NBA's Salary Cap For 20-21 Could Decline By As Much As $30M

[RealGM Wiretap]

The NBA most recently projected a salary cap of $115 million and $139 million luxury tax for the 20-21 season. According to one team's front office, the cap could decline by as much as $25 million to $30 million.

The initial cap projections were based on an expected $8 billion in basketball-related income (BRI), which is now expected to decrease by at least $1 billion and potentially as much as $2 billion.

Using the standard salary-cap formula with $6 billion in BRI would have massive implications throughout the league, with the salary cap and tax line for 2020-21 plummeting to $95 million and $115 million, respectively.

Under that scenario, there would be at least 25 teams in the luxury tax, which would be the most of any season in NBA history.

The Golden State Warriors' projected tax penalty of $45 million would increase to $160 million even before the start of free agency.

One executive told ESPN that the league could solve the luxury tax issue by leaving the line at $139 million and letting the cap fall.

Via Bobby Marks/ESPN

[mastermixer]

Funny how when the owners wanted to smooth the rise of the cap in the collective bargaining, it was a hard pass from the players.

Now that the show is on the other foot, I’m sure the players are going to want a sort of “reverse smoothing”

But the question is, if 25 of the 30 teams now find themselves in the much higher tax bracket than expected, aren’t they all paying each other that money, so in effect paying themselves back?

[dice]

Funny how when the owners wanted to smooth the rise of the cap in the collective bargaining, it was a hard pass from the players.

Now that the show is on the other foot, I’m sure the players are going to want a sort of “reverse smoothing”

But the question is, if 25 of the 30 teams now find themselves in the much higher tax bracket than expected, aren’t they all paying each other that money, so in effect paying themselves back?

my guess is that there WILL be some sort of smoothing to the luxury tax. otherwise, the teams w/ the lowest payrolls going into next season will be tempted to just not re-sign their free agents and collect huge lux tax reimbursements

[dice]

if the salary cap goes down that much, free agents are basically screwed, right? other teams CAN'T sign them and current team can only re-sign at cut rate to avoid tax

[Elnegron]

Good news for bucks unless Gianni forces a trade. Bad news for bucks and Lakers if they don't win this year. Imagine green LeBron and David swallowing the whole cap next year. My heat team is fine since we can develop a street guy into a,mid level player

[IWishIWasHarden]

Why would the cap decline? It doesn't even make sense. You can't decontract players who already signed.

[Vegeta10176]

Good news for bucks unless Gianni forces a trade. Bad news for bucks and Lakers if they don't win this year. Imagine green LeBron and David swallowing the whole cap next year. My heat team is fine since we can develop a street guy into a,mid level player

Every one is under contract for the Lakers next season except Morris and Howard.. I think Morris will get a decent offer else where and would never have been able to continue to be a laker unless he sacrificed money and Howard may get an offer else where but I really think he will stay.. They will try to resign cousins but that would be tricky.. Oh Dudley is not under contract kind of irrelevant as he is defo a vet min guy if he continues to play.. KCP and Rondo will be opting in to their player options.. Lakers will be way over the cap but I think NBA will leave the luxury tax lines etc the same given the circumstances.. It's actually teams that do not have players signed or own the bird rights or want to improve their roster with non min players that will be in the hardest spot.. It would appear players like Kawhi and Paul George will suffer the most financially due to not maxing out when they could of.. Of course Giannis will probably get less now but he couldn't have changed that.. Clippers are probably in a pretty good position for the cap going down as PG13 and Kawhi will go out of contract the year after and they will pay them less but at that time Lakers will be in a similar situation with AD who will likely opt in next year and hope the cap somewhat recovers before signing long term..

[DoctorDunc]

The whole point of the cap and the luxury line is to force the teams top spread the talent around the league. Any made up reason to change the rules on the fly is ridiculous. This is actually an opportunity to bring balance back. Too many G-league rosters as it stands.

[Vegeta10176]

if the salary cap goes down that much, free agents are basically screwed, right? other teams CAN'T sign them and current team can only re-sign at cut rate to avoid tax

I think the NBA will keep the tax line the same players out of contract will defo make less though and yeah very cap space so signing with a team with your bird rights is the best thing to do.. Players will also opt into their final year of their contracts now.. For instance Drummond probably would of opted out of his contract and leave Cleveland but now he is more likely to opt in.. AD will likely opt in too.. Giannis likely won't force a trade or sign an extension hoping for the cap to recover.. Player movement will be limited in free agency likely some trades will happen.. As Steve Balmer is the richest owner and can afford to take the most losses and keep the team together I think Clippers will be the most favoured team from these events..

[Cassius]

Funny how when the owners wanted to smooth the rise of the cap in the collective bargaining, it was a hard pass from the players.

Now that the show is on the other foot, I’m sure the players are going to want a sort of “reverse smoothing”

But the question is, if 25 of the 30 teams now find themselves in the much higher tax bracket than expected, aren’t they all paying each other that money, so in effect paying themselves back?

my guess is that there WILL be some sort of smoothing to the luxury tax. otherwise, the teams w/ the lowest payrolls going into next season will be tempted to just not re-sign their free agents and collect huge lux tax reimbursements

The reason why the players association kicked back the smoothing is that the owners proved to be lying about their numbers during the previous CBA. A bunch of teams were crying poor about "losses", the players' cut of BRI was reduced, then the next season Donald Sterling is forced to sell the Clippers... a team he bought for $12.5M, for a cool $2B. So when the the league comes up and says, "there's a big bag of money and we'll give it to you a little bit at a time", it was completely logical to be skeptical.

I can't even find an article that lays out the number of years over which the cap would have been smoothed. If the plan was any longer than 3 years, then whatever balance was left will surely never make it to the players' bank accounts, now that COVID-19 is here.

[Bentley1225]

Guys like DeRozan, Hayward, Drummond will definitely opt in now

Teams with incumbent UFAs will have alot more leverage, like the Raps with Ibaka, Gasol and FVV

Guys like Paul Milsap may just take the MLE over 4 years instead of risking a larger 1 year deal.

[ciueli]

It's fascinating, there's a huge incentive for the handful of teams that could be under the tax to keep the system as is because they would receive a fortune in luxury tax payments for 2020-21. Atlanta, Detroit, Miami, Phoenix, and Charlotte would be virtually guaranteed to stay out of the tax, and Toronto could get there if they're willing to lose most of their big name free agents. Probably there will be some kind of smoothing put in place to avoid this, but if there isn't it will be a bloodbath for free agents (no team other than the Hawks with significant cap space) and a crushing financial blow to any team that was already projected to be in the tax (Golden State, Boston, Philadelphia, Brooklyn).

[DaddyCool19]

I wonder how the owners will react, if the players are all for a cap smoothing this time.

[DoctorDunc]

The fat contracts are going to be spread around. 6ers for instance have 4 players over 25mm...Portland in a small market has to pay Lillard 54mm in his last year while paying CJ 30mm. Why does small market SA want to pay DeRosen 27mm? There will be a lot of weird trades once cap is set, luxury line is set, schedule is set. Leverage moves from players to big market teams at least for a couple of years.