NBA projects 2017 salary cap at $92 million

The Orlando Magic are waiting for free agency to make a major move. They now have an idea of where the NBA salary cap will come in come July 1.

One of the first puzzle pieces to the Orlando Magic’s summer plans has tentatively been put in place.

In a memo sent to league executives — and now reported widely by several news outlets including Jeff Zillgitt of USA TODAY and Eric Pincus of Basketball Insiders — the salary cap for the 2017 season is projected to come in at $92 million, a roughly $21 million increase from last season.

This number is important because the salary cap determines the amount for max contracts in the league. Essentially, if the Magic are going to go after a max contract player, they now know how much they will have to pay for them.

Remember, a max contract is pegged to a percentage of the salary cap based on years played in the NBa. Eric Pincus of Basketball Insiders did a quick reference to what the various max levels would be:

The Magic currently have approximately $35.9 million in guaranteed money committed to next season before taking into account cap holds. Inclusive of all options and qualifying offers, the Magic have just $54 million committed to next season. This is not their final cap number, but the way the salary cap works, the Magic should be able to finagle enough room to go after whomever they want with max money.

In other words, the Magic will have cap room to sign one, possibly two max players if they want to.

The only problem is that with the cap increasing so much for every team, every team is going to have tons of cap room. That is the situation the Magic find themselves in entering free agency. At least now they have a clearer idea of how much cap room they have and can plan free agency accordingly.

The other minor issue too is that the league also reported a $93 million shortfall, according to Eric Pincus of Basketball Insiders.

The league pays to the players anywhere from 49 to 51 percent of the league’s total basketball related income, as calculated through a formula stated in the collective bargaining agreement. The NBA withholds 10 percent of each player’s salary in escrow in case there is an excess paid to the players.

However, this year there was a severe shortfall. There is expected to be another massive shortfall next year when the salary cap is expected to jump another $15 million at least with the new TV deal kicking in full gear. The 2016-17 season is the first season the new TV deal officially kicks in. Owners will begin seeing paychecks after that season from the new deal.

That is a lot of money being thrown around. The league has been preparing for this windfall for some time now. They tried to have the players approve a smoothing of the cap to prevent these dramatic shifts. Teams are required to spend at least 90 percent of the salary cap each year — the Magic acquiring Chris Copeland got the Magic above this line for the season, even though they did not have to actually pay Copeland — and so there will be a lot of cash thrown around this summer, even if there are not necessarily players worth that cash.

Orlando figures to be big players in free agency. Rob Hennigan said as much Thursday during the team’s exit interviews. Now they have an idea of what the rules of engagement will be when it comes time to pay up in July.