The NBA’s New CBA and Its Effect On Free Agency and The Salary Cap

CBS Sports Ken Berger with a look at next month’s NBA free agency as it relates to the new NBA economic model:

MIAMI — In the aftermath of a compelling NBA Finals, a championship coronation for LeBron James and his Miami Superteam, the question is — as always — what now?

That question ripples through the NBA, from the biggest of big markets to the smallest of small, especially now, as the league ventures into new salary cap and player movement guidelines that resulted from the 149-day lockout that almost canceled the season.

How do the Heat add to their championship roster? How do the Thunder keep their core together and still have flexibility to make the improvements necessary to get back to the Finals? How does the rest of the league catch them, and more interestingly, which model prevails? The clear-space-and-load-up-on-stars model? Or the patient, snail’s-pace, build-from-within approach?

These questions take on even broader significance in the coming days as executives, agents and players prepare for the first full-fledged free agency period since the new collective bargaining agreement reset the NBA’s economic and competitive model. In the coming days, officials from the National Basketball Players Association will continue holding a series of regional conferences around the country to explain the new rules to agents who will be negotiating contracts and trying to arrange trades under the new rules.

Under the CBA ratified by owners and players in December, the salary cap and luxury tax threshold cannot go lower in 2012-13 than their levels in the first year of the deal — $58 million and $70.3 million, respectively. Despite a robust post-lockout recovery that included salvaging all $900 million or so of the league’s national broadcast revenues, sources familiar with the NBA’s finances believe overall revenues did not increase enough in 2011-12 to push the cap and tax significantly beyond current levels until 2013-14, the first season under a more punitive luxury tax designed to rein in big-spending teams.

Current spending levels are expected to be status quo when the free-agent floodgates open July 1. But the restrictions within that model are much harsher, and it isn’t clear yet who the winners and losers will be.

While NBA officials have lauded the presence of so-called small-market teams in the playoffs — commissioner David Stern specifically has mentioned Oklahoma City, San Antonio, Indiana, Memphis and Utah — this season was simply more of the same. Three of the four teams to reach the conference finals were in the top five in the league in payroll: Boston (2), Miami (3), San Antonio (5) and outlier Oklahoma City (17), according to league salary data.

Of the top five teams in average payroll for the past five seasons, all made the playoffs: Dallas (1), the Lakers (2), Boston (3), New York (4) and Orlando (5). Only Memphis (27) and Oklahoma City (28) made the postseason from the bottom five in average payroll over the past five years. Charlotte (26), New Jersey (29) and Sacramento (30) did not.

League executives expect the spending gap between the top and bottom to narrow as the effects of the new CBA kick in, beginning in 2013-14 with vastly more onerous luxury-tax provisions. Indeed, some of the financial reset is expected to phase in during free agency this summer as teams position themselves to comply with the new guidelines and new player contracts begin to converge with old ones on teams’ salary books.

But deputy commissioner Adam Silver, the league’s lead negotiator during the lockout and chief proponent of flattening payroll disparity to enhance competitive balance, has admitted that no one knows for sure what the effects will be. Indeed, when the previous CBA went into effect in 2006, league executives expected the luxury tax would be more of a spending deterrent for high-revenue teams than it wound up being in practice. By the end of the deal last season, seven teams were taxpayers: the Lakers, Magic, Mavericks, Celtics, Jazz, Trail Blazers and Rockets.

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Posted on June 26, 2012, in NBA and tagged , , , , . Bookmark the permalink. Comments Off on The NBA’s New CBA and Its Effect On Free Agency and The Salary Cap.

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