The 2014-15 NBA salary cap is projected to be $63.2 million and luxury tax $77 million, according to ESPN, which represents a $5 million increase from last season’s cap. These new figures are forecasts from the NBA based on projected league revenues. The official salary cap will be announced in early July.
Per NBA collective bargaining agreement (CBA) expert Larry Coon, this would make league-wide Basketball Related Income (BRI) approximately $4.75 billion next season.
All of which, Coon predicts, will lead to a lock-out in 2017.
Implications on Current CBA
Coon notes that under the current CBA, players are guaranteed 50 percent of the league’s forecasted BRI and 60.5 percent of the difference between forecasted revenue and actual revenue, meaning players are set to receive a total of $2.384 billion next season.
Given the favorable terms awarded to owners in the 2011 CBA and the improved financial health of the league and its teams, Coon predicts NBA players will activate their opt-out clause in 2017 from the CBA and re-negotiate to get a larger piece of the league’s revenue. A lock-out would result:
I expect the players to opt-out in 2017, and for the league to impose a lockout on July 1, 2017 (because they can’t do business without an agreement in place), However, negotiations will be quick and smooth (similar to 2005), and there will be a new CBA in place in time for the 2017-18 season to begin on time.
Of interest is the timing of the opt-out clause in the current CBA. While the deal was signed through the 2020-21 season, both the owners and the players have the ability to opt out of the CBA in 2016-17 and re-negotiate. This occurs directly after new national TV deals will be negotiated between the NBA and networks—the lion-share of league and team revenues.
Upcoming Free Agency
With the salary and luxury cap bars moving up an estimated $5 million next season, teams across the league will have added space to bid for big free-agent names such as Carmelo Anthony and Luol Deng.
This will be a small boost to teams who have the funds to throw big-money contracts at players but perhaps did not have adequate space under the cap. Five million is not a large increase in space, but it is not insignificant.
If the trend continues with BRI increasing at a 7.7 percent annual rate and team balance sheets becoming healthier, the salary cap would conceivably increase year after year and give large-market teams more room to spend, ironically a development the 2011 CBA intended to curb.
As always, Coon’s commentary about the rise in salary cap is well worth a full read.