the league sets a maximum $$$ amount that a teams' payroll can be for the upcoming season. if a team goes over that amount then the luxury tax kicks in. a team would have to pay $1 for every dollar they go over. this years salary cap is set around $49.5 million dollars.Originally Posted by nyk33334
the new cba is willing to give a one-time amnesty clause allowing a team to cut a player with that player's contract counting against the salary cap but not against the luxury tax.
ie. if the knicks are going to be $40MM over the salary cap this, they would have to pay a $40MM luxury tax. houston's contract is something like $18MM this year and $19MM next year. If we cut him, we would still be $40MM over the salary cap (preventing us from signing any significant players) but we would only have to pay $22MM this year and $23MM next year (assuming cap will stay the same)