Remedial Chaos Theory: The NBA cap spike and how it impacts the Bulls

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There is an iconic line from "The Matrix" where Morpheus tells Neo, “Unfortunately, no one can be told what the Matrix is. You have to see it for yourself.” That line also applies to this year’s NBA free agency. You’ll read dozens of articles over the next few days talking about the salary cap spike and how it’s going to impact the league, but none of us really know what to expect on July 1. We’re going to have to see it for ourselves, and that includes the front office of every team in the league.

Gar Forman told CSN Chicago on Thursday night after the draft, “I don’t think anybody knows what’s going to happen come July 1 because there’s never been anything like this where there’s been such a spike in the cap.” The salary cap is going to increase from $70 million in 2015-16 to $94 million in 2016-17. That’s a nearly 35 percent increase in one season -- by far the biggest in league history.

The Cauldron's NBA salary cap expert Nate Duncan says to expect chaos for not just one, but two years: “I expect it to be completely insane, not only since there is a ton of space this year but because with the cap spiking to a projected $107 million next year (pending a new CBA) these ridiculous contracts could actually end up looking good by comparison with what is handed out a year from now.” (1)

Nate makes a fantastic point because we’re in store for two years of a completely unknown market. The best teams will plan for 2016 and 2017 simultaneously. How many free agents this year will opt for a two-year deal with a player option on the second year? We could witness a situation in which many top tier free agents this year go through the same process again next July.

Perhaps the most crucial aspect of the cap spike is the sheer number of teams that will have room to sign a player to a max salary. (2) RealGM.com projects that 13 teams will likely have space to sign a Tier 1 free agent to a max deal. In addition to the 13 teams that will likely have that amount of cap space, BasketballInsiders.com projects that up to 25 teams could hit that mark.

 In 2010, the year of one of the greatest free agents classes in history, just eight teams had space to sign a max player. Outside of Kevin Durant, this year’s class is not particularly strong, and there will be 20+ teams looking to spend a lot of money. There is no way a player is going to meet with 10 teams, let alone 20. There are going to be many teams who can’t even get a sitdown with a player they are interested in.

We were already going to see eye-popping contracts this summer just based on the cap spike. A player who would have made $12 million per season before is projected to make $16 million per season just based on the percentage increase. But the real wild card is the sheer number of teams with cap space. Duncan says the most intriguing part of free agency for him will be the secondary market: “I want to see what some of the role players get. How low do you have to get in the market before the money finally starts running out?” And to borrow from Donald Rumsfeld, this is the biggest known unknown. What happens when teams start to panic? You may see players eighth in a rotation get $10 million+ per season.

Think of it this way: Let’s say you and 20 of your friends have brand new iPhones and gift cards to get the premium versions of apps. But in this scenario, each app is only available to download once. Furthermore, that gift card expires after one week. Waze, Spotify, and Snapchat are going to go early and kudos to those of you who downloaded them. Then Instagram, Facebook and Pinterest get downloaded. At some point, one of you is going to get desperate, panic, and download the Meow Meow Beenz app you really didn’t want. (3)

Mentally prepare yourself for seemingly outrageous contracts. Harrison Barnes, despite struggling mightily in the playoffs, is going to get a max deal. Kent Bazemore is probably going to get $15 million per season, and E’Twaun Moore is probably going to get $7 million a season. I may even be low on those numbers. This is part of the "unintended consequences" that Adam Silver referenced in his annual All-Star address last February.

Let’s narrow the focus on how this impacts the Bulls. I’m projecting them to have approximately $24 million in cap space to spend.

That number could increase if they are aggressive in trying to trade Mike Dunleavy Jr, Tony Snell, or Taj Gibson (4).

The Bulls will be looking to add an impact player to the roster this July, but they face several challenges.

The Bulls will go after top-tier players, but a more realistic expectation is to sign two rotation players. Forman said this about his team’s strategy July 1: “My guess would be as opposed to one guy we’ll probably look to fill some holes and look for some guys that fit the plan moving forward.”

The key part of that quote is the “fit the plan moving forward” line. Forman has to plan for 2016 and 2017. Overpay for a marginal free agent now and that could greatly limit flexibility next summer. The 2017 free agent class may be better than 2010 and the 2017 draft will be one of the most talented in nearly a decade.

I think the smart play for the Bulls is to either overpay on a one-year deal for a starter, or sign two rotation players to a relatively team-friendly deal. They will want to maintain cap flexibility next summer.

The challenge for the Bulls (and every team) is finding the right player without getting into a bidding war that causes a team to overpay. I actually think the second and third wave of free agents signings will cause more people to be shocked than the “who got a max deal?” signings.

Teams have to be flexible and be willing to adjust course instantly. As long as the Bulls don’t remain rigid and treat free agency like Rickon running from Ramsey, they should be able to add quality depth to the roster. (5)

Footnotes

1. There is an opt-out in the current Collective Bargaining Agreement that allows either side—the owners or players—end the current CBA next July.

2. NBA free agents max salaries are based on their years of service in the league. Tier 1 free agents are 0-6 years. Tier 2 is 7-9 years. Tier 3 is 10+. First year max for Tier 1 in 2016-17 is $22.2m, Tier 2 is $26.6m, and Tier 3 is $31.1m. Please visit Larry Coon’s amazing CBA FAQ for more info

3. Downloading Meow Meow Beenz is only done on the Darkest Timeline.

4. The Bulls could also save a small amount of cap space but waiving two players with non-guaranteed contracts: Spencer Dinwiddie or Christiano Felicio. They could also save the salary of second-round pick Paul Zipser by entering an agreement that he play in Europe next season.

5. Don’t even get me started on why he was running in a straight line. I could write 1,000 words on that scene alone.

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