The league has agreements in place where roughly half of its revenues go to the players, and it has a complex salary cap system in place to ensure that the players get what they’re due. This year’s salary cap is expected to take a massive leap to around $92 million from this year’s $70 million. Over the last 20 years the average year-to-year salary cap jump has been around six percent. The leap to $92 million in 2016 represents a 31 percent jump.
The salary cap jump will have an enormous impact on the league. A full 26 of the 30 teams are expected to have over $20 million in cap room available to chase free agents, with two teams able to clear over $60 million each. And teams have to spend this money – one of the salary cap regulations is that teams need to spend at least 90 percent of the salary cap, or about $83 million.
As a result, the 2016 salary cap increase will hit the league like an earthquake, and its aftershocks will continue to be felt well into the future. Here’s some of what you should expect when free agency opens this July.
The biggest names likely will stay put
Remember when I said this year’s free agent class was kinda weak? Two of the top players in the league – LeBron James and Kevin Durant – will be free agents this summer, so how could that possibly be true? The answer is that they will both be free agents, but both (for different reasons) are much more likely to stay put (in Cleveland and Oklahoma City, respectively) than they are to uproot and move elsewhere. Once you’re past those two, the list of prime available free agents is much, much shorter.
Insane amounts of money will be thrown around
The cap will make a huge leap, almost all of the league will have lots of money they have to spend, and the supply of free agents is pretty short – these are the making for the mother of all seller’s markets, which will drive salaries up to insane levels. The next tier of free agents – names like Mike Conley, Al Horford and Hassan Whiteside – will be maxed-out without question. The cost of an average starter probably will eclipse $15 million. Teams will be giving $10 million salaries to guys who can barely crack the rotation.
Some teams will be poised to flex their muscles
Consider the Los Angeles Lakers. They’re one of the richer teams, in a major market. They have had a history of winning, but have had a few down seasons in Kobe Bryant’s waning years. But during that time they’ve been able to draft a new nucleus of players for the next generation, and that includes this year’s #2 pick. Younger players are cheaper players, and the Lakers are poised to roll into free agency with as much as $65 million to spend. That’s enough for not one but two max free agents, with room to spare. If they snare two top free agents to add to their developing core of young players, they will change the league’s balance of power in one fell swoop. It’s a moment the team has been planning for years.
Seemingly incomprehensible trades
The league’s trade rules ensure that deals, for the most part, are relatively sane. Teams are limited in the salaries they can transfer to other teams. But that’s only for teams that are at or above the league’s salary cap. For teams that stay below the cap, the trade market is a free-for-all. And remember, this year almost every team will be far, far below the cap. As teams strategize and maneuver around each other, some teams will want to dump productive players in order to clear more cap room – and will find no shortage of takers with enough cap room to absorb those incoming salaries. We likely will see several big-name, expensive players tossed into the recycle bin this summer as teams take advantage of this rare opportunity to set themselves up for the future.
Bad contracts galore
Remember what I said about a weak free agent class and a massive seller’s market? Once all the good free agents are gone, several teams will be left with a wheelbarrow full of cash and no one worth spending it on. And this money HAS to go to the 2016 free agent class, thanks to the players union’s refusal to adopt the league’s proposal to inject some sanity into the process. Teams will have little choice but to give huge salaries to players who don’t deserve it. Their only hope is to get these players signed on SHORT contracts, and avoid mortgaging their futures while they spend all this money.