The Waive and Stretch: A Look At The NBA Middle Class, Teams Regretting The Stretch

Mar 16, 2025

Welcome back to another edition of The Waive and Stretch Newsletter. A quick shameless plug to note that I am looking to work in basketball in any capacity and would love to connect with anyone in the industry or trying to break in. Please feel free to share this with anyone who you think might find it interesting. Let's get into it!

A Look At The NBA Middle Class

Ever since the new CBA was ratified, people have been proclaiming the death of the NBA middle class of contracts. I’ve always been a bit skeptical of that, and finally found the time to dig into the numbers. The table below breaks down the distribution of salaries from a percent of the salary cap perspective since 2017-2018, the beginning of the previous CBA.

So, for example, this year 37.2% of contracts fall in between 0% and 3% of the cap, 13.3% of contracts fall between 3% and 5% of the cap, etc. You can see certain trends of these buckets over time but there doesn’t seem to be any crazy drastic shift over the years. The change in the % of contracts that are generally minimums (0%-3%) and 20% to max contracts have really offset each other over the last eight years (in favor of the larger deals), and in total those two buckets have consistently represented 50% of all the contracts in the League. Meaning that my definition of the “Middle Class” of the League, contracts that fall between 3% - 20% of the cap, have always hovered around 50% of all contracts as well. Inside of that “Middle Class” however, you can see some shift down from those upper 10% - 20% buckets down into that 5% -10% bucket. You can see the change in the distribution year over year in the below violin chart as well.

A couple things to note. Covid obviously had a pretty huge impact on the salary cap from 2019 - 2021 as there was little to no cap growth, and contracts were signed before Covid that did not have that projected in. You can see the thinning out around that 20% line during that time, with it seemingly normalizing since. Additionally, we have only had one offseason with the new CBA at play. It will be interesting to see how this plays out going forward. But the “Middle Class” actually picked up more tools at their disposal in this new CBA with expanded extension rules, essentially requiring teams to hit the salary floor, and increases in the amounts of the Non Tax MLE, and Room MLE, not to mention the impending 10% cap increases that the League will have for the foreseeable future.

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I would envision that the League really maintains this distribution throughout the life of this next CBA as well. Any “re-balancing” we might see will likely be at the total team spend level, i.e. second apron teams coming down and lower spending teams coming up. But as far as the allocation to players, I really think the middle class contracts will be just fine.

Teams Might Be Regretting The Stretch

As someone who writes a blog called The Waive and Stretch, I do have a special place in my heart for the waive and stretch provision available to teams with regards to waiving a player and stretching their dead cap hit over multiple years. However, I wouldn’t recommend a team ever doing it unless absolutely necessary. You are really just kicking the can down the road, robbing Peter to pay Paul if you will. And it can have unintended consequences in the out years.

Take the Dallas Mavericks for example. They are in a real tough spot injury wise, are having issues fielding a roster for games and may end up having to forfeit games. They do have an open roster spot, but because they are hard capped at the first apron and only have $51k in space under it, they can’t fill that roster spot until April 10. Dallas did a lot of maneuvering around the trade deadline to get back up to that first apron line, and I’m sure they did not envision all these injuries stacking up where that lack of apron space would endanger their ability to even play games. But, a decision they made in the summer of 2023 should be weighing heavily on their minds. In August of 2023, the Mavericks waived and stretched the remaining 2 years, $11.7 million over five years. That’s over a $2.2 million dead cap hit through 2027/2028. Now, even if they hadn’t stretched McGee, he would’ve had an even bigger dead cap hit this season and it would’ve still been an issue. But, they could’ve not waived him at all, moved him to a team that would’ve taken him on to take no dead cap hit. Waiving him when they did forfeited any flexibility to get off his money in the future, and the only band aid was to stretch it over five years. Now they have to maneuver around that dead cap hit through 2028, and in the apron era every dollar counts, as the Mavs know all too well right now.

The Phoenix Suns are in a similar boat. They waived and stretched the contracts of EJ Liddell, who has a dead cap hit of $707k for three years, and Nassir Little, who has a dead cap hit of $3.1 million for seven (!!) years. I still can’t believe the Suns chose to stretch Little instead of just keeping him on the roster and trying to move him in a trade down the line. Their combined dead cap hit is costing them over $20 million in luxury tax penalties alone this year and already $29 million in projected luxury tax penalties next year (very much subject to change). And it’s not like their tax savings was significant with the waive and stretches, as they replaced these guys on the roster with two more minimum contracts. If Phoenix does have aspirations of getting under the second apron in the near future, they’ve made it that much harder to do so by pushing unmovable dead money out into the future.