Salary cap projected to go down as much as $7.3 million next season

[Roy Hobbs]

In a memo announcing next season's salary cap and luxury-tax threshold, sent out shortly before the league's annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season. . . . A significant drop for the luxury-tax threshold is also projected going into the summer of 2010.

http://sports.espn.go.com/nba/news/story?id=4312837

A decrease like that would have a huge effect on the market.  Teams like Cleveland, New York, and Miami -- which had created cap room to sign two (and in Miami's case, potentially three) max contract players now may not be able to do so.  The luxury tax may further squeeze other teams, and force them to consider dumping even more salary (which makes our expiring contracts that much more valuable, presumably).

I think most fans knew the cap was going to go down, but a $7 million drop would have a huge impact.

[wdleehi]

It also might make teams that have MLE offers out there to rescind them.   

[Kwhit10]

So how many teams will be able to give a max contract in 2010 if this worst case scenario happens 4, 5, 6?  If there are less max contracts than team available to give some stars are going to have to take less no matter what right?

[Donoghus]

Wow, that's a significant decrease.  The market to cash in for those 2010 free agents just got more difficult.

[wdleehi]

I think Rondo can forget about getting a 10 million a year offer now. 

[Donoghus]

I think Rondo can forget about getting a 10 million a year offer now. 

Not if his agent points at that ridiculous Bargnani contract.

[wdleehi]

I think Rondo can forget about getting a 10 million a year offer now. 

Not if his agent points at that ridiculous Bargnani contract.

His agent can point all that he wants.  If another team is not offering Rondo that type of money, why should the Celtics?

[winsomme]

In a memo announcing next season's salary cap and luxury-tax threshold, sent out shortly before the league's annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season. . . . A significant drop for the luxury-tax threshold is also projected going into the summer of 2010.

http://sports.espn.go.com/nba/news/story?id=4312837

A decrease like that would have a huge effect on the market.  Teams like Cleveland, New York, and Miami -- which had created cap room to sign two (and in Miami's case, potentially three) max contract players now may not be able to do so.  The luxury tax may further squeeze other teams, and force them to consider dumping even more salary (which makes our expiring contracts that much more valuable, presumably).

I think most fans knew the cap was going to go down, but a $7 million drop would have a huge impact.

the thing that i don't understand is the luxury tax. I would think the gap between the luxury tax and the regular cap would expand in tough economic times so that teams aren't penalized more when revenue drops.

[wdleehi]

In a memo announcing next season's salary cap and luxury-tax threshold, sent out shortly before the league's annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season. . . . A significant drop for the luxury-tax threshold is also projected going into the summer of 2010.

http://sports.espn.go.com/nba/news/story?id=4312837

A decrease like that would have a huge effect on the market.  Teams like Cleveland, New York, and Miami -- which had created cap room to sign two (and in Miami's case, potentially three) max contract players now may not be able to do so.  The luxury tax may further squeeze other teams, and force them to consider dumping even more salary (which makes our expiring contracts that much more valuable, presumably).

I think most fans knew the cap was going to go down, but a $7 million drop would have a huge impact.

the thing that i don't understand is the luxury tax. I would think the gap between the luxury tax and the regular cap would expand in tough economic times so that teams aren't penalized more when revenue drops.

Competitive balance.  The more space between the two numbers, the bigger the disparity between the different market teams.

[vagrantwade]

Yet at the same time the Max contract will drop down to like 16.something million.

[BudweiserCeltic]

Good news for the Cs.

[JSD]

In a memo announcing next season's salary cap and luxury-tax threshold, sent out shortly before the league's annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season. . . . A significant drop for the luxury-tax threshold is also projected going into the summer of 2010.

http://sports.espn.go.com/nba/news/story?id=4312837

A decrease like that would have a huge effect on the market.  Teams like Cleveland, New York, and Miami -- which had created cap room to sign two (and in Miami's case, potentially three) max contract players now may not be able to do so.  The luxury tax may further squeeze other teams, and force them to consider dumping even more salary (which makes our expiring contracts that much more valuable, presumably).

I think most fans knew the cap was going to go down, but a $7 million drop would have a huge impact.

the thing that i don't understand is the luxury tax. I would think the gap between the luxury tax and the regular cap would expand in tough economic times so that teams aren't penalized more when revenue drops.

Competitive balance.  The more space between the two numbers, the bigger the disparity between the different market teams.

This is exactly right. It would create a system of haves and have-not similar to baseball with some big market teams (LA, NY) at *$80 million while the smaller markets stay around *$40 million because of the economy.

*hypothetical #'s of course

[BballTim]

I think Rondo can forget about getting a 10 million a year offer now. 

Not if his agent points at that ridiculous Bargnani contract.

His agent can point all that he wants.  If another team is not offering Rondo that type of money, why should the Celtics?

  If he has a good season then next year will be a great time to be a free agent. Some team who (now) doesn't have room for a max player will start looking for players who could be stars but won't command the max. Teams that cleared a ton of cap space but don't sign anyone will still look at adding to their teams. Kind of like reverse musical chairs.

  I wouldn't count on Rondo not improving. I wouldn't count on the fact that not one team with cap space that doesn't get LeBron or Bosh won't overpay. If Rondo were a RFA this summer the odds of his getting a big offer aren't that great. Next year is a different story.

[nickagneta]

As I understand it the salary cap is derived off the anticipated Basketball Related Income(BRI) that is adjusted based on several factors including just how far off the actual BRI was as compared to what the league anticipated for the previous season.

So, and I guess this question is directed at Roy, does this mean the league expects a major fall of in basketball related income and also feels that the figure they are setting for this year could be significantly off which could warrant a major adjustment? The article mentions a possible 5% drop of BRI. Given that this is what is in the BRI:

Basketball Related Income (BRI) essentially includes any income received by the NBA, NBA Properties or NBA Media Ventures. This includes:

    * Regular season gate receipts
    * Broadcast rights
    * Exhibition game proceeds
    * Playoff gate receipts
    * Novelty, program and concession sales (at the arena and in team-identified stores within proximity of an NBA arena)
    * Parking
    * Proceeds from team sponsorships
    * Proceeds from team promotions
    * Arena club revenues
    * Proceeds from summer camps
    * Proceeds from non-NBA basketball tournaments
    * Proceeds from mascot and dance team appearances
    * Proceeds from beverage sale rights
    * 40% of proceeds from arena signage
    * 40% of proceeds from luxury suites
    * 45% - 50% of proceeds from arena naming rights
    * Proceeds from other premium seat licenses
    * Proceeds received by NBA Properties, including international television, sponsorships, revenues from NBA Entertainment, the All-Star Game, the McDonald's Championship and other NBA special events.

Some of the things specifically not included in BRI are proceeds from the grant of expansion teams, fines, and revenue sharing (e.g. luxury tax).

http://members.cox.net/lmcoon/salarycap.htm#Q13

I wonder where exactly a huge drop off like 5% is expected to come from? My guess is most of that number is created from broadcast rights and gate receipts but the NBA already has the national broadcast rights sold and locked in place and most teams rights are likewise already set. It has to be an expected downturn in gate receipts and arena related sales(signage, novelty items, beverage, concessions, etc.) that is being predicted.

But with 2/3 of the teams at 89.4% capacity or higher

http://sports.espn.go.com/nba/attendance

I wonder if long term the right thing for the NBA to do is contract, while keeping the salary cap and luxtax numbers higher, rather than continually lowering numbers which will hamper the most competitive teams by the 1/3 of the league that is having major money problems and problems drawing fans in. Wouldn't seem a lot smarter to eliminated 2 teams like the Kings and Griz who's pathetic numbers have to have a decent effect on the average number?

Yes a possible 30 NBA player jobs would disappear but it is going to keep the average salary much higher because significant drops in the BRI are going to mean more and more teams not being able to offer much except the MLE for many years. This is going to drive down salaries long term and hamper player movement.

I think this could be a much more serious problem than the average fan realizes!!!

[nickagneta]

I think Rondo can forget about getting a 10 million a year offer now. 

Not if his agent points at that ridiculous Bargnani contract.

His agent can point all that he wants.  If another team is not offering Rondo that type of money, why should the Celtics?

  If he has a good season then next year will be a great time to be a free agent. Some team who (now) doesn't have room for a max player will start looking for players who could be stars but won't command the max. Teams that cleared a ton of cap space but don't sign anyone will still look at adding to their teams. Kind of like reverse musical chairs.

  I wouldn't count on Rondo not improving. I wouldn't count on the fact that not one team with cap space that doesn't get LeBron or Bosh won't overpay. If Rondo were a RFA this summer the odds of his getting a big offer aren't that great. Next year is a different story.

Or what it could mean is that the team most likely to offer Rondo the most money is going to be the Celtics and they won't have to offer him anywhere near what they could have because they won't need to go to the max.

I think eventually lower cap and luxtax numbers are going to severely effect player movement. Most teams are going to be over the cap for a couple of years due to the lower number and only be able to offer MLE's and LLE's. That means fewer teams will have 2 max contract spots open under the cap. That means some of the expected max guys are going to be taking deals that ordinarily would have gone to the Rondo's and Turkoglu's of the NBA. That means that players like Rondo might have to settle for even less.

If a team like NY that was looking to add 2 max FAs next year suddenly can afford only one max FA and a $10 million FA I think it more likely they sign a max FA and then wait to see who are the expected max FA guys that didn't get signed to max deals and sign one for $10 million per year than they would to rush into signing a possible future max FA guy like Rondo that might never materialize.