Nobody has any idea where the 2020-21 salary cap is going to go. The NBA and NBPA are negotiating that point and thousands of others as the pandemic develops and we learn more about when regular life will be able to resume, but at this point, there’s no way to know how they’ll set the cap for next season or even how much of next season will be salvageable.
That said, it seems unlikely that the league would have a salary cap larger than the $115 million the league projected back in late January. How far it drops, or if it drops at all, remains to be seen; I’m skeptical that $115 million was attainable even before the COVID-19 pandemic put everything on hold. The original $116 million projection included a full complement of Chinese TV and merchandise revenue. To this point, it’s not clear whether that will be intact for the 2020-21 season. If not, I wouldn’t be surprised to see the salary cap drop at least another $1-2 million, on top of whatever impact the pandemic has on 2020-21 projected revenue or how the 2019-20 hiatus affects future seasons. Everything is up in the air and it may be months before we have solid answers on any of these points.
Should the 2020-21 cap drop from the projected $115 million, that would erase a whole lot of spending for a number of teams. Teams with cap space would see some of it vanish, while teams on the precipice of the luxury tax threshold would be squeezed even further. Less spending means less money for the 2020 free agent class. Fortunately for the PA, the 2020 class was already relatively tepid, so it’s unlikely that any high-profile players take significantly less than they would have otherwise, but it’s still going to impact finances for a larger number of players: more than 200 players could be on the open market this summer looking for work.
However, less league-wide spending won’t impact every player in the same way. For a few players, a lower cap might actually increase their leverage with their current teams. In particular, three players come to mind, with a few others potentially positively impacted as well: Goran Dragic, Jae Crowder, and Dario Saric.
Dragic and Crowder will be unrestricted free agents on a Miami Heat team that is projected to walk into the 2020 offseason with $26.4 million in room, but a lowered salary cap could bump them down to the point that it makes more sense to operate as an over-the-cap team. Should the cap slide to $110 million, the Heat would drop to $21.6 million in space – would they rather spend $21.6 million on free agents (plus the $4.8 million room exception), or retain Dragic and Crowder, then use their $9.3 million non-taxpayer mid-level exception and $3.7 million bi-annual exception on outside free agents to add to a team that was surprisingly competitive in 2019-20? Where exactly that inflection point lies for the Heat is unknowable, but should the cap drop from $115 million, the team might opt to stay over the cap for the 2020 offseason.
In that situation, it would make sense for Dragic and Crowder to agree with the Heat on one-year balloon contracts to take advantage of their Bird rights, while still keeping Miami’s 2021 flexibility intact. On the open market, those guys might not have significant offers, but the Heat can pay them more than the non-taxpayer mid-level exception on a one-year deal, then they can get back on the market when teams have more money to spend. To a lesser extent, teammates Meyers Leonard and Solomon Hill are in the same boat, though their one-year balloon payments would be significantly lower than Dragic and Crowder.
Saric is in a similar situation with the Phoenix Suns. The Suns are slated for $14.0 million in room, which includes tendering a qualifying offer to Saric to retain his restricted free agent rights. However, should the cap drop from $115 million, that cap space could quickly disappear, making the Suns an over-the-cap team and giving Saric a bit more leverage in his negotiations. However, a cap drop is a double-edged sword for Saric, as less spending power throughout the league could leave him with very few suitors. Non-premier restricted free agents can often find the process very difficult to navigate and the Suns could certainly play hardball with Saric this summer. Even with a $110 million cap, Phoenix could walk away from Saric and have $18.8 million in room.
A drop could also be a positive for Aron Baynes and Frank Kaminsky – if the Suns do go the over-the-cap route, then Baynes could follow Dragic and Crowder to negotiate a one-year balloon payment and Phoenix may opt in on Kaminsky’s $5.0 million contract in order to keep him around. Baynes should have contending teams knocking on his door in free agency, but the Suns would have full Bird rights if he wanted to prioritize money over competitiveness this summer.
For the most part, a drop in the cap and less spending power throughout the league would be a negative for players looking for a new contract this summer, but for a select few, their team’s proximity to the lessened salary cap could work in their favor.