NBA Will Feel Pains of Financial Meltdown a Year Late
But it ain't going to be that way forever. Along with the official 2009-10 salary cap numbers the NBA released Tuesday night, the league sent a memo to all 30 teams. Marc Stein of ESPN.com got ahold of it. The memo tells of a dark summer of 2010, in which the salary cap and luxury tax threshold for 2010-11 will fall dramatically.
The memo projects a salary cap of $50-53 million for 2010-11, and tax threshold of $61-65 million. The cap number is some $5-8 million lower than the level it stood at for 2008-09, and the tax line is $5-9 million lower. This is not just a problem for players, who will be eligible for lower maximum salaries, lower mid-level exceptions and a generally tighter talent marketplace. It's absolute doom for teams, even if all 30 franchises put a lock on their bank vaults today.
Why? Because many, many NBA players are already under contract for 2010-11. And of these players, a majority will have higher salaries in 2010-11 than they do now. (Some teams, particularly Chicago, have turned to front-loaded contracts in instances. But most players have escalating contracts, for fairly practical reasons stemming from the nature of the collective bargaining agreement.)
As of today, three teams (Lakers, Hornets, Nuggets) are already above the most rosy 2010-11 luxury tax threshold projction offered by the NBA in Tuesday's memo. The Wizards, Mavericks and 76ers would be above the threshold if the more dire end of the league's projection came to fruition. This does not account for most free agent contracts to be inked this summer, nor contracts for players just drafted, nor contracts for players to be drafted in 2010, nor players to be signed to extensions this summer. At least a full third of the league -- and maybe half -- will be in luxury tax danger without making any major moves.
Stein smartly predicts this will murder the salaries of those lauded 2010 free agents. But our bigger concern should be on those struggling franchises, who may not survive the coming wave with any sort of talent base left.