NBA salary cap will soar when new TV money kicks in
NEW YORK – The NBA's new TV deal will inject so much money into the salary cap that a $90 million cap for the 2016-17 season was realistic.
What few saw coming: a $108 million salary cap with a luxury tax threshold of $127 million in 2017-18.
But according to projections sent by the league to teams, that's how dramatically the salary cap will increase over the next few seasons.
The salary cap and luxury tax line will increase to approximately $67.1 million and $81.6 million next season, up from $63.065 million and $76.829 million this season and starting in the 2016-17 – when the league's new lucrative multi-billion TV deal kicks in – the cap will increase to $89 million and the luxury tax threshold to $108 million and it will spike again to $108 million for the cap and $127 million for the luxury tax in 2017-18, two people familiar with the projected estimates told USA TODAY Sports.
They requested anonymity because they were not authorized to speak publicly about the salary cap and luxury tax figures.
After those big increases, the cap is projected to dip in 2018-19 to 100 million for the salary cap and $121 million for the luxury tax line and then make smaller increases in the following two seasons.
But the salary cap increase to $89 million then to $108 million in the next three seasons is a significant development with ramifications both obvious and unknown.
Teams that thought they had limited room to spend money under normal cap increases year over year are now looking at significant cap space to attract free agents. Teams such as the Los Angeles Lakes, New York Knicks, Miami Heat, Chicago Bulls and some others will be players in the free agent market with top-dollar to offer.
Think about the Miami Heat for a minute. They can give Goran Dragic a large deal during free agency, and when free agency hits the following summer in 2016, the Heat will have money to add max-type player alongside Dwyane Wade, Chris Bosh and Dragic.
Or take the New York Knicks. President Phil Jackson may be looking at a shorter rebuild period than anticipated. That's of course if he can bring in the right players. Same goes for Mitch Kupchak and the Los Angeles Lakers.
And consider the Cleveland Cavaliers. Let's say they keep Kevin Love and Tristan Thompson, they'll have Love, Thompson, LeBron James and Kyrie Irving and money to spend on an All-Star caliber player.
It's great if you're fans of those teams and believed there wasn't much financial flexibility in the coming seasons.
Or look at James' contract. The way he plans to structure his contract with the Cavaliers, he's on pace to become $30 million a season player, and if he continues to maximize salary cap numbers, he could make $40 million a season at some point.
But, there are the potential unintended consequences that concern NBA Commissioner Adam Silver and his collective bargaining agreement staff.
How will this unprecedented infusion of money impact competitive balance? The league – at the behest of owners – fought hard to implement a system that established competitive balance and gave every team a chance to compete for a championship if well managed.
To get there, the NBA implemented in the 2011 collective bargaining agreement shorter contracts and a punitive luxury tax payment system designed to keep teams from spending money on players at the expense of teams who couldn't afford to do so.
The league believes it's making progress toward that. But with spending about to go wild and the result unpredictable, the NBA is uneasy.
Silver didn't express that concern directly Friday, but talking about draft lottery reform, Silver said, "Once the union had made the decision not to smooth in the increases in the new television deal, the reaction was we're now going into a world that will look very different than anything we've dealt with historically.
"That is a massive amount of cap space that will come in because of the increase in BRI (basketball-related income) in '16 and '17, the first year of the new television deal. So what the basketball people pointed out, and they're right, is that of course the draft lottery and the draft are just one component of team building. There's also free agency and then there are trades, and that it's very difficult then to look at that one aspect in the abstract.
"So my sense where we were coming out is that there's still a sense that we need to make a change (to lottery reform), but until we see what the team behavior is going to be with all this new cap room, we should hold it and wait and then look holistically at the whole system."
Again, Silver wasn't directly addressing the issue of competitive balance, but he wants to see how this money alters the league. The league wants to protect its progress toward competitive balance, and that's why collective bargaining discussions will be so compelling when that time arrives. And both the players and league can opt out of the current CBA after 2016-17.