The beginning of the NBA's calendar year on July 1 brings with it clarity.
The opening of free agency on June 30 at 6 p.m. brings with it the official salary cap, tax and apron numbers the league is operating under for the upcoming season. Teams lock in some certainty, including exactly where they stand among the NBA's complicated salary cap rules.
For the Orlando Magic, the revealing of the salary cap also brings one more piece of certainty.
Like last year when Franz Wagner began his max contract, the salary cap now means Paolo Banchero's contract numbers are finalized.
The biggest salary on the Magic's books is locked into place.
Banchero signed a max extension last summer with Rose Rule language in his contract. But he failed to make the All-NBA team, making him due 25 percent of the salary cap. If it is a true max contract, it will come with eight percent raises for the next five seasons. He also received a player option on the fifth season (a rare inclusion that had not been offered since Trae Young and Luka Doncic).
The NBA announced its salary cap for the 2027 season is $164.961 million. That means Banchero's first-year salary will be $41,240,250. The total for his five-year contract (with the maximum eight-percent raises) would be a franchise-record total of $241.9 million.
Here is the breakdown of his complete salary for the next five seasons if he received full eight-percent raises for the life of the contract:
Year | Amount |
|---|---|
2026-27 | $41,240,250 |
2027-28 | $44,539,470 |
2028-29 | $48,102,628 |
2029-30 | $51,950,838 |
2030-31 (PO) | $56.106,905 |
According to Spotrac, however, there is no raise between the second and third year of the contracts. That gives the Magic a little bit of flexiblity and means Banchero did not sign a full max.
Either way, it is a lot of money. He and Wagner are the first $50 million players in franchise history.
And the new contracts are a big reason why the Magic now find themselves deep into the luxury tax.
Welcome to the tax
President of basketball operations Jeff Weltman has been warning everyone who would listen about how expensive the Orlando Magic were about to become.
That is part of what happens when you draft well. When those players get to their second contracts, they become significantly more expensive. And this roster has reached that threshold.
It started with the max contract to Franz Wagner that began last season. He is set to make $41.8 million this season in the second year of his five-year max extension.
That means the Magic are paying $83.0 million to their top two players. That equates to 50.3 percent of the salary cap. Adding in Desmond Bane ($39.4 million) and Jalen Suggs ($32.4 million) has the Magic racing well past the salary cap.
Orlando will be a first-apron team this season. The team has $210.5 million in guaranteed salary for the upcoming season. That puts them well over the $200.4 million tax line and the $209.0 million first apron line.
This is why the Magic have found it difficult to make trades. The team cannot take back more money than it sends out in deals while under the first apron. And the Magic are limited to the taxpayer mid-level exception, which amounts to $6.0 million.
The Magic are just $11.2 million beneath the second apron. With three roster spots to fill, hardcapping themselves at the second apron by using the taxpayer mid-level exception seems unlikely.
The price of being successful under the new salary cap rules is the accumulation of expensive contracts. At some point, a team will need to deconstruct. The Magic are nearing that point, it seems.
For now, the Magic believe they have two All-Star players. They gave max contracts out accordingly.
And so, to be sure, this team's future depends on Banchero and Wagner delivering on that potential.
At least through 2030, the Magic are locked into expensive rosters that should be competing at the top of the Eastern Conference. The should part is the part the Magic are working on.
For the first time since Dwight Howard's departure, the Magic have ventured into the tax. They have ventured very deep into the tax and all that entails.
This is what they wanted in the end. This is ultimately the decision and situation every team wants so long as they are competitive.
Orlando is still fighting for that last part.
But they have their two stars locked in.
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