The NBA has reduced its estimate for the 2017-18 salary cap from $101 million to about $99 million. Jay King of MassLive.com had the news first on Twitter:
Teams have been informed the NBA expects the salary cap to go down from latest projections, per league source. $99 million the new number.— Jay King (@ByJayKing) June 22, 2017
The luxury tax threshold will also fall from $121 million to $119 million, and the tax apron will be reduced by $2 million to $125 million.
Tax projection is now $119 mil, down from $121 mil, cap down to $99 mil instead of $101, NBA cites low playoff revenue among other reasons— Eric Pincus (@EricPincus) June 22, 2017
The cash shortfall can be blamed on a remarkably uncompetitive 2017 playoffs, which saw eight of 15 series end in four or five games.
How Does This Affect the Blazers?
As of now, the Blazers are slated to have nearly $140 million in guaranteed salary next season, putting them well into the luxury tax and over the tax apron. If nothing changes, the new cap figure will increase their tax bill at the end of next season.
Alternatively, if the Blazers are hoping to shed salary as has been suggested, possibly to get out of the luxury tax and avoid a stiff “repeater tax” for an additional year, that has now become more difficult. They must eliminate more money than expected to make a dent in the tax bill and fewer teams will be interested in taking on salary.
What About the Draft Picks and Taxpayer MLE?
As a team over the luxury tax apron the Blazers cannot use the standard midlevel exception (MLE) or bi-annual exception. They will, however, have the taxpayer MLE. When the most recent collective bargaining agreement (CBA) was signed, the league set the taxpayer MLE at $5.2 million, independent of any fluctuations in the cap. So the Blazers will still have $5.2 million to lure free agents or second-round draft picks to Portland.
Similarly, the CBA set the rookie scale salaries for first-round draft picks so those will not change. They will, however, consume a slightly higher percentage of a team’s cap space, which may reduce flexibility for some clubs.
Are Maximum Salaries Changed?
Unlike the MLE or rookie scale contracts, maximum salaries are determined as a percentage of the cap. This means that max deals this summer will be slightly cheaper than expected.
That actually hurts the Blazers, though, because of CJ McCollum’s contract. Last summer McCollum signed an extension set to start on July 1, for nearly the maximum. McCollum’s contract is now only barely below the max, reducing Portland’s savings by over $1 million.
The new cap estimate will NOT affect Damian Lillard’s salary. His max deal was set when it initially kicked in and will not be altered by annual cap fluctuations.
What about Nurkic?
It’s too early to tell whether or not the new salary cap will affect Jusuf Nurkic. Nurkic will be eligible to begin his first post-rookie contract next year and he may command the max or a near-max figure. If the league has a successful season it could recover the revenue it “lost” this year and hit the original salary cap projections, boosting Nurkic’s potential earnings back to the expected rate.
Either way, Blazers President of Basketball Operations Neil Olshey will likely be feeling pressure over the next 12 months to clear salary in order facilitate Nurkic’s expected monster contract.
What’s the Bottom Line?
The bottom line is that this is especially bad news for the Blazers or any team trying to land a max-contract free agent this summer.
Without going into too much detail, many teams will have to shed more money than expected to clear room for elite free agents this summer:
Cap lowers 2M, CP3's max lowers 700k, Spurs now have to clear an additional 1.3M in cap room— Lucas Hann (@LucasJHann) June 22, 2017
In general, many teams will have less flexibility because the cap has been reduced but scale contracts (i.e. MLEs and rookie contracts) will be unchanged, thus taking up a higher percentage of the cap as a result. Several teams will also be fighting to reduce salary to sign elite free agents, increasing competition on the salary dump market.
The biggest consequence for the Blazers is that all of these factors will combine to reduce the amount of money available to sign mid-tier free agents (i.e. non-max players who sign for more than the MLE). By extension, Portland’s role players on large deals, especially Allen Crabbe and Evan Turner, may not look any better than they did last season.