The 2016 NBA free agency period will be unlike any summer in the history of the league. The salary cap is slated to get a $24 million.
This is a new era of the NBA as the cap will rise even more next offseason. Heavy is here to explain the key details of the 2016-17 salary cap and breakdown how NBA teams just inherited a large amount of cap space.
The NBA Salary Cap Is Projected to be $94 Million
NBA free agents are excited to see the salary cap get such a huge boost. It impacts mid-level players the most as these players should see bigger contracts with the additional money teams have to spend.
Different leagues have different salary cap structures. The NBA has a soft cap which allows teams to go over the cap in specific circumstances to sign players. A salary cap is used by leagues to help level the playing field for teams. Without a cap, each team could spend as much money as they wanted which would favor teams with the most money to spend.
There is no end in sight either. The 2017-18 cap is expected to jump up at least $13 million to $107-110 million. This might cause teams to be even less thrifty knowing that the cap is about to get another boost in a year.
There Will Be a $24 Million Jump in the Salary Cap Thanks to the New TV Deal
Prior to this offseason, a typical jump in the salary cap between seasons would be $2 million. This season, the cap is projected to go up $24 million. Why is there a shift in the salary cap trajectory? The NBA’s new television contract kicks in for the 2016-17 season.
It is a nine-year deal worth $24 billion, almost three times as much as the old deal. Television contracts play a key role in determining Basketball Related Income (BRI). BRI helps determine what the salary cap is set at each season. There is a positive correlation between the television contract and the salary cap. Since there was a massive increase in tv deals, teams are seeing a large increase in the salary cap.
Max contracts are projected to start at $21 million per year with the amount increasing for veteran players. Essentially, each team has gained an amount close to a max contract with the new salary cap.
There Are 21 Teams Who Can Sign a Free Agent to a Max Contract
n the prior NBA, teams worked for years to acquire cap space for a certain summer. According to CBS Sports, the bump in cap space has given 21 teams the ability to sign a free agent to a max contract.
Simply having cap space is no longer enough in such an unprecedented competitive marketplace. This summer, fans might see their teams sign players to questionable deals with the salary cap floor given as the reason.
The CBA states that teams must spend 90 percent of their cap space. The salary cap floor for the upcoming season is expected to be $85 million. Teams who strike out on marquee free agents might be forced to sign role players to higher than normal contracts to allow them to reach the floor.
The Luxury Tax Amount Is Projected at $111 Million
Each year, the NBA sets a luxury tax threshold in addition to the salary cap. It is the amount that teams must pay a tax on if they exceed the cap. Teams are charged $1.50 for every dollar they spend over the cap up to $5 million. The penalty rises after this threshold.
Teams can come close to this threshold in a few different ways. The most common way is to re-sign one of your own free agents using his Bird Rights. It allows a team to still sign the player to a contract even if they are over the cap. Another way a team goes over the cap is by signing players using their mid-level exception.
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