Yuma said:
Then how does Mark Cuban saying he will sign guys for whatever amount he wants, regardless of the luxury tax or salary cap work? I have also heard several free agents saying they will play for him because he will spend what it takes on his team!
Think about it logically, if a team can spend more than the cap whenever they want, what is the point of a cap? The cap was designed to prevent large market teams (or high rolling owners) from buying their teams talent outright. Since it is a given that not every owner is on the same playing field in terms of disposible income, the cap is created (and determined off of league wide revenues).
The point of the MLE is to allow teams that are locked into bad contracts improve through FA, but they can only sign average players. At least that is the point (it is based off of the average league salary), but sometimes we see people take a pay cut a la Payton.
The luxary tax is is dollar amount above the salary cap. Anyone over that dollar amount is forced to pay a dollar for dollar tax on their contracts. However, the luxary tax has no direct effect on FA signings. Is does however indirectly effect them, since the players salary is essentially doubled. This is the biggest reason the suns havent signed a player for the MLE lately. Instead of paying 5 million for a player, they would be paying 10 million.
The way teams get so far above the cap is by resigning their own players, like Eric said. The reason for Bird Rights is pretty obvious, a team shouldn't loose out on talent they developed for 3 years just because they are over the cap. It would cause way to much player movement.
The most recent example with Cuban is Steve Nash. Although the Mavericks are way over the cap, he can give Nash a maximum contract if he wants. Same with Antoine Walker actually. Players want to let their current deal expire while they are on the Mavs, because they have the best chance of getting a fat paycheck that way.