There's a massive shadow over the 2015-16 NBA season. The shadow created by the giant sack of money hanging over the league, ready to drop on July 1, 2016. The league is always changing, but the infusion of money from a new national TV broadcast deal is going to shake the NBA to its core. Some of the impacts will be positive, some negative. But the impacts are coming, and fast.
- NBA teams could have a combined $1.07 billion in salary cap space for 2016 free agents, according to a review of current salary data.
- NBA players are guaranteed to earn just over $3 billion total in the 2016-17 season.
- Only $1.6 billion of that is currently committed, meaning NBA owners will need to spend an additional $1.4 billion on player salaries in '16-17 one way or another
The league's projections peg the 2016-17 team salary cap at a record $89 million thanks to the new TV deal. Assuming that all player and team options for 2016-17 are rejected*, every team in the NBA is currently under the projected salary cap by at least $11 million. There are three teams that could free up more than $60 million in cap space without making any additional trades or cuts.
*The exception: we assumed the third and fourth years of rookie scale contracts for first-round picks would be picked up.
In all likelihood, a number of team options will be picked up, shrinking available cap space. Any Early Bird extensions signed by fourth-year first-rounders (like Harrison Barnes and Andre Drummond) will shrink the cap space figure. If Tristan Thompson signs, that will shrink the cap space. When all is said and done, the gross cap space number may fall below the $1 billion line. But that doesn't mean more than $1 billion in 2016-17 salary won't be committed in the first few days of July 2016.
WARNING: COMPLICATED, BORING ENVELOPE MATH
The league's projected basketball-related income (BRI) for 2016-17 is $6.4 billion. The 2011 collective bargaining agreement capped salaries and benefits at 51 percent of BRI, and benefits soak up right around $210 million. That leaves just over $3 billion guaranteed for player salaries in 2016-17.
There are $1.6 billion in salaries already committed to 224 players for next season. This includes all guaranteed contracts only with one exception: second- and third-year players who were first-round picks. These players have team options on the third and fourth years of their contracts that are almost universally picked up, so I included those contracts in these calculations. I omitted any other contract with a team or player option. (I expect most players to reject player options. Some teams will drop players on options, too, in order to grab cap space, though any productive player should expect the team to pick it up given the salary climate.)
So, players are contractually due $3 billion. There is $1.6 billion already committed. That means players are due another $1.4 billion in 2016-17. There can be a maximum of 15 players on a regular season roster. With 30 teams, that means in theory 450 total roster spots are available each year. (This ignores that players with guaranteed contracts -- like Josh Smith -- can be waived, freeing up a spot without freeing up guaranteed player salary.) As mentioned, 224 players are already under contract for next season. That leaves about 226 roster spots for other players. Those 226 players will split up the $1.4 billion still on the table.
Or not. There's a possibility that some of that money will still be on the table at the end of 2016 free agency, in which case the NBA Players' Association will decide how to split it up. The collective owners still must pay $3 billion to players in 2016-17. If they don't do so through regular contracts, the leftover amount goes to the union to be split accordingly. This is similar to what happens when a team doesn't reach the salary minimum in a season: the difference is split among players under contract. The actual mechanics of how this would work are fuzzy.
In reality, what's likely to happen is that the top 75 free agents will soak up a huge portion of the allotted cap space, dozens of players will sign small contracts and a hundred or more will sign minimum or semi-guaranteed deals near the minimum. The 2016 free agent class is not particularly deep, but that money isn't going to spend itself. We could see a slew of players signing deals over $20 million per year.
BACK TO ALL THAT CAP SPACE
So if there's about $1 billion of cap space but players are contractually due another $1.4 billion, how's that going to work?
The NBA's salary cap is soft: teams can exceed it by using a slew of exceptions (like the Bird exception, the Early Bird exception, the mid-level exception, the biennial exception, the rookie exception). That's why the salary cap is not just the total amount due to players divided by 30: the salary cap is calculated to be a lower amount because the NBA and players' union know that most teams will use exceptions to exceed the cap. Some of the teams with a modest amount of cap space heading into 2016 will absolutely exceed it. The Cavaliers might, against all odds, bust through the luxury tax threshold.
It's relatively certain that some teams will struggle to get up to the salary cap number. That's the case with a much lower cap this season: Philadelphia and Portland are each more than $12 million under the cap. Consider this: The 2016-17 salary cap will be $89 million. Only eight teams are at or above that salary level this season, and no team has more than $78 million committed for 2016-17.
We're going to be left with a lot of massive deals, and some of them could get weird. There could be a spate of ridiculously huge one-year contracts (so teams can preserve space in 2017 and beyond) and likely a few teams well below the salary cap number. It's going to be completely nuts, even by NBA free agency standards.
SO, WHO HAS THE SPACE?
Many thanks to BasketballInsiders.com, whose salary data is clean and thorough. We crunched the 2016-17 salary numbers presented there to figure teams' potential 2016-17 cap space as of now.
Well, the Los Angeles Lakers have a huge chunk of it -- more than $65 million worth. Only six Lakers have guaranteed deals in 2016-17, and the biggest one is only $7 million (Lou Williams). To get all of that cap space, the Lakers would have to renounce Bird rights to Kobe Bryant and Roy Hibbert (who each have $20 million plus cap holds) and decline options on a few other players.
The Philadelphia 76ers don't need to do much to open up $62 million in cap space: they don't have any major contracts on the books, so there isn't anything really to come off. (The two biggest contracts on their sheet this season belong to two waived players, JaVale McGee and Gerald Wallace.) The Dallas Mavericks have $29 million locked up in five players (led by Wesley Matthews' $17 million), but there's another $30 million tied up in player options that could go either way and will dictate how big a player Big D can be.
If Cleveland signs Tristan Thompson to any amount in the negotiated range, they'll still have cap space in 2016. But that doesn't include LeBron James, who has a player option he is incredibly likely to decline in order to boost his salary share.
ARE THERE GOOD FREE AGENTS TO SPEND ALL OF THIS DOUGH ON?
There's Durant and LeBron (the latter of which is almost assuredly sticking with Cleveland for a max contract starting at $31 million). Dwight Howard can become a free agent. The top unrestricted FAs in their primes will be Mike Conley, Al Horford and Joakim Noah. DeMar DeRozan and Chandler Parsons can opt out. There's Al Jefferson and Roy Hibbert, and by mentioning Hibbert so early in this exercise, you have your answer: this is not a deep set of star free agents.
There are plenty of useful players, but few worth max-level contracts, especially since maxes will cost even more. (They are calculated as a percentage of the team salary cap. LeBron's max for the 2016-17 season will be more than $31 million, for example. He's making less than $23 million this season.)
With all that said, here's a prediction that another $1.4 billion is not going to get spent in 2016, leaving the players missing some money due to them, according to the labor agreement. But that and a full exploration of the lucky-as-a-leprechaun 2016 NBA free agent class will come later. For now, revel in the sea of salary cap space teams are facing.