The Vertical Front-Office Insider Bobby Marks, a 20-year executive with the Nets, looks at the impact of this year’s free agency and what to expect in the future.
NBA commissioner Adam Silver was quite direct when discussing the fireworks of this summer’s free agency.
“What happened this summer was an anomaly in terms of the system,” Silver said.
The first two weeks of July resembled an old western movie in which the rules were cast aside, undermining a salary-cap system the NBA thought it had fixed in 2011.
When the dust settled, $3.3 billion in contracts had been handed out, more than 70 percent of free agents switched teams, a franchise player joined Golden State to form an All-Star team, and the average salary for each player signed hovered near $11 million.
Was the summer of 2016 the perfect storm of new TV money impacting the salary cap or a continual pattern for the near future?
The $72 million contracts Deng and Noah signed certainly set off some sticker shock, however, the true value of how each contract should be measured is as the actual percentage against the cap.
Noah counts 18 percent against the cap, and Deng is at 19 percent.
Had Noah signed under a $77 million salary cap, the percentage of his first-year salary would have equaled $13.9 million (instead of $17 million), roughly $500,000 more than he earned in his last year with the Bulls.
For Deng, an $18 million cap hit is more like $14.7 million under the old cap, which is comparable to his $14.2 million salary in 2013-14.
The concern moving forward is what could happen when the cap regulates and a new set of rules could possibly be in place next summer.
The percentage of salaries that teams viewed this summer could look less appealing in the future.
One of the goals of the collective bargaining agreement that was signed in 2011 was to incentivize teams to retain their current free agents by allowing them to add extra years along with percentage salary increases.
Although player movement certainly occurs every summer, the cap rising to $94 million eliminated the incentive for players to remain with their own team as more than 70 percent of players switched franchises.
Had the players association agreed to the NBA proposed cap smoothing and not for the cap to jump from $70 million to $94 million, Kevin Durant likely would have remained with the Thunder.
THE $100 MILLION DOLLAR CLUB
The 2013-14 Brooklyn Nets sent shock waves through the NBA with their $100 million-plus payroll.
Fast-forward three years and now there are 10 teams with $100 million payrolls with five more hovering north of $95 million.
The new TV money will certainly off-set player salaries in the future, but the financial picture of the NBA, with 15-man rosters, now looks more like the NFL’s with 53-man rosters.
LUXURY TAX BECOMES A NON-FACTOR
The days of the Cavaliers’ $54 million tax bill this past season and the Nets’ $90 million one in 2013-14 are long gone.
The rise in the cap, for at least one year, has eliminated the luxury tax that teams such as the Miami Heat once feared.
A major sticking point in the 2011 work stoppage was for the NBA to implement a progressive luxury tax that would penalize teams for overspending along with creating rules that would hinder player movement for tax teams.
Since going into effect in the 2013-14 season, the NBA has collected over $300 million in luxury tax with 50 percent of that amount distributed to teams that fell below the tax threshold.
Although teams such as the Clippers and Cavaliers, repeat offenders from last season, hover around the $113 million tax threshold, the rest of the NBA has little to worry about.
RESTRICTED FREE AGENTS STAYING PUT
Although the cap jumped $24 million from the previous season, restricted free agents continued the path of past summers and remained with their teams.
The rise in the cap certainly played a role in the salary amounts each player agreed upon and could have lasting financial repercussions for Miami and Portland.
ROOKIE SCALE EXTENDED
From a headline perspective, a player drafted in the first round certainly has appeal. Along with the label of being a first-round pick also comes two years of guaranteed money.
The additional cap relief teams received this summer however unofficially extended the rookie scale into the second round.
Out of the nine second-round picks currently signed, eight mirror the rookie scale of a first-round selection.
Although there is no scale for players selected in the second round, teams have taken advantage of the additional cap space to lock up players to cap-friendly contracts.
Grizzlies second-round pick Deyonta Davis, for example, signed a three-year, $4 million contract that is similar to one signed by a first-rounder selected in the early twenties of the draft.
THE IMPACT ON THE 2017 FREE AGENTS
The excessive spending this summer will have an impact with the excellent free-agent class next summer.
The field of 27 teams with $20 million-plus in cap space this past summer could be sliced in half by the time next July rolls around.
Even with the cap rising from $94 million to a projected $102 million, early projections forecast only 12 teams having $15 million-plus in cap room.
With unrestricted free agents LeBron James, Kevin Durant, Steph Curry, Russell Westbrook, Chris Paul, Blake Griffin, Gordon Hayward, Kyle Lowry, Paul Millsap, Serge Ibaka, JJ Redick and Derrick Rose set to hit the open market, free agents could be remaining with their own teams.
Although four NBA teams have won championships since the current collective bargaining agreement was introduced in 2011, the Durant defection to Golden State has observers concerned about a lack of parity in the NBA.
With the NBA and Players Association expected to opt out of the CBA this December, expect changes to occur.
“I think we do need to re-examine some of the elements of our system so that I’m not here next year or the year after again talking about anomalies,” Silver said.
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