-guaranteed.
And despite the inability to trade a first-round pick until 2032, Orlando has five players -- Anthony Black, Jett Howard, Tristan da Silva, Jase Richardson and Noah Penda -- on the roster that were drafted in the previous three seasons.
Not yet a member, but major decisions loom
The Nuggets' vice chairman Josh Kroenke recently caused a stir when mentioning the second apron.
"For us, going into that second apron is not necessarily something that we're scared of," Kroenke told reporters in June. "I think that there are rules around it that we need to be very careful of with our injury history. The wrong person gets injured and very quickly you're in a scenario that I never want to have to contemplate, which is trading [Nikola Jokic].
"We're very conscious of that, pushing forward and providing the resources we can when the moment arrives. That second apron, is it a hard cap? I'm not 100 percent sure, but it's something that teams are obviously very aware of going forward."
The statement was a precursor to how the Nuggets operated this offseason.
No, the Nuggets are not trading Jokic, but they did have the foresight to balance their finances now and in the future while also strengthening their roster.
At the cost of a 2032 unprotected first-round pick (its only tradable pick), Denver traded Michael Porter Jr. to the Brooklyn Nets for Cameron Johnson. The trade reduced the Nuggets' payroll by $17 million this year and $18 million in 2026-27.
The savings allowed Denver to improve its depth by signing veterans Tim Hardaway and Bruce Brown Jr. and agreeing in principle to acquire center Jonas Valanciunas. The trade has also given the Nuggets more flexibility to pursue extensions with Christian Braun and Peyton Watson. Denver is a projected $34 million below the second apron in 2026-27 and can create an additional $10 million in savings -- but at the cost of moving Valanciunas.
Houston Rockets
There is some hesitancy to include Houston in the second apron club.
The Rockets have $143 million in committed salary next season, well below the projected $222.3 million threshold. The salaries for next season, however, do not include Kevin Durant and Tari Eason.
Durant is eligible to sign a two-year, $118 million extension with a first-year salary of $57.4 million. Eason is eligible to sign a rookie extension until Oct. 20. In that scenario, Houston does jump into the second apron in 2026-27, but its stay is likely temporary.
The Rockets should get cap relief when Fred VanVleet's contract expires and with Dorian Finney-Smith's non-guaranteed salary in 2027-28, the same season the first year of a potential Amen Thompson extension would begin.
For two consecutive seasons, New York has danced around the second apron.
The Knicks traded for Towns last offseason and recently signed Guerschon Yabusele to part of the tax midlevel exception. The two transactions hard-capped New York at the second apron.
While the Knicks won't exceed the second apron this year, that could change in 2026-27 if they want to keep their top seven players under contract. New York is $52 million below the second apron next season, a by-product of Jalen Brunson taking $12 million less in salary. That discount allowed New York to sign Mikal Bridges to a four-year, $156.1 million extension.
However, a new contract for Bridges that starts at $34.8 million could squeeze out Mitchell Robinson. Like Bridges, Robinson is eligible to sign up to a four-year extension and is a free agent if a new contract is not reached by June 30.
