Implications Of Projected ’13/14 Cap, Tax Figures

Last night,'s Marc Stein reported (via Twitter) that the early estimates given to NBA owners and general managers have the 2013/14 salary cap rising to a projected $58.5MM from this year's $58.04MM. That figure isn't set in stone yet, and won't be until the first week of July, but if it's accurate, it's a tighter cap than we had expected — previous reports had estimated a figure in the neighborhood of $60MM.

Following up on that report, Stein adds today (via Twitter) that teams are being told the projected tax threshold for next season will be about $71.6MM. That wouldn't be a huge leap either, but it'd be more significant than the projected cap increase, considering this past season's tax line was about $70.31MM.

As mentioned, we won't officially know 2013/14's cap, tax, and salary restrictions for a few more weeks, but if we assume that Stein's reported figures end up being accurate, what will that mean for the free agent period this summer? Let's examine a few ways that teams and players could be affected…

  • Even with a $60MM cap, teams like the Rockets and Mavericks, who hope to make a run at Dwight Howard, would have had a hard time squeezing a maximum-salary offer in under the cap. With a $58.5MM cap, each team would have to make at least one trade to clear the room necessary for Howard's max first-year salary (about $20.51MM). The Hawks would also need to clear a little salary to make room for max offers for Howard and Chris Paul.
  • A year ago, player's maximum salaries rose by about 5.78%. I'd expect a smaller increase this year if the cap increase is as modest as Stein suggests. That won't affect players like Howard or Paul, who are eligible to make 105% of their previous salaries, since they're already earning more than the maximum. But it could impact the earning potential of other players who will be seeking the max, such as Nikola Pekovic, Josh Smith, and Brandon Jennings.
  • As Jeff Kramer of Storyteller's Contracts points out (via Twitter), projected taxpayers wouldn't mind seeing the tax threshold increase a little more, since the new CBA's more punitive tax penalties will be in effect for the first time in 2013/14. The higher the threshold, the less expensive the bill would be for a taxpaying team. The Nets, Bulls, Lakers, Heat, and Knicks are among the clubs that figure to be affected by the new tax rates.
  • If the tax threshold is at $71.6MM, that would put the apron ($4MM above the tax line) at $75.6MM. That would mean that teams acquiring a player via sign-and-trade, using the bi-annual exception, or using more than $3,182,700 in first-year mid-level exception money wouldn't be able to exceed that $75.6MM hard cap for the remainder of the season.

Despite a modest projected increase for 2013/14, the cap and tax lines are expected to increase substantially for the '14/15 season, according to cap expert Larry Coon. Coon tweets that the current projected figures for '14/15 are a $62.1MM cap and $75.7MM tax line.

Based on those numbers, it's possible we see teams maneuvering to avoid handing out big salaries this season, preferring instead to spend money in the summer of 2014 and beyond, when they'll have more cap flexibility. Additionally, the free agent class of '14 figures to be more star-studded than this year's class, with LeBron James and his early termination option leading a group that could also include Carmelo Anthony, Dwyane Wade, Chris Bosh, Dirk Nowitzki, John Wall, and DeMarcus Cousins.

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