Memphis Grizzlies Avoid Luxury Tax with Financial Flexibility
The Memphis Grizzlies have created financial flexibility by trading away big contracts, allowing them to avoid the luxury tax. The team is positioned to avoid penalties for years to come.
What happened?
A major change to the NBA landscape came in summer 2023 with the introduction of the NBA Cup and stricter luxury tax thresholds. The league created a so-called first and second apron, shifting the way teams build rosters and plan for the future. The current collective bargaining agreement includes a potential mutual opt-out after the 2028-29 season before the deal is set to expire following the 2029-30 season.
Why it matters for Memphis Grizzlies
The Grizzlies have operated firmly above the salary cap but below the luxury tax in recent seasons. Once teams cross the tax line, they begin paying penalties based on how far they exceed it. Memphis' contract numbers will remain fluid as the team works to reduce its roster, but it is nowhere close to entering the luxury tax.
What comes next?
The team is positioned to avoid those potential penalties for years to come. Of the Grizzlies' top six contracts, four have potential opt-outs after this upcoming season. Even if they decide to spend more next offseason, they should have the flexibility to do so without immediately pushing themselves into the tax.
First and Second Apron Rules
The first apron for the 2026-27 season is $209.02 million, with the second apron beginning at $221.69 million. Teams above the first apron face additional restrictions that don’t apply to teams below it. Among them, first-apron teams face more restrictive rules when matching salaries in trades, generally being limited to taking back 110% of the outgoing salary rather than the more generous matching rules available to teams below the apron.
Memphis Grizzlies' Financial Flexibility
The bigger significance is what the first apron could mean down the road. If they eventually build an expensive roster around their young core, the front office will have to weigh the benefits of spending above the line against the restrictions that come with it. For now, the Grizzlies' financial flexibility is an advantage.
Recent Form
The Grizzlies have struggled in recent games, losing their last five matches, including a 132-101 defeat to the Houston Rockets on April 13, 2026. Their recent form has been dismal, with a record of 0W-0D-5L (LLLLL, most recent first).
The Memphis Grizzlies are well-positioned to avoid the luxury tax and its associated penalties. With financial flexibility and a young core, they have the potential to build a competitive team in the future. As the team continues to rebuild, they will need to weigh the benefits of spending above the luxury tax against the restrictions that come with it.
