NBA free agents, the best summer of your life begins today (or began at midnight).
The NBA salary cap is set to balloon to $94 million per team for the 2016-2017 season, up from $70 million this past season. That $24 million increase is more than three times the largest salary cap increase ($7 million) in NBA history. As such, every team now has significantly more cap space to sign new players, and those teams that do not spend as much money will have even more money to throw into the Scrooge McDuck-like money-filled swimming pool that every NBA owner has, stashed away out of the public eye.
Case in point? The Philadelphia 76ers have a staggering $47 million surplus to use to entice players to join the Sixers for the upcoming season. The number that you'll typically hear regarding a team's cap space probably won't even factor in the additional luxury cap threshold, which allows team to exceed the soft salary cap and hit a maximum of $113 million (without the use of any salary cap exceptions).
Unlike years past (see: 2011 NBA CBA negotiations), no one can deny that NBA revenues are on the rise. Steve Ballmer famously paid $2 billion to purchase the Los Angeles Clippers in 2014, the league's new television deals are going to bring in over $24 billion over the next nine years, and the NBA is doing an above-average job of promoting and growing the game on an international level.
The end result of this monetary windfall? Not only are NBA free agents about to get PAID, but some of them are about to be — or already have been — drastically overpaid.
Under the current CBA, the salary cap is based on a projected amount of the league's basketball related income, or BRI. The BRI is generated from numerous sources — gate receipts, merchandise sales, broadcast rights, among others — and the league and the players split a CBA-determined amount of the pot each year. With the upcoming season, the BRI will increase dramatically, which in turn has led to the large jump in the salary cap. Since roster sizes are constant (typically 15 players during the season) and the CBA also allows for a salary floor — teams must spend at least 90 percent of the salary cap before the last day of the regular season — you are left with owners with a monetary surplus to burn.
Is the NBA ready to potentially see Roy Hibbert as a $20 million per year center? We already know that we're getting Jeremy Lin at three years, $36 million (Lin made around $2 million last season) and that Hassan Whiteside is now a $100 million (actually, $98 million) man. Those contracts, which some will certainly deem as "atypical," represent the state of today's NBA free agent. That's not to say that there were no other, albeit not as player-friendly, alternatives.
In 2015, the owners submitted a "cap-smoothing" proposal, under which the salary cap would be artificially lowered and then increase year-over-year by a pre-established amount. The players would still be entitled to their CBA-determined percentage of all BRI, with the players receiving the difference between the expected BRI percentage and the current salary cap in a prorated lump sum to every player, but each individual's earning potential would be lowered (think the difference between LeBron James making $22 million a year and receiving an additional $500,000 check from the league vs. LeBron James making $30 million a year). It was a deal that the players thought was unfair, and they said as much last year,
"The proposal that the league submitted ... would artificially deflate the salary cap ... And that, of course, meant that players' salaries would not increase as much as they would otherwise were it not for smoothing. That pretty much was what killed it. It killed it in the eyes of the economists that made the recommendations, and it killed it in the eyes of the players." -NBPA Executive Director Michele Roberts
As mentioned, the result is that we're all in for the craziest free agent period in NBA history — at least until 2017, when we have to deal with another increased cap and either side opting out of the current CBA.
