NBA salary cap is due for a significant rise
The Orlando Magic have a big decision to make in free agency this summer. None of that may matter as the NBA salary cap is set for a massive rise soon.
The reality of the NBA’s salary cap future is going to be coming into sharp focus not this summer but next summer. The looming influx of cash coming from the league’s new TV deal has teams already planning for a major increase to the cap.
The projections the NBA released Friday from the league’s Board of Governor’s meeting paints a much clearer picture of what is going to happen.
This summer will see the salary to make a modest rise from $63.1 million to $67.1 million. That is a modest rise and will not affect too many teams. What will change is what happens to the salary cap in 2016. There, the NBA says, the salary cap will increase to $89 million before eclipsing $100 million at $108 million in 2018. That is, if the league gets that far with a work stoppage possible when the players and owners have an opt-out following the 2017 season.
So while teams may not be able to spend a ton of money, it suddenly makes contracts signed this summer much less costly than they might have been otherwise.
Take Nikola Vucevic‘s recently minted four-year, $48 million that kicks in starting next season. According to Basketball Insiders, Vucevic is slated to make $11.25 million next season. That would make up 16.8 percent of the team’s salary cap.
If the numbers rise as projected, by 2018, Vucevic’s $12.25 million salary will make up 11.3 percent of the cap. Vucevic’s salary will not increase at the same rate as the cap, turning him into even more of a bargain.
A player who has averaged a double double the last three seasons (and came four rebounds short of becoming the only player with three straight 11.0 rebounds per game seasons in the NBA currently), will take up a little more than 11 percent of the cap in two years!
Consider that for a moment.
Try the experiment again with Tobias Harris. For argument’s and simplicity’s sake, say Harris signs an offer sheet at a flat $13 million per year for four years. He would take up a good chunk of the cap next year — 19.4 percent — but by 2017, that $13 million would make up just 14.6 percent of the cap.
For reference, a max player like Kevin Durant is taking up 30 percent of Oklahoma City’s cap. A player’s max salary usually is set at 25-30% of the team’s salary cap.
That still leaves a lot of cap room to re-sign Victor Oladipo before the 2019 season (whether he is a max player will be decided in the mean time) and go after another max player in the meantime (depending on how much maximum salaries increase).
Ideally, then, it seems the best opportunity to go for a max player is either this summer (when they are cheaper) or in summer 2016 when the team does not have any major salaries committed and should have a clearer picture of what their young core needs and what they can offer.
They should also still have plenty of cap room the next two seasons.
Even if Harris signs a deal starting at $13 million, the Magic would have $51.9 million committed to next year’s team for about $16 million of cap space. And the team holds Harris’ Bird Rights, meaning they can go over the cap to sign him — Harris’ cap hold is only about $5 million, so there is roughly $21 million of cap room this summer if they strike before Harris signs an offer sheet. None of these figures include the rookie contract yet (the fifth pick makes $3.1 million, the sixth pick makes $2.8 million his first year).
Using the same assumptions, for summer of 2016, the Magic would potentially have $49.2 million in salary committed. Assuming they only have interest in re-signing Evan Fournier and their draft pick, that still leaves a majority of $40 million in cap room left for the summer of 2016.
Of course, every other team is going to find themselves suddenly awash in cap room and will be left trying to figure out how to use it. But the Magic are going to be positioned to spend a max salary and have a ton of money too. Of course, they will still have to be planning
Whatever contracts Orlando, or any team signs, this summer are going to be worth less than the paper they are printed on by the time they come near their end.
Looking at these numbers seems to suggest matching Tobias Harris, even at a ridiculous price, is not so bad because the scale is sliding so dramatically. There is a lot of money to spend. And the Magic will be forced to spend a lot of it to get to the salary floor, the minimum amount a team has to spend without penalty.
No one quite knows what the actual cap number will be two or three years down the road. These reported numbers are just guides for teams moving forward. Decisions will obviously have to be made as they manage the cap moving forward and as the revenue becomes clearer and more determined.
For now, the Magic will still retain plenty of cap space and the opportunity to go after just about anyone they want in the next few seasons, even if they match Harris this summer. The competition will grow as the scale slides toward the new salary cap.
The ramifications of what is coming though are pretty clear. There is going to be a lot of money to throw around throughout the league and spending wisely will be as important as ever.