Current NBA salary cap: $109,140,000.
Projected NBA salary cap for next season: $115,000,000.
Of course, that projection came before the NBA suspended its season due the coronavirus. The stoppage is costing the league significant money. With it appearing increasingly likely fans won’t be able to attend games next season, that’s even more lost revenue ahead.
A big question: Will the salary be lower than this season or lower than the last projection for next season? There’s obviously a big difference.
The salary cap has decreased just twice ever. It went from $42,500,000 in 2001-02 to $40,271,000 in 2002-03. After being $58.68 million in 2008-09, it fell to $57.7 million in 2009-10.
Owners and players split Basketball Related Income (BRI) approximately 50-50. So far, owners have generally bore the brunt of coronavirus-caused financial pain. Players will soon take their lumps, having 25 percent of their salaries withheld. But it’s unclear just how much less revenue will be made this season than initially expected. If players don’t give back enough salary to reach that approximate 50-50 split of BRI, that could trigger a lowering of next season’s salary cap.
The salary cap is generally determined by projected revenue. But if players got paid too much (based on the approximate 50-50 split), the cap can be reduced the following season.
Next season could be hit with a double whammy – lower-than-expected revenue plus players getting paid more than their fair share this season.
But perhaps the revenue losses from coronavirus will be so drastic, the salary cap will decrease regardless (though not as sharply as if no countermeasures were taken).
A lower salary cap would particularly hurt players who signed max contract extensions last offseason – 76ers’ Ben Simmons, Nuggets’ Jamal Murray and Raptors’ Pascal Siakam. The max is based on a percentage of the salary cap. If the salary cap lands below $95,535,716, Celtics wing Jaylen Brown would also have his extension reduced.
First-round picks also generally have their four-year contracts based on the salary cap the year they sign. So, the 2020 draft class could suffer.
Free agents next offseason would also generally get squeezed. Some could opt for shorter contracts rather than locking into long-term deals with a relatively low starting salary. On the flip side, teams could get value with the risk-averse free agents who’d sign long-term under these conditions.
If the teams can afford it.
The luxury tax generally rises and falls with the salary cap. A lower luxury-tax line could burden many teams and produce a tremendous advantage for the teams with lower payrolls. Those latter teams could extract sweeteners by trading for expensive players and/or receive relatively high distribution payments from tax teams. Even more than a lower salary cap, a lower tax line could significantly alter the landscape. Which is why the luxury tax could be calculated differently next season – or even suspended.
Everything is up for negotiation in these unprecedented times.
But consider this report a clue in the direction things are headed.