EuroLeague’s New Luxury Tax and What It Means for Teams and Players

Back in the day, overseas basketball was the Wild West. There were no rules or accountability. Just the constant reminder that as a player, you were disposable. Contracts felt more like suggestions, and if a team decided they didn’t need you anymore, they would cut you loose. I had a sneaking suspicion that if I coughed during practice, I’d be on the next flight home. There was no real structure to protect players or even ensure teams operated fairly.

Now, EuroLeague is finally taking steps in the right direction. A new €8 million salary cap per team and luxury tax system starting in the 2025-26 season are meant to keep spending in check while creating some financial balance. Along with efforts to regulate agent fees, these moves help shift the overseas game toward something more stable. Players should be treated like valued employees instead of temporary hires who can be replaced at a moment’s notice. It won’t fix everything. But it’s a start. Here’s how it all works.

The Basics: Salary Cap & Luxury Tax

Starting in 2025-26, EuroLeague teams will have a Base Remuneration Level (BRL) of €8 million, meaning that’s the limit for player salaries before penalties kick in.

But unlike a hard salary cap (where teams can’t spend over the limit), EuroLeague is implementing a luxury tax system. Teams can go over the €8M limit, but they’ll be penalized financially based on how much they exceed the cap.

Who’s Exempt from the €8M Cap?

Not all salaries count towards the €8M cap. Some players and situations are excluded, making the actual spending power of teams a bit more flexible.


  • Two Anchor Players: The two highest-paid players on each team are NOT counted in the salary cap.

  • U23 Players: Young players under 23 don’t count toward the €8M.

  • Long-Term Injured Players: If a player is out for more than two months, his salary isn’t included.

  • Long-Tenure Players: Players who have been with the team for 3+ years only count at 75% of their salary.

  • Medium-Range Exception: A salary range of €560,000 to €640,000 (7-8% of the BRL) won’t count in full.


This means that while the cap is set at €8M, actual total payrolls can be much higher if a team manages their contracts smartly.

How the Luxury Tax Works

If a team exceeds the salary cap, they have to pay extra fees based on how much they go over. Here’s the breakdown:



For every extra 20% beyond 150%, the tax rate increases by €1 per euro.

Example Scenario

Let’s say a team has €10 million in net salaries...that’s €2M over the cap. That means they fall in the 30-50% overage range, so they’ll be paying €1 per euro over the limit.

That’s an extra €2 million in luxury tax payments, just for spending that additional €2M.

How This Affects Players and Teams

For Teams:


  • Big-spending clubs like Real Madrid, Barcelona, and Fenerbahçe will have to rethink strategy. They’ve traditionally had some of the biggest payrolls and may now reduce spending to avoid heavy luxury tax payments.

  • Mid-tier and smaller-budget teams get a chance to compete. With the biggest clubs forced to control costs, competitive balance could improve.

  • Teams will rely more on U23 talent and long-tenured players. Since these contracts don’t fully count against the cap, teams will likely invest in player development and retention rather than just throwing money at top talent.


For Players:


  • Veterans may see smaller contracts: With teams trying to stay under the tax limit, older players could see reduced deals unless they’re the two “anchor” guys.

  • More opportunities for younger players: U23 players being exempt means more chances for young stars to get minutes and earn bigger roles.

  • More contract stability: Since long-tenure players count for only 75% of their salaries, teams have an incentive to keep players longer, rather than constantly rotating rosters.


The Big Question: Does This Actually Work?

This system is designed to prevent teams from spending recklessly, but it’s still flexible enough that big-money teams can work around it. If a team plays its cards right, leveraging U23 players, long-tenured guys, and the two exempted “anchor” players, they can still put together a stacked roster while staying under the €8M net salary mark.

Potential Issues


  • The rich clubs may just pay the tax anyway. If a team like Real Madrid wants to spend €20M+ on salaries, they’ll just pay the luxury tax and keep dominating.

  • Smaller clubs still won’t have the money. Even with this system, if a team’s budget is only €4-5M, they won’t suddenly be able to spend with the big dogs.

  • Star players may look elsewhere. If salaries get squeezed, some players might prefer China, the G-League, or even Middle Eastern leagues, where money isn’t as restricted.


Final Thoughts

This isn’t a hard salary cap, but it does add a layer of financial control to the EuroLeague. Big clubs can still spend, but they’ll have to pay up for the privilege. Meanwhile, mid-tier teams might find new ways to compete by using loopholes in the exceptions.

Will it work? That depends on how teams adjust. What we know...EuroLeague just got a whole lot more interesting.