The Declining Relative Value Of The Mid-Level

The mid-level exception was originally intended to be just that — a middle ground between minimum and maximum salary contracts. Once the cap shoots up next year, the pendulum of the mid-level’s value will have swung decidedly toward the low end. While the cap may go up or down depending on the league’s basketball-related income, the latest collective bargaining agreement locked in set mid-level amounts. The non-taxpayer’s mid-level, sometimes referred to as the “full” mid-level, began at $5MM in the 2011/12 season and isn’t scheduled to eclipse $6MM until 2019/20. The taxpayer mid-level and room mid-level exceptions exhibit similarly measured growth, but the salary cap is projected to rise dramatically.

The league sent out preliminary projections that show the cap ballooning from $67.1MM to $108MM in a two-year period. Of course, the larger figure assumes there isn’t a work stoppage after the 2016/17 season, when the cap is projected to hit $89MM. If there are indeed labor negotiations in 2017, when both sides can opt out of the collective bargaining agreement, it would set up an intriguing dynamic within the union, headed these days by president Chris Paul and vice president LeBron James, both maximum-salary players. Rank-and-file players might like to see the mid-level exceptions — and the minimum-salary exception, which is also a set figure year-to-year — tied to rising revenues as well. It would offset what otherwise is set up to be a growing gap between the most highly paid players and everyone else.

This table shows the league’s projections for the salary cap and the luxury tax thresholds for each of the seasons remaining under the current collective bargaining agreement. It also includes a rough estimate of each maximum salary for those seasons (the NBA uses a different cap calculation for maximum salaries than the cap itself, so that’s why the percentages don’t align precisely). In the rightmost column is the non-taxpayer’s mid-level amount for each season.

A conceivable positive consequence for mid-level players as max salaries surge is that teams would be set up with greater wiggle room between the cap and the tax threshold, so it would be easier for them to spend the full mid-level amount. Fewer teams would cross the tax apron, a mark $4MM above the tax threshold, and thus fewer teams would be limited to only the taxpayer’s mid-level. Still, by that same logic, more teams would be liable to spend less than the cap, meaning they’d have only the room exception, the least lucrative of the three versions of the mid-level.

Front offices may be more hesitant to spend up to the max for as many players as they do now, so perhaps the NBA’s middle class will endure as teams split their resources. Still, a valuable systemic tool to provide for the skilled but less-than-elite stands to have much less effect.

Larry Coon’s Salary Cap FAQ was used in the creation of this post.