The 2019-20 NBA season is currently on hiatus with no clear end in sight. Both sides — NBA/teams and players association/players — are hoping to salvage what is left of the season. The challenge is that no one has any idea what a resumption of play will consist of or look like.
We already covered how the hiatus could impact this season and upcoming seasons. For now, we’ll focus on this upcoming summer and what the offseason landscape could look like for the league.
The NBA has yet to issue an updated salary cap projection for 2020-21. That means the league’s projection remains at $115 million. That is already down $1 million from the initial projection of $116 million. That projection came down after the league’s preseason issues with China.
It’s too soon to know where the cap will settle for next year due to the uncertainty of this season. We do know that there is almost no way the cap doesn’t come down significantly from that $115 million projection. Revenue losses could land between $500 million and $1 billion. Some are projecting the cap won’t drop lower than this season’s $109.14 million, even if it takes some negotiating between the NBA and players association to get there. One of the working assumptions is that will happen to keep salaries from falling too low next year, while also avoiding a massive spike when things are back to normal.
The players association rejected a form of cap smoothing before the initial cap spike of 2016 because that would have kept salaries artificially low. This type of cap smoothing will keep salaries artificially higher, which should be more palatable to the players.
Looking at the apocalyptic scenario of a $1 billion loss would more than likely see the NBA opt for force majeure and a dissolution of the CBA as opposed to simply an extreme lowering of the salary cap. In that scenario, we’re likely looking at an ugly set of negotiations that could mean no basketball long after activities are cleared to resume.
Because of that, we’re going to work off the assumption that the salary cap, luxury tax and all associated items (exceptions, rookie-scale salaries, and maximum and minimum salaries) stay the same as they are currently with the $109 million cap. Current contracts, outside of a few rookie-scale extensions (Ben Simmons, Jamal Murray and Pascal Siakam), are already locked in. This gives us everything we need to project where teams will fall to start the offseason.
Cap space teams
Six NBA teams project to have cap space at $109 million. They just project to have a little bit less than originally thought.
Atlanta Hawks: $43.2 million
New York Knicks: $41.5 million
Detroit Pistons: $28.2 million
Charlotte Hornets: $22.5 million
Miami Heat: $20.9 million
Phoenix Suns: $18.9 million
The first four teams will assuredly seek to be players this offseason. The Hawks are hoping to make the jump to being a playoff team. The Knicks are perpetually rebuilding, this time with a new front office in place. The Pistons have kicked off a rebuild, but still have some big enough salaries that they could look for a quick turnaround. And the Hornets feel they aren’t far from being a playoff team.
The Heat are already making waves that they could choose to roll over their space to the summer of 2021. This could include re-signing their own free agents to big one-year deals. The Suns could choose to do the same. The reason why is twofold. First, the free-agent class projects to be far better in 2021 than this summer. The second reason is that we’ll hopefully be in a more normal cap environment next summer. That means space could go much further in 2021 vs. 2020.
Luxury tax teams
While cap space teams won’t change much in this scenario, tax teams could change quite a bit. A projected cap of $115 million comes with a luxury tax at about $139 million. In that scenario, five to nine teams project to be over the luxury tax. A cap of $109 million carries a tax line of $132.6 million. At those figures, eight to 15 teams project to be over the tax.
The eight teams that are almost guaranteed to be in or around the tax are:
Golden State Warriors
Los Angeles Clippers
Los Angeles Lakers
These teams are already in the tax at $115 million or are very close to it.
The seven teams that could join them, pending roster decisions, are:
Oklahoma City Thunder
San Antonio Spurs
These teams are probably clear of the tax in the original projection. If the tax line drops, these teams could face difficult decisions on retaining their own free agents and/or using exceptions.
These nine teams are limited to using the non-taxpayer mid-level exception and/or bi-annual exception, whether the cap falls or not.
New Orleans Pelicans
Portland Trail Blazers
The challenge these teams face is that they could be looking at approximately $500,000 less to use with the non-taxpayer MLE and almost $200,000 less with the bi-annual. While it’s an even playing field, having that much less to offer could make it hard to land free agents. It may be more enticing for a player to re-sign with his current team than leave for a lower than expected starting salary elsewhere.
The 2020 free-agent class
After a monster class of free agents in 2019, the 2020 group is best described as underwhelming. The unrestricted group is fairly unremarkable. The quality of the restricted group went down because several players coming off their rookie-scale contracts reached agreements on contract extensions.
The best unrestricted free agent is Anthony Davis. If he left the Lakers it would come as a major shock.
The best restricted free agent is Brandon Ingram, but the Pelicans have already said they won’t be letting him get away.
Many of the other best available free agents have player options that they are likely to pick up because of the uncertain market. The rest of the group includes solid role players, but no franchise-altering talents.
It was a somewhat bleak picture before the COVID-19 pandemic caused the suspension of the 2019-20 season. These current events have made things only that much bleaker. If the cap drops further than $109 million, it could cause player movement this summer to really stagnate.
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