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The Declining Relative Value Of The Mid-Level

April 20th, 2015 at 5:57pm CST by Chuck Myron

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.

capmidlevel

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.

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2015/16 Salary Commitments By Team

April 18th, 2015 at 3:00pm CST by Eddie Scarito

Hoops Rumors took a look ahead at each franchise’€™s salary cap situation heading into the offseason, and the inevitable free agent frenzy that occurs every year when the weather turns hot. We went through the contracts on each teams’ books for next season, minus any cap holds for unrenounced free agents.

While the exact amount of the 2015/16 salary cap won’€™t be announced until July, the cap is projected to come in somewhere around $67.4MM, with the luxury tax threshold projected at approximately $81MM. This year’s $63.065MM cap represented an increase of 7.7% over 2013/14, which was well above the league’€™s projected annual increase of 4.5%. It would appear that these figures are due for a significant bump in the near future. NBA teams were recently advised ‎that the league’s salary cap could rise past the $100MM mark as soon as the 2017/18 season. These estimates should make the hearts of NBA agents palpitate, and set the stage for some exciting future offseasons.

Here are each of the teams’ 2015/16 salary cap listings organized by conference and division:

EASTERN CONFERENCE

Atlantic Division

Central Division

Southeast Division

WESTERN CONFERENCE

Northwest Division

Pacific Division

Southwest Division

The Basketball Insiders salary pages were used in the creation of these posts.

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And-Ones: Salary Cap, Draft, Sefolosha

April 17th, 2015 at 9:30pm CST by Eddie Scarito

At this week’s NBA Board of Governors meetings, teams were advised ‎that the league’s salary cap could rise past the $100MM mark as soon as the 2017/18 season, Marc Stein of ESPN.com writes. Stein’s sources informed him that, based on current projections, league officials expect the salary cap to increase from its current $63.1MM figure to $67.1MM next season, $89MM in 2016/17, and $108MM in 2017/18. The league has been careful to stress to its teams that these projections are contingent on the NBA and its players avoiding a work stoppage after the 2016/17 season when the league and the NBPA can opt out of the current CBA, Stein adds.

Here’s more from around the league:

  • Alpha Kaba, a 6’10” forward playing for the French team Espoirs Pau-Orthez, will enter the 2015 NBA draft, Pedja Materic of BeoBasket.net tweets. The 19-year-old is not currently projected to be selected in June.
  • The league also discussed playoff reform during its Board of Governors meetings, and while no immediate changes are coming, the league is mulling a number of options, Howard Beck of Bleacher Report relays (Twitter links). One of the options being discussed according to commissioner Adam Silver is the addition of a play-in tournament, Beck notes.
  • The NBA also discussed potential draft lottery reform, but the league concluded that it wasn’t ready to make a change yet, Beck tweets.
  • Thabo Sefolosha underwent successful surgery today to repair a fractured fibula and ligament damage in his right leg, the Hawks announced. Sefolosha will have an expected recovery period of about six months, and Atlanta hopes that he’ll be ready for the start of training camp.
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And-Ones: Salary Tiers, Deng, Jackson

April 13th, 2015 at 10:43pm CST by Dana Gauruder

The maximum salary tiers will rise dramatically over the next two years when the league’s new TV contract takes effect, Eric Pincus of Basketball Insiders reports. Currently, players with up to six years of experience can receive a maximum of $14.7MM in the first year of a contract, $17.7MM if they have seven to nine years of experience and $20.6MM if they have at least 10 years of experience. By the 2016/17 season, those maximum salary tiers will rise to approximately $21.0MM, $25.3MM and $29.5MM, Pincus calculates. That will encourage free agents this summer to sign contracts with an opt-out clause for the second year, allowing them to take advantage of the bump in salaries, Pincus continues. LaMarcus Aldridge, Rajon Rondo and Paul Millsap are some of the free agents this summer who could elevate into the top tier in salary in 2016/17 by signing one-year contracts or contracts with an opt-out clause, Pincus adds.

In other news around the league:

  • Draft prospects Montrezl Harrell of Louisville and Trey Lyles of Kentucky have signed with LeBron James‘ agent, Rich Paul of Klutch Sports, Marc J. Spears of Yahoo! Sports tweets. Sam Dekker of Wisconsin has chosen Mark Bartelstein and Priority Sports to represent him, according to Jeff Goodman of ESPN.com. (Twitter link). Chad Ford of ESPN.com has all three rated as first-round prospects, with Dekker ranked No. 15 overall, Lyles at No. 17 and Harrell at No. 24. Jonathan Givony of DraftExpress also has all three among his first-round prospects, with Dekker 15th overall, Lyles 19th and Harrell 23rd.
  • Luol Deng has not yet decided whether he will exercise his player option of approximately $10.15MM for next season, Jason Lieser of Palm Beach Post tweets. The Heat forward is optimistic about the team’s future and has enjoyed playing for the organization this season, Lieser adds.
  • Pierre Jackson, who ruptured his right Achilles’ tendon playing for the Sixers’ summer-league team last year, has been cleared to resume all basketball activities, according to Spears (Twitter link). Jackson was part of the Nerlens Noel trade between Philadelphia and the Pelicans after the Sixers selected him in the second round in 2013. New Orleans traded Jackson back to the Sixers last year in exchange for Russ Smith‘s draft rights. Jackson is a free agent after the Sixers waived him in September.
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Western Notes: Collison, Jones, Powell

March 21st, 2015 at 4:15pm CST by Eddie Scarito

The salary cap could jump from $90MM in 2016/17 to as much as $105MM the year after, league sources tell Zach Lowe of Grantland.com. With all the buzz surrounding Kevin Durant, Lowe notes that the increase could give the Thunder another chance to add talent without going into the luxury tax. Although, he adds that giving Serge Ibaka a maximum salary contract on his next deal could limit their flexibility.

Here’s more from the Western Conference:

  • The Thunder‘s injury woes continue as coach Scott Brooks informed reporters that Nick Collison is expected to miss at least 10 days with an ankle injury, Darnell Mayberry of The Oklahoman relays. Collison joins Durant, Ibaka and Enes Kanter on the injured list, Mayberry notes. “One thing I do know is our guys are going to continue to fight and rally and our crowd is going to continue to support our guys because they give effort,” Brooks said. “We’ve never, ever given up and felt sorry for ourselves. Our team’s going to continue to rally around each other and help each other fight through it. We’ve had some tough moments this year. That has never stopped us from competing, never stopped us from trying to improve.”
  • Rockets players have missed a combined 137 games this season due to injury or illness thus far, Jonathan Feigen of The Houston Chronicle notes. The latest Houston player to sustain an injury is Terrence Jones who suffered a collapsed lung during Thursday night’s contest. Jones will be out of action indefinitely as a result of his injury, Feigen relays. “Guys have to step up,” coach Kevin McHale said. “I sure wish Kostas Papanikolaou [who has been out for 13 games with a sprained ankle] was ready to play, but he’s not ready to play, either. We just have to deal with it and go.“
  • The Mavs have re-assigned Dwight Powell to the Texas Legends, their D-League affiliate, the team announced in a press release.
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Latest Salary Cap Projections

March 17th, 2015 at 9:55am CST by Chuck Myron

The expectation of a leap in the salary cap to about $90MM for the 2016/17 is well-known and has been a matter of broad discussion since the league and its TV partners closed on a $24 billion deal this past fall. But the players union and the league also anticipate another surge for 2017/18 that would likely send the cap zooming past $100MM, as TNT’s David Aldridge writes in his Morning Tip column for NBA.com. However, that second bump would be a product of artificial inflation of sorts, a ripple effect from the injection of the new TV revenue the year prior, as Aldridge details. So, there’s a chance the cap would contract from that $100MM-plus figure, setting up a decline for the 2018/19 season, according to Aldridge. The league and the union agree that such a dip is indeed possible, as USA Today’s Jeff Zillgitt and Grantland Zach Lowe report (Twitter links). That could be “a recipe for disaster” for players who become free agents in 2018, as well as for teams that signed high-dollar deals the years prior, Aldridge writes.

There’s more on the changing salary cap, as we pass along:

  • The union’s final rejection of cap smoothing was no shock to the league, which had told teams to prepare for both outcomes, Aldridge notes in the same piece. Still, the league sought a gradual increase to the cap because some teams are concerned that they’ll be unable to compete for free agents in 2016 with so many opponents set up to have cap space, as Steve Kyler of Basketball Insiders writes within in NBA AM piece.
  • Most executives from teams around the league estimate that the cap for next season will come in at a little more than $67MM, as Kyler reports in the same story. The league is now projecting a $67.4MM cap.
  • The low-end estimates for the 2016/17 cap are between $85MM and $86MM, and the high estimates are close to $90MM, Kyler hears. A couple of team executives told Kyler that they assume that the cap will be $87MM.
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2015/16 Salary Commitments: Nets

March 12th, 2015 at 8:31pm CST by Eddie Scarito

With the NBA trade deadline now passed, teams are focusing on locking down playoff spots or vying for a better chance in the draft lottery. Outside of the players who are added on 10-day deals, or those lucky enough to turn those auditions into long-term contracts, teams’ rosters are relatively set for the remainder of the season.

We at Hoops Rumors are in the process of taking a look ahead at each franchise’s salary cap situation heading into the summer, and the free agent frenzy that occurs every offseason. While the exact amount of the 2015/16 salary cap won’t be announced until July, the cap is projected to come in somewhere around $68MM, with the luxury tax threshold projected at approximately $81MM. This year’s $63.065MM cap represented  an increase of 7.7% over 2013/14, which was well above the league’s projected annual increase of 4.5%.

We’ll continue by taking a look at the Nets’ cap outlook for 2015/16…

Here are the players with guaranteed contracts:

Here are the players with non-guaranteed contracts:

Players with options:

The Nets’ Cap Summary for 2015/16:

  • Guaranteed Salary: $58,678,233
  • Options/Non-Guaranteed Salary: $31,004,980
  • Total: $89,683,213

The Basketball Insiders salary pages were used in the creation of this post.

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Fallout From Union’s Refusal Of ‘Cap Smoothing’

March 12th, 2015 at 11:27am CST by Chuck Myron

The players union’s ultimate rejection Wednesday of any gradual increase to the salary cap as opposed to a drastic leap for 2016/17, when the league’s $24 billion TV deal kicks in, figures to have widespread consequences. Just about every team stands to have the ability to open the cap space necessary to sign a maximum-salary free agent, as I explored, and the ripple effects of the change in the NBA’s salary structure will be felt long after 2016 free agent frenzy is over. Here’s more on the aftermath of the union’s decision:

  • Teams are projecting the 2016/17 salary cap to come in between $88MM and $92MM, sources tell Brian Windhorst of ESPN.com, which largely jibes with the roughly $90MM figure many around the league had reportedly assumed as of early last month.
  • The union’s refusal to compromise on so-called “cap smoothing” increases the odds that there will be a lockout in 2017, when the players and owners have a mutual option on the collective bargaining agreement, Windhorst believes, as he writes in the same piece. Players association vice president LeBron James spoke Wednesday of a “huge meeting” that the union will hold this summer, Windhorst notes.
  • Salary cap guru Larry Coon thinks the union didn’t want tiered increases to the cap because a spike in 2016 would come in advance of any 2017 lockout. Marquee players, like James, will benefit from the jump but pedestrian players near the end of their careers stand to miss out, Coon believes. That’s because the league would have distributed among all players what probably would have been a large difference between total team expenditures on player salary in 2016/17 and the 51% of the league’s basketball revenue that teams are required to spend on salaries, as Coon explains. Players near the end of their careers won’t see that sort of shortfall check now that cap smoothing is off the table, and if they don’t sign a new contract after next season, they won’t have a piece of the pie, according to Coon (All five Twitter links here).
  • Stefan Bondy of the New York Daily News asked three players before Wednesday’s Nets-Heat game about the union’s decision to reject cap smoothing, and none of the three knew what he was talking about. That suggests that the union wasn’t unanimously behind the choice, Bondy tweets.
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And-Ones: NBPA, Smith, Orton

March 11th, 2015 at 10:29pm CST by Eddie Scarito

With the NBPA voting against the league’s cap smoothing proposal the salary cap is expected to increase significantly for the 2016/17 season, Sean Deveney of The Sporting News writes. The owners had hoped smoothing would appeal to the players because it would allow a bigger portion of the new television money to be spread to a wider group of players, Deveney notes. But now there will be nothing preventing the owners from using all the extra space next summer, which won’t benefit players becoming free agents in 2017 and beyond as much as the NBPA expects, Deveney adds.

A source with knowledge of the thinking of NBPA head Michele Roberts told Deveney, “The union should not have to police how much the owners spend. That’s not the job of the union. All of the caps that are on salaries now, the max deals and the shorter lengths and all of that, it’s all stuff that has been done to protect owners from themselves. Michele has been pretty strong on saying, hey, it’s not the job of the players to protect owners from other owners. Why should that fall on the players?”

Here’s more from around the league:

  • Thunder GM Sam Presti said it was ludicrous to think that the team would consider trading Kevin Durant, Darnell Mayberry of The Oklahoman tweets. It was posited earlier by ESPN’s Tom Penn that OKC would likely trade Durant next season rather than risk losing him in free agency for nothing.
  • J.R. Smith is happy be a member of the Cavaliers and playing alongside his friend LeBron James, and the guard has indicated that he’d like to remain in Cleveland past this season, Joe Vardon of The Northeast Ohio Media Group writes. Smith, who has a player option for 2015/16 worth $6,399,750, could be leaning toward opting in for next season with an eye on a larger contract come 2016 when the salary cap is expected to increase significantly, Vardon adds.
  • The NBA is projecting that the 2016/17 salary cap will be set at $78MM, a figure that many cap analysts believe is a very conservative estimate, Alex Kennedy of Basketball Insiders tweets.
  • The Grand Rapids Drive, the Pistons‘ D-League affiliate, have acquired center Daniel Orton, Keith Langlois of NBA.com reports (Twitter link). Orton appeared in 22 games for the Sixers last season and averaged 3.0 points and 2.8 rebounds in 11.4 minutes per contest. The big man was in training camp with the Wizards this season.
  • Wesley Matthews underwent successful surgery today to repair his torn Achilles, the Trail Blazers announced.
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2015/16 Salary Commitments: Hawks

March 11th, 2015 at 7:11pm CST by Eddie Scarito

With the NBA trade deadline now passed, teams are focusing on locking down playoff spots or vying for a better chance in the draft lottery. Outside of the players who are added on 10-day deals, or those lucky enough to turn those auditions into long-term contracts, teams’ rosters are relatively set for the remainder of the season.

We at Hoops Rumors are in the process of taking a look ahead at each franchise’s salary cap situation heading into the summer, and the free agent frenzy that occurs every offseason. While the exact amount of the 2015/16 salary cap won’t be announced until July, the cap is projected to come in somewhere around $68MM, with the luxury tax threshold projected at approximately $81MM. This year’s $63.065MM cap represented  an increase of 7.7% over 2013/14, which was well above the league’s projected annual increase of 4.5%.

We’ll begin by taking a look at the Hawks’ cap outlook for 2015/16…

Here are the players with guaranteed contracts:

Here are the players with non-guaranteed contracts:

Players with options:

  • N/A

The Hawks’ Cap Summary for 2015/16:

  • Guaranteed Salary: $39,276,545
  • Options/Non-Guaranteed Salary: $947,276
  • Total: $40,223,821

The Basketball Insiders salary pages were used in the creation of this post.

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