Inside the NBA
Inside the NBA Trade Machine: The Business, the Risks, and the Death of the Superteam
By Candace Goodman | The Good Blog
When Luka Dončić was traded to the Los Angeles Lakers in February 2025, it was a headline that captured the basketball world. But what most fans didn’t see were the spreadsheets, cap tables, and internal projections that made the deal possible—if not inevitable.
Today, player movement in the NBA is no longer just about talent. It’s a calculated business decision rooted in financial strategy, legal limits, and long-term planning. Every trade is a balancing act between chasing championships and preserving a sustainable future.
This is what really goes on behind the trades that shake the league.
How the Salary Cap Actually Works
At the heart of NBA team-building is the salary cap, a limit on how much teams can spend on player salaries each season. But this isn’t a hard ceiling—it’s a soft cap, meaning there are exceptions that allow teams to exceed it under specific conditions.
The cap is set annually based on a share of Basketball Related Income (BRI), which includes national and local TV revenue, gate receipts, sponsorships, licensing, and merchandise sales. For the 2024–25 season, the cap was set at $140.6 million.
Understanding the Tiers: Over the Cap, Tax Line, and Second Apron
Over the Cap
Most playoff-caliber teams are over the cap. Once you’re over, you lose the ability to sign free agents freely. You can only add players via trades (with salary-matching rules), the mid-level exception, or veteran minimums.
Example of a Smart Cap-Focused Trade:
In 2021, the Celtics traded Kemba Walker’s $36M salary—plus a first-round pick—to the Thunder for Al Horford. While Horford had a large salary himself, the deal allowed Boston to reset its cap sheet, bring back a better-fitting player, and regain financial flexibility for the following summer. The Thunder, meanwhile, weaponized their cap space to collect another first-round pick.
Luxury Tax Threshold: $172M
Go over this line, and you're paying taxes—literally. Every dollar spent above the line gets taxed at increasing rates. And if you're a repeat offender, the rates double or triple.
Example of High-Cost Return:
In 2023, the Golden State Warriors paid over $170 million in luxury taxes to maintain a declining core that exited early in the playoffs. The cost-benefit equation didn’t work. The bill far outweighed the team’s postseason success.
Second Apron: $182.5M+
Crossing this newer threshold leads to harsh restrictions:
- No sign-and-trade acquisitions
- No mid-level exception
- No salary aggregation in trades
- No access to buyout market
- No future pick flexibility
Teams like the Clippers, Suns, and Warriors have all experienced these limits firsthand, often finding themselves trapped by their own ambitions.
Max Contracts and the Cost of Star Power
NBA contracts are tiered based on experience:
- 0–6 years: Max 25% of cap (~$35M)
- 7–9 years: Max 30% (~$42M)
- 10+ years: Max 35% (~$49M)
A trio of veterans on 30–35% deals leaves little room for the rest of the roster. Even if the numbers work short-term, the team often suffers from poor depth, cap inflexibility, and long-term risk.
Example of a Lopsided Return:
The Brooklyn Nets' 2020–2022 experiment with Kevin Durant, Kyrie Irving, and James Harden cost them:
- $540M+ in salaries
- Control of five future first-round picks
- Multiple pick swaps
- Most of their supporting roster
End result? One playoff series win, three trade requests, and a full rebuild.
No-Trade Clauses, Sign-and-Trades, and Sneaky Exceptions
No-Trade Clauses
Only a few players possess these, but they matter. Bradley Beal used his clause in 2023 to force a trade to Phoenix on his terms, giving Washington virtually no leverage in return.
Sign-and-Trades
In 2019, the Warriors executed a sign-and-trade to acquire D’Angelo Russell after Kevin Durant left for Brooklyn. It preserved the value of their cap slot—but Russell didn’t fit, and he was later traded for Andrew Wiggins. The move ultimately worked because of long-term thinking, not immediate results.
Trades That Worked Financially
Memphis Grizzlies Acquiring Marcus Smart (2023)
The Grizzlies took on Smart’s contract to replace the injured Ja Morant’s leadership role. While not a blockbuster financially, it was a balanced acquisition that kept them under the second apron while improving culture and defense.
Thunder Acquiring Chris Paul (2019)
Viewed as a cap dump by the Rockets, Paul’s contract was massive—but the Thunder used it as a short-term financial bridge, made the playoffs unexpectedly, and later flipped him for more assets. It was a masterclass in converting dead money into value.
Trades That Failed: Big Bills, Small Returns
Russell Westbrook to the Lakers (2021)
The Lakers took on a $44 million salary, gave up three role players (Kuzma, KCP, Harrell), and lost all roster depth. The move tanked their defensive identity and spacing. Westbrook didn’t fit next to LeBron and AD, and the team missed the playoffs.
John Wall to the Rockets (2019)
Houston acquired Wall’s $44 million salary in exchange for Russell Westbrook—essentially trading one immovable contract for another. Wall barely played. The Rockets paid nearly $90 million for 40 total games.
These deals weren’t just bad basketball decisions—they were financially devastating moves that restricted team-building for years.
Owner Profits: The Untold Side of Team Building
NBA ownership is among the most profitable ventures in sports and entertainment.
What the Numbers Say:
- Average franchise value: $3.8 billion
- Average revenue per team (2023): $400–500 million
- Typical operating income (after expenses): $100–150 million annually
- Luxury tax redistribution payments from big spenders: Up to $20M per team
Example:
Even a small-market team like the Indiana Pacers, which operates below the tax line, can earn $100M+ annually through media deals, revenue sharing, and appreciation in team value.
In short, the game is expensive—but the profits are substantial. Owners aren’t just betting on banners. They’re betting on long-term asset growth.
Why Superteams Are a Thing of the Past
The league has made it harder than ever to build superteams. Not just with tighter financial rules, but also with systemic limitations on trade tools and cap maneuvering.
In the 2010s, Miami (LeBron/Wade/Bosh) and Golden State (Curry/KD/Thompson) redefined the league. Today, those teams would be restricted by:
- The second apron
- Limitations on buyouts
- Severe luxury tax hits
- Trade matching limitations
- No aggregating salaries
The result? Teams now aim for duos with depth, not trios with imbalance. Think: Jokic and Murray. Tatum and Brown. Giannis and Dame. The new formula favors stability and versatility over star-studded risk.
Final Word
NBA trades are no longer about impulse. They’re negotiations within a legal and financial framework that gets more complex every year.
Good teams plan two, three, sometimes five years ahead. Great teams know when to take on risk—and when to let go of even their biggest stars.
As for fans dreaming of their team landing the next big name: understand that behind every blockbuster is a front office calculating not just what’s best today, but what’s sustainable tomorrow.
This is the business of basketball. Welcome to the front office.
