Salary Cap

How NBA/China Controversy Could Impact Salary Cap

As we briefly discussed in our Wednesday night roundup on the latest developments in the NBA/China standoff, salary cap experts for several NBA teams are preparing for a scenario in which lost revenue from Chinese partners affects the growth of the league’s salary cap, according to Keith Smith.

Smith explores the subject in a little more depth in a full story at Yahoo Sports, but makes it clear in a pair of follow-up tweets that those clubs are just doing due diligence now to avoid being caught off guard later. According to Smith, no one is expecting the league’s 2020/21 salary cap projection to dip by as much as the 10-15% figure he cited earlier — teams just want to be prepared for a worst-case scenario.

While the NBA’s salary cap going forward may not be drastically affected by the controversy in China, any unexpected lost revenue can have an impact on the cap. As Jeff Siegel of Early Bird Rights explains in a Twitter thread, the league’s current cap figures and projections for future seasons are based on anticipated basketball-related income (BRI).

This year’s $109.14MM cap – and next year’s $116MM projection – didn’t take into account that the league’s revenue streams in China might take a hit, so if this saga continues, projections for future seasons would have to be adjusted downward to ensure the BRI split between players and team owners adheres to the requirements laid out in the league’s Collective Bargaining Agreement.

In an in-depth look at the NBA’s financial stakes in China, Jeff Zillgitt and Mark Medina of USA Today suggest that a “conservative” estimate would put the league’s annual revenue from China at $500MM.

Cap expert Albert Nahmad (Twitter link) projects that a $100MM drop in expected revenue for the NBA this season would lower the cap projection for ’20/21 by about $1.7MM. Each additional $100MM drop in revenue up to the $500MM mark would likely reduce the projection by another $1.5MM or so, Nahmad estimates.

If the cap ultimately comes in lower than $116MM, it will have a real impact on where team salaries land in proximity to the cap threshold and to the luxury-tax line. It would also reduce projected maximum salaries, rookie scale amounts, and several other salary figures that are directly linked to the percentage the cap increases (or decreases).

“I haven’t really been in this spot before,” one team’s cap expert told Smith. “The cap has only gone up in recent years. It’s really different. I have to wonder if the league would be pressed to consider some measures to not drop the cap down so far from where we are today at $109MM. Otherwise, a bunch of us are over the tax. It’d be nice to know now, because that changes how we approach trades and everything else throughout the season.”

NBA Updates 2020/21 Salary Cap Projection

The NBA has informed its teams of a new salary cap projection for the 2020/21 season, reports Shams Charania of The Athletic (Twitter link). As Charania details, the updated projection calls for a $116MM cap and a $141MM luxury tax line for the ’20/21 campaign.

Previously, the NBA projected a $117MM cap with a $142MM tax line for 2020/21, so the new figures come in slightly below those marks. However, they’d still represent a substantial jump up from the cap figures for 2019/20, which are $109.14MM (cap) and $132.627MM (tax).

According to Charania, the league’s projections for 2021/22 remain unchanged, with the NBA still estimating a $125MM cap and a $151MM tax line for that season.

The updated figures won’t have a massive impact on teams’ plans for next summer, but every dollar counts when it comes to creating cap flexibility. Players who have signed maximum-salary contract extensions that take effect during the 2020/21 season will also take note of the league’s new cap estimates, since it will have a small impact on their projected earnings.

Sixers All-Star 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.

Under the previous $117MM projection, Simmons’ and Murray’s deals were expected to be worth $169.65MM over five years. A $116MM cap would reduce the projected value of those five-year contracts to $168.2MM.

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 the adjusted 2020/21 projection.

Rookie Scale Salaries For 2019 First-Round Picks

With the NBA’s salary cap set at $109,140,000 for the 2019/20 league year, the rookie scale has been set as well. The rookie scale locks in the value of contracts for first-round picks.

In every NBA league year, rookie scale amounts are assigned to each first-round slot, from No. 1 through No. 30. Teams can sign their first-rounders to as little as 80% of that rookie scale amount, or up to 120% of that figure. While that rule theoretically affords teams some flexibility, first-round picks virtually always sign contracts worth 120% of their rookie scale amount, and unsigned first-rounders have a cap hold worth 120% of their rookie scale amount.

Listed below, via Jeff Siegel of Early Bird Rights and RealGM, are the salary figures that represent 120% of the rookie scale amounts for 2019’s first-round picks. Players will sign for these amounts unless they accept a deal worth less than the maximum allowable 120%, which hasn’t happened for several years. Rookie scale contracts are guaranteed for the first two years, with team options on the third and fourth years.

Here’s the 2019 breakdown:

Player 2019/20 2020/21 2021/22 2022/23 Total
Zion Williamson $9,757,440 $10,245,480 $10,733,400 $13,534,817 $44,271,137
Ja Morant $8,730,240 $9,166,800 $9,603,360 $12,119,440 $39,619,840
R.J. Barrett $7,839,960 $8,231,760 $8,623,920 $10,900,635 $35,596,275
De’Andre Hunter $7,068,360 $7,422,000 $7,775,400 $9,835,881 $32,101,641
Darius Garland $6,400,920 $6,720,720 $7,040,880 $8,920,795 $29,083,315
Jarrett Culver $5,813,640 $6,104,280 $6,395,160 $8,109,063 $26,422,143
Coby White $5,307,120 $5,572,680 $5,837,760 $7,413,955 $24,131,515
Jaxson Hayes $4,862,040 $5,105,160 $5,348,280 $6,803,012 $22,118,492
Rui Hachimura $4,469,160 $4,692,840 $4,916,160 $6,263,188 $20,341,348
Cam Reddish $4,245,720 $4,458,000 $4,670,160 $5,954,454 $19,328,334
Cameron Johnson $4,033,440 $4,235,160 $4,437,000 $5,887,899 $18,593,499
PJ Washington $3,831,840 $4,023,600 $4,215,120 $5,808,435 $17,878,995
Tyler Herro $3,640,200 $3,822,240 $4,004,280 $5,722,116 $17,188,836
Romeo Langford $3,458,400 $3,631,200 $3,804,360 $5,634,257 $16,528,217
Sekou Doumbouya $3,285,120 $3,449,400 $3,613,680 $5,539,771 $15,887,971
Chuma Okeke * $3,121,080 $3,277,080 $3,433,320 $5,266,713 $15,098,193
Nickeil Alexander-
$2,964,840 $3,113,160 $3,261,480 $5,009,633 $14,349,113
Goga Bitadze $2,816,760 $2,957,520 $3,098,400 $4,765,339 $13,638,019
Luka Samanic $2,689,920 $2,824,320 $2,959,080 $4,556,983 $13,030,303
Matisse Thybulle $2,582,160 $2,711,280 $2,840,160 $4,379,527 $12,513,127
Brandon Clarke $2,478,840 $2,602,920 $2,726,880 $4,343,920 $12,152,560
Grant Williams $2,379,840 $2,498,760 $2,617,800 $4,306,281 $11,802,681
Darius Bazley $2,284,800 $2,399,160 $2,513,040 $4,264,629 $11,461,629
Ty Jerome $2,193,480 $2,303,040 $2,412,840 $4,220,057 $11,129,417
Nassir Little $2,105,520 $2,210,640 $2,316,240 $4,171,548 $10,803,948
Dylan Windler $2,035,800 $2,137,440 $2,239,200 $4,037,278 $10,449,718
Mfiondu Kabengele $1,977,000 $2,075,880 $2,174,880 $3,923,484 $10,151,244
Jordan Poole $1,964,760 $2,063,280 $2,161,440 $3,901,399 $10,090,879
Keldon Johnson $1,950,600 $2,048,040 $2,145,720 $3,873,025 $10,017,385
Kevin Porter Jr. * $1,290,960 $1,717,981 $1,782,621 $3,217,631 $8,009,193

* Okeke won’t sign his rookie contract until 2020/21.

* Porter will earn 80% of the rookie scale in 2019/20 and less than 120% of the rookie scale in future seasons.

NBA Minimum Salaries For 2019/20

While some NBA teams will head into free agency with more than enough cap room to add a maximum-salary player, other clubs will be totally capped out. However, each of the NBA’s 30 franchises will be on common ground in one respect: No team will be ineligible to sign a player to a minimum salary contract.

Teams with cap room available will have a little more flexibility to sign players to longer-term minimum salary contracts, but over-the-cap clubs will still be able to use the minimum salary exception to add as many players as roster limits allow, for contracts of up to two years. Unlike other exceptions, such as the mid-level or the bi-annual, the minimum salary exception can be used multiple times.

[RELATED: Values of 2019/20 mid-level, bi-annual exceptions]

Undrafted free agents and late second-round picks are often recipients of minimum salary contracts, but there are plenty of veterans who end up settling for the minimum too. Of course, because a player’s minimum salary is determined by how much NBA experience he has, many veterans will earn more than twice as much money as a rookie will in 2019/20 on a minimum salary contract.

Listed below are 2019/20’s minimum salary figures, sorted by years of NBA experience. If a player spent any time on an NBA club’s active regular season roster in a given season, he earned one year of experience. So any player with zero years of experience has not yet made his NBA debut.

Here’s the full breakdown:

Years of Experience Salary
0 $898,310
1 $1,445,697
2 $1,620,564
3 $1,678,854
4 $1,737,145
5 $1,882,867
6 $2,028,594
7 $2,174,318
8 $2,320,044
9 $2,331,593
10+ $2,564,753

Because the NBA doesn’t want teams to avoid signing veteran players in favor of cheaper, younger players, the league reimburses clubs who sign veterans with three or more years of experience to one-year, minimum salary contracts. Those deals will only count against the cap – and against a team’s bank balance – for $1,620,564, the minimum salary for a player with two years of experience.

For instance, if Tyson Chandler – who has 18 years of NBA experience – signs a one-year, minimum salary contract with a new team, that team would only be charged $1,620,564 for Chandler’s contract. He’d earn $2,564,753, but the NBA would make up the difference. This only applies to one-year contracts, rather than multiyear deals.

If a player signs a minimum salary contract after the regular season begins, he’ll earn a pro-rated portion of the amount listed above.

NBA Maximum Salaries For 2019/20

Now that the NBA has set its salary cap for the 2019/20 league year at $109,140,000, we have a clear idea of what maximum-salary contracts will look like for the coming season.

While these numbers can probably soon be applied to contracts for free agents like Kevin Durant, Kawhi Leonard, Kyrie Irving, Kemba Walker, and others, they’re also relevant for players who signed maximum-salary extensions that will go into effect in ’19/20, such as Karl-Anthony Towns, Devin Booker, John Wall, and James Harden.

Listed below are the maximum-salary contracts for players signing contracts that start in 2019/20. The first chart shows the maximum salaries for a player re-signing with his own team — a player’s previous team can offer five years instead of four, and 8% annual raises instead of 5% raises. The second chart shows the maximum salaries for a player signing with a new team.

A player’s maximum salary is generally determined by his years of NBA experience, so there’s a wide gap between potential earnings for younger and older players. In the charts below, the “6 years or less” column details the maximum contracts for players like Booker and Towns; the “7-9 years” column applies to free agents like Leonard and Irving; and the “10+ years” column applies to vets like Durant or super-max players like Wall and Harden.

Here are the maximum salary figures for 2019/20:

A player re-signing with his own team (8% annual raises, up to five years):

Year 6 years or less 7-9 years 10+ years
2019/20 $27,285,000 $32,742,000 $38,199,000
2020/21 $29,467,800 $35,361,360 $41,254,920
2021/22 $31,650,600 $37,980,720 $44,310,840
2022/23 $33,833,400 $40,600,080 $47,366,760
2023/24 $36,016,200 $43,219,440 $50,422,680
Total $158,253,000 $189,903,600 $221,554,200

A player signing with a new team (5% annual raises, up to four years):

Year 6 years or less 7-9 years 10+ years
2019/20 $27,285,000 $32,742,000 $38,199,000
2020/21 $28,649,250 $34,379,100 $40,108,950
2021/22 $30,013,500 $36,016,200 $42,018,900
2022/23 $31,377,750 $37,653,300 $43,928,850
Total $117,325,500 $140,790,600 $164,255,700

Values Of 2019/20 Mid-Level, Bi-Annual Exceptions

The salary cap for the 2019/20 NBA league year has officially been set, with the league announcing that the cap will be $109,140,000.

Under the league’s current Collective Bargaining Agreement, the values of the mid-level, room, and bi-annual exceptions are tied to the percentage that the salary cap increases in a given year. The cap figure for 2019/20 represents approximately a 7.1% increase over last season’s $101,869,000, so other exceptions will increase by the same amount, rounded to the nearest thousand.

Listed below are the maximum annual and total values of each of these exceptions, along with a brief explanation of how they work and which teams will have access to them.

Mid-Level Exception (Non-Taxpayer):

Year Salary
2019/20 $9,258,000
2020/21 $9,720,900
2021/22 $10,183,800
2022/23 $10,646,700
Total $39,809,400

The non-taxpayer mid-level exception is the primary tool available for over-the-cap teams to add free agents. As long as a team hasn’t dipped below the cap to use cap space and doesn’t go over the tax apron ($138,928,000) at all, it can use this MLE, which runs for up to four years with 5% annual raises.

Mid-Level Exception (Taxpayer):

Year Salary
2019/20 $5,718,000
2020/21 $6,003,900
2021/22 $6,289,800
Total $18,011,700

If an over-the-cap team currently projects to be a taxpayer, or expects to move into tax territory later in the 2019/20 season, it will have access to this smaller mid-level exception for taxpaying teams. If a team uses more than $5,718,000 of its mid-level exception, it is forbidden from surpassing the tax apron at any time during the league year. So even if a team isn’t above the apron when it uses its MLE, it might make sense to play it safe by avoiding using the full MLE and imposing a hard cap.

The taxpayer MLE can be used to sign a player for up to three years, with 5% annual raises.

Room Exception:

Year Salary
2019/20 $4,767,000
2020/21 $5,005,350
Total $9,772,350

Although this is also a mid-level exception of sorts, it’s colloquially known as the “room” exception, since it’s only available to teams that have used cap room. If a club goes under the cap, it loses its full mid-level exception, but gets this smaller room exception, which allows the team to go over the cap to sign a player, once the team has used up all its cap space. It can be used to sign players for up to two years, with a 5% raise for the second season.

Bi-Annual Exception:

Year Salary
2019/20 $3,623,000
2020/21 $3,804,150
Total $7,427,150

The bi-annual exception, as its name suggests, is only available to teams once every two years. Of the NBA’s 30 clubs, only three – the Bucks, Pelicans, Knicks, and Spurs – used it in 2018/19, so they won’t have access to it in 2019/20. The league’s other 26 teams could theoretically use it this season.

Still, even if a team didn’t use its BAE in ’18/19, that club doesn’t necessarily have access to it for the coming year. As is the case with the non-taxpayer MLE, this exception disappears once a team goes under the cap. It’s also not available to teams over the tax apron — using the BAE creates a hard cap at the apron.

The BAE can be used to sign players for up to two years, with a 5% raise after year one.

Note: Be sure to check out our Hoops Rumors Glossary installments for more information on the mid-level exception and the bi-annual exception.

Salary Cap, Tax Line Figures Set For 2019/20 Season

The NBA has released the numbers that teams will be working with when free agency officially starts tomorrow, tweets Shams Charania of The Athletic. The salary cap for the 2019/20 season has been set at $109,140,000 and the tax line will be $132,627,000. The minimum salary floor will be $98,226,000, 90% of the cap.

The cap and tax figures are slightly higher than the original projections of $109MM and $132MM. Some league executives were hoping the cap might be $500K more than the estimate, notes Brad Townsend of the Dallas Morning News (Twitter link).

Many other cap figures, including minimum and maximum salaries and several exceptions, are tied to the percentage of the salary cap increase. Here are some in-depth details on those numbers:

Here are a few more key cap-related figures:

  • Estimated average salary for 2019/20: $9,560,000 (Twitter link via Albert Nahmad)
  • Maximum cash a team can send, receive in trades in 2019/20: $5,617,000 (Twitter link via Nahmad)
  • Tax apron: $138,928,000

Meanwhile, the NBA has also issued updated cap projections for the next two seasons, per Eric Pincus of Basketball Insiders (Twitter link). Those projections are as follows:

  • 2020/21: $117MM cap, $142MM tax line
  • 2021/22: $125MM cap, $151MM tax line

According to cap expert Pincus (via Twitter), the Thunder ($61.6MM), Warriors ($51.5MM), Raptors ($25.2MM), Trail Blazers ($15MM), and Celtics ($3.4MM) finished the 2018/19 season as taxpayers. Those numbers are similar to the ones we heard at season’s end, with the Raptors’ figure getting a bump due to unlikely incentives that were achieved in the postseason. No teams finished the 2018/19 season below the salary floor, Pincus notes (via Twitter).

Sixers Notes: Horford, Brogdon, Butler

It’s not a given that the Sixers bring back their five starters this offseason.

Jimmy Butler and Tobias Harris will each have rival teams looking to offer them a max deal. J.J. Redick will likely see heavy interest on the market as well, with Keith Pompey of the Philadelphia Inquirer hearing that shooting guard will yield offers in the range of $12MM annually.

“They have tough decisions to make and so do we,” GM Elton Brand said.

Bringing back those three players will put the Sixers over the salary cap and out of contention for a number of free agents. Should the team decide to make major changes, there’s a wide range of talent on the market.

“We definitely need hard-nose players, shooting,” Brand said. “We want to add shooting. If you watch the playoffs, these are playoff-tested players … I don’t want to say names … but [the Sixers want] veteran-tested players, playoff-tested players that can take us over the edge with our talent.”

Al Horford, Malcolm Brogdon, and Danny Green are players the team could have interest in Pompey adds.

Here’s more on Philadelphia and the team’s pending free agents:

  • Don’t be surprised if the Clippers make a play to sign Harris, Pompey notes. The combo forward, who came to the Sixers via a midseason trade with the club, will be taking meetings on June 30 and July 1.
  • The Sixers may have to offer a five-year deal in order to keep Jimmy Butler, Pompey writes. Butler and his camp are meeting this week to go over free agent objectives.
  • Marcus Morris, Ed Davis, Ish Smith, Cory Joseph, and Patrick Beverley are among the free agents whom the Sixers could pursue, Pompey adds in the same piece. The team has confidence in its ability to lure one or two impactful free agents should it lose one of its max free agents.
  • Derek Bodner of the Athletic details how the Sixers are devaluing second-round picks. The team will have three more second-rounders next year after wheeling and dealing picks last week, as I recently detailed.
  • Furkan Korkmaz may join Turkish team Fenerbahce next season, according to Sportando. The former No. 26 overall pick is all but certain not to be back in Philadelphia next year.

Pelicans Agree To Trade Anthony Davis To Lakers

The Pelicans have reached an agreement to trade All-Star big man Anthony Davis to the Lakers for guards Lonzo Ball and Josh Hart, forward Brandon Ingram and three first-round picks, including the No. 4 overall pick in this year’s draft, Adrian Wojnarowski of ESPN tweets.

The rest of the Pelicans’ haul includes a 9-30 protected first-rounder in 2021, which becomes unprotected in 2022, and an unprotected first-rounder in 2024.

New Orleans will also have the right to swap unprotected first-rounders in 2o23 and will have the option to defer the 2024 pick until 2025, according to reports from Tim Bontemps of ESPN and Tania Ganguli of The Los Angeles Times (Twitter links).

[UPDATE: Davis trade will become a three-team deal]

The Lakers immediately become championship contenders with Davis joining forces with LeBron James. Davis’ agent Rich Paul, also James’ agent, had tried to steer trade talks toward the Lakers over the winter after Davis’ desire to be traded was made public. But Davis didn’t get his wish at the time.

Paul and Davis recently met with the Pelicans’ new top executive, David Griffin, who tried to convince Davis to rescind his trade request. Davis declined and expressed his desire to play long-term for either the Lakers or Knicks.

GM Rob Pelinka, who has been under fire after criticism from former Lakers president Magic Johnson, pulled off a major coup by winning the Davis sweepstakes over the Knicks and Celtics, among others. Los Angeles gave up plenty in the deal but didn’t have to include another talented big man, Kyle Kuzma.

Davis could sign an extension with the Lakers but still intends to test free agency next summer, Chris Haynes of Yahoo Sports tweets.

The Lakers will have either $27.8MM or $32.5MM in cap room after the deal to pursue a high-level free agent, depending upon timing and Davis’ willingness to waive his $4MM trade bonus, ESPN salary cap expert Bobby Marks tweets.

The trade cannot be officially finalized until after the new league year begins in July. It may be even be completed as late as July 30 — newly-drafted players can be traded immediately without signing a rookie scale contract, but if they sign that contract, they aren’t eligible to be dealt for 30 days. Waiting those 30 days would be advantageous to the Lakers for cap-related reasons, as Marks notes (via Twitter).

The Lakers still don’t have quite enough cap room to max out a free agent like Kawhi Leonard, Jimmy Butler, Kyrie Irving or Kemba Walker but they’re close to it, Eric Pincus of Basketball Insiders tweets. Naturally, one of those free agents might take a little less to form a superstar trio in Los Angeles or the Lakers could make other moves to clear more cap room. Walker will be the Lakers’ top free agent target, Marc Stein of the New York Times tweets.

Boston refused to part with its top young player, forward Jayson Tatum, in trade talks with the Pelicans, Stein add in another tweet. That put the Lakers in the driver’s seat for Davis’ services.

With Ball and Hart joining Jrue Holiday, the Pelicans have greatly enhanced their backcourt. They now have the No. 1 and No. 4 picks in Thursday’s draft. It’s a slam dunk they’ll select Duke forward Zion Williamson with the top pick and theyll get another high-level prospect, unless they have another trade in the works. Williamson and Ingram should be a formidable duo at the forward spots and the Pelicans can now concentrate on bringing in another big man to make all the other pieces work.

Photo courtesy of USA Today Sports Images.

NBA Cap Projection Lowered for 2020/21 Season

The NBA has informed teams that its updated projected salary cap and tax level remain unchanged for next season and is $2MM lower for the 2020/21 season, Shams Charania of The Athletic tweets.

The league projects a cap of $109MM for next season and a $132MM threshold when the luxury tax kicks in. Its projection for the 2020/21 season is a $116MM salary cap and a $141MM tax level.

The stable projection for the 2019/20 season means that budgets set for free agency don’t have to be altered. The teams projected to have the most cap space to pursue free agents include the Knicks, Clippers, Nets, Mavericks, Hawks, Pacers, Lakers, Kings and Sixers.

The salary cap this season is $101,869,000 with a luxury tax threshold of $123,733,000.