NBA Revises Cap, Tax Projections For 2020/21

3:15pm: The NBA’s new projection is a $115MM salary cap and $139MM tax line, according to Wojnarowski (Twitter links). That’s not as significant a drop from the previous projection as some front offices feared, so it shouldn’t have a noticeable impact on teams’ plans at the deadline.

3:07pm: The NBA has informed teams that new projections for 2020/21’s salary cap and luxury tax threshold are on the way, according to Adrian Wojnarowski and Bobby Marks of ESPN. Those new numbers haven’t been revealed yet, but teams are expected to receive that info shortly in order to ensure they’re as informed as possible as they consider deadline trades.

When the NBA last updated its projection in September, it called for a $116MM cap and a $141MM tax line in 2020/21. Each of those numbers would represent a substantial jump up from the figures for 2019/20, which are $109.14MM (cap) and $132.627MM (tax).

However, those estimates were issued before Rockets general manager Daryl Morey published a tweet supporting protestors in Hong Kong. That tweet instigated a controversy between the NBA and China that cost the league sponsors and television partners. The ordeal is believed to have cost the NBA approximately $150-200MM, league sources told ESPN.

Although the cap is still expected to increase beyond this year’s figure, front office executives are preparing for a more modest jump, according to Wojnarowski and Marks, who hear that some teams believe the new projection could dip as far as $113MM. Tim MacMahon of ESPN tweets that some team executives have referred to the expected drop as the “Daryl Deduction.”

A smaller cap increase than expected may not have a massive impact in free agency, since most teams are expected to be over the cap anyway. Still, every dollar counts when it comes to creating cap flexibility and avoiding the tax. Wojnarowski and Marks point to the Celtics, Nets, Warriors, Rockets, and Sixers as teams that could be taxpayers in 2020/21 and would be on the hook for a larger bill if the tax threshold is a few million dollars lower than anticipated.

Players who have signed maximum-salary contract extensions that take effect for the 2020/21 season will also take note of the league’s new cap estimates, since it will have an impact on their projected earnings.

Sixers guard Ben Simmons and Nuggets guard Jamal Murray, for instance, signed maximum-salary extensions that will start at 25% of the cap next season, assuming neither player earns an All-NBA spot in 2019/20. When they signed those deals in July, the league was projecting a $117MM cap, which would have made them worth $169.65MM over five years. A $113MM cap would reduce their projected value to $163.85MM apiece.

Several other figures – including the rookie scale, mid-level exceptions, minimum salaries, and cash available in trades – are also linked to the percentage the salary cap increases from year to year and would be affected by an adjusted 2020/21 projection.