Free Agency CBA impromptu:
I'm sure there're readers that are less interested in the bureaucracy of the NBA and their Collective Bargaining Agreement.
With the cap skyrocketing it makes it harder to classify new contracts, due to their scaling, projected cap development over the next few years.
It's even hard for lawyers so taking a second and thinking it through is absolutely necessary even for experts.
Some of these so called experts in front offices are still going to hand out horrible contracts despite having counsel and the time to think it through in advance.
According to my research the NBA fiscal year starts July 1st and ends June 30th of the following year. So most of the money the NBA has generated between July 2015 and June 2016 determines the salary cap for the 16/17 season.
The new TV contract doesn't start until next season, so some of its money must have been included last year by payout some kind of signing money or whatever to soften the cap development, as the NBAPA was completely unwilling to cooperate when asked to organically soften it. They also didn't negotiate a continuous rise in the TV contract to circumvent the players.
The TV money will rise from 930M to 2.6B average per season.
The NBAPA wants the TV money to be stable and that growth comes from other sources over the duration of this contract(international success, winning shares nationally and taking viewers from NFL/NHL/MLB)
They'd want a huge jump that would affect the basketball related income in the 16/17 fiscal year and cause a meteoric jump in the 17/18 cap.
(I have not found any indication that projections of future earnings could impact the current cap as of the CBA)
What the NBA probably did is they received a front loaded signing bonus from the TV networks in 15/16 that helped propel the cap up to 94 this year and then they'll have a front loaded TV contract that makes the cap regress slightly after 17/18 unless it's offset by gains they got elsewhere(Apparently international income is growing rapidly in some places. In Europe they record growth of almost 10-20% for several years in a row now - One of the reasons the cap has been growing faster than projected before the TV money came in)
I made a small paint to illustrate how I interpret the cap development in and how I suspect the TV deal to be structured based on league revenue projections.
But even with the huge National TV money, the NBA underestimates its growth for several years in a row now.
I think aside from gaining traction internationally, reasons why the NBA grows faster than national inflation is that there are ripple effects from the TV deal that aren't included in the projections. Some of the Local TV deals are due to be renegotiated every year and if a game is suddenly worth almost 3 times as much as it was before on a national scale, then this trend will rub off on local TV stations as well.
Another aspect are gate receipts. Take a team like Milwaukee for example. The team blows for 1 year, they can't fill the place even while giving tickets away for free.
So expectations are low for the next season as well. Suddenly J Kidd comes in, the team plays defense and reaches the first round in 15.
The place is more packed than anticipated for most of the season because ppl wanna see the team around Giannis and Jabari grow into sth.
In 16 they disappoint again for various reasons, but due to the 2015 success the season ticket sales were better than their result and them losing means another team winning more and they can up their tickets during the regular season due to their unanticipated success.
Before I completely get off track, I'll stop here. I think I illustrated some factors and everybody knows the current projections for the next years.
https://www.usatoday.com/story/sports/nba/2016/04/15/nba-salary-cap-higher-than-projections/83095482/
Here are some of the newest long terms projections I found, even though it has already been corrected upwards for the 17/18 cap. But the big picture should be clear.
Now back to the giant contracts handed out yesterday.
Usually NBA contracts are backloaded and depending on Bird rights you've got 7.5% or 4.5% increments between seasons.
So arguing that all the high contracts are being put in perspective by next year's 2nd rise(94->111(18%) as of current projections) isn't quite true in itself.
If you have a short contract over 2-3 years, then that's probably smart. But if the contract duration is gonna be 4-5 years, it can still bite you in the *** long term, especially if you have bird rights on a player.
Let's look at Timofey Mozgov's tract, which I think is one of the worse that was closed.
I take the cap projections from the link above and add $2M for each year to account for newer short term projections.
Cap: Mozgov's salary+age: % of the cap:
16/17: 94M 14.96M(30) 15.9
17/18: 111M 15.63M(31) 14.1
18/19: 107M 16.34M(32) 15.3
19/20: 105M 17.07M(33) 16.3
So you can clearly see if the projections will stay accurate with the dropping cap, the contract looks mediocre in year 1, better in year 2 as the cap spikes the 2nd time and then it will look worse again as the cap drops. Do you think an aging borderline starter should get such a high proportion of your salary cap? I wouldn't have done this deal just to meet the salary floor. I think meeting the salary floor is good if you can "overpay" on 1 and 2 year contracts, but giving out 4 years like candy is not smart in my book.
The contract would look worse if someone had bird rights and had to pay full 7.5% raises. Like with Mike Conley's contract.
Let me illustrate how that's gonna look like:
Cap: Conley's salary+age: % of the cap:
16/17: 94M 26.34M(29) 28.0
17/18: 111M 28.31M(30) 25.5
18/19: 107M 30.44M(31) 28.4
19/20: 105M 32.72M(32) 31.2
20/21: 112M 35.18M(33) 31.4
That contract will look okay exactly in 16/18 because everyone else is on old contracts and in 17/18 because of the jump. But as the majority of the NBA is on contracts based on the new cap, the last 3 years combined with his age are probably gonna hurt Memphis or force them to rebuild. Retooling with such an albatross is hard. Ask the Kobe Lakers...
What most teams are doing right now in a relatively weak free agent class is they're filling the salary floor by trying to be the highest bidder. Teams must have 90% of the current cap in salary or else they gotta add the missing money to the salary of their current players.
So teams will try to reach at least 84.6M in salaries this season.
Two teams that have mostly kept out of the bidding war so far are the Spurs and Jazz.
Let's look at the payroll of our Jazz:
https://www.basketballinsiders.com/utah-jazz-team-salary/
Unless unprecedented developments happen, we'll pick up all the nonguaranteed bargains of Mack, Johnson and Withey. Together with the 22Million for Joe Johnson that I'll assume as two flat $11M payments, that leaves us at 15 paid roster spots and $72M in salaries.
If we stayed that like that throughout the whole season, we'd have to add the missing 12.6M to the floor and distribute it amongst our players. But by staying out of the bidding war we preserved flexibility. If teams find out midseason they overpaid for nothing, we can absorb contracts and fleece assets and avoid not meeting the salary floor at the same time. And I don't mean that in terms of other teams trying to avoid luxury tax, some teams will invest heavily into meeting the floor during offseason that they'll find themselves with too little flexibility for the next offseason and will try to reposition themselves for that. So trade chatter will be intensive throughout the season. Mack is a serviceable off the bench guard on an expiring 2.5M contract. If someone wants to both compensate an injury and remain financially flexible, it will be costly.
If you consider that the Jazz have to offer Hayward, Rudy contracts next year and Exum, Hood, Favors the year after that it's very good that we could avoid those 3 and 4 year contracts.
I called this year's free agents weak, let me show you who's most likely gonna be there next year:
Kevin Durant(assuming he closes a 1+1 contract with the Thunder)
Steph Curry
LeBron James
Blake Griffin
Chris Paul
Russell Westbrook
Jeff Teague
Kyle Lowry
Serge Ibaka
Danilo Gallinari
Taj Gibson
Tyreke Evans
George Hill
Derrick Rose
JJ Redick
Jrue Holiday
Andre Igoudala
Amir Johnson
Patrick Patterson
Patty Mills
Kyle Korver
Jodie Meeks
Shelvin Mack
Shaun Livingston
Rodney Stuckey
Like that's stars, rotation players, impact players and a list of restricted free agents from the 2013 draft that are actually more valuable than guys that saw a pay day this offseason. There's a good chance a lot of the players that got paid yesterday might fall off a cliff performance-wise towards the end of their contracts.
Some teams picked up solid value as well yesterday in my opinion. Solid in this special environment has a good chance to turn out as good over time. In a lot of cases it will depend on how the players will execute their roles and how they fit their roles.
I kind of like the Bazemore contract. He played hard on both ends last season and developed quite a bit. He's 27, but hasn't played as many minutes as other prospects at that age which makes me believe he still has a solid room for development.
Atlanta probably regrets not extending DeMarre last offseason right now, but he's still a solid consolation prize. They probably realized how unlikely it is to find another replacement for Bazemore that they can nurture into a performer.
Jordan Clarkson is someone who if more patient could have scored a higher offer sheet once unrestricted free agents are off the table and the losers like the Mavs just randomly decided to offer him 15 annually since they have an empty payroll and bet on his individual progress. So I like it from the Lakers side.
The DJ Augustin contract is also very unlikely to be bad in hindsight. He's in his late 20s and a good shooter. I don't see how he can't get at least a lot of opportunities in Orlando considering how little shooting Elfrid Payton provides.
Jerryd Bayless should be a very good pickup for the Sixers. They don't need him to try to be good at the things he isn't good at. He's tradeable at any point and he's a good shooter.
Evan Fournier's 17 annually into the middle of his prime should be solid as well. Even if he's a 6th man kind of player he's solid value under the new cap. He can shoot and he's still got room to improve.
E'Twaun Moore is a solid gamble. He plays hard and he can shoot. You just can't expect him to run your offense. If the Pelicans have another playmaker for the future the pickup should be solid.
One signing I absolutely hate is Chandler Parsons. Not because he isn't worth the max short term. It's just that offering a player who just underwent microfracture surgery a year ago and missed parts of last season because of knee injuries is very unlikely to last 4 years. At least no bird rights were involved and the annual raises are lower.
Solomon Hill is a huge reach as well IMO. If he can't extend his shooting range, I just don't him working out as the Pelicans need any kind of shooting and it's still unclear if Davis wants to transition into a Center in the long term on defense. That's a contract that can look very ugly unless he suddenly learns to hit 3s.
I'm very indifferent about a lot of other FA signings such as Turner, Noah. I think they can look both bad or good depending how it goes. High variance, though with Noah the injury concerns are pretty high. It just made sense from a payroll standpoint for the Knicks. They won't mind Noah on the roster if they rebuild through the draft and let Rose go+trade Anthony away. If the veterans stay healthy and productive, a healthy and productive Noah will help them probably for at least 2 more years.
