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Doing the Math for 2015 and 2016 Deals

Salary cap guru Eric Pincus estimates the 2015 and 2016 salary cap numbers.

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With the trade deadline passing last week, a number of teams prepare for a run at the playoffs, while some brace for the inevitable draft lottery.

Free agency begins on July 1, but players cannot be officially signed until after the NBA’s annual moratorium ends on July 9.

During that stretch, the league will calculate the salary cap, luxury tax threshold and maximum contract levels, based on projected basketball related income for the 2015-16 season.

Due to the NBA’s new national television deal, which kicks in a year later, the salary cap for the 2016-17 season is expected to jump significantly.

The league has approached the National Basketball Players Association with hopes of artificially smoothing the cap, so it doesn’t make such a jarring leap, but to date, the union has rejected any overtures.

Even at this early date, projections can give an idea of the salary cap math for the next two seasons — including a sizable increase for 2016-17.

Estimates for 2015-16 Season

The NBA’s current estimate for the 2015-16 salary cap is roughly $67.4 million, up from the current $63.1 million.

Based on Kyrie Irving’s extension, the maximum salary for a player with zero to six years of experience starts at $15.9 million.

A player with seven to nine years in the league should start at about $19 million, while a ten-year vet (or higher) should be at approximately $22 million.

Four year deals, with 4.5 percent raises, should total roughly $67.7 million, $81.1 million and $94.0 million, respectively.

Five year deals, re-signing with 7.5 percent raises, would hit about $91.2 million, $109.3 million and $126.5 million, respectively.

Other exceptions, and the league minimum salary levels, are specified in the Collective Bargaining Agreement.

The Mid-Level Exception starts at $5.5 million, for deals up to $23.3 million over four seasons.

The Taxpayer Mid-Level Exception begins at $3.4 million, for deals up to $10.6 million over three years.

The Bi-Annual Exception is $2.1 million, up to $4.4 million on a two-year deal.

The Room Exception will be $2.8 million for one year or up to $5.8 million for two seasons.

First-round draft picks are also on a set schedule, although teams can pay up to 120 percent or as low as 80 percent of the slotted amount.

The salary for the top overall pick for next season is $4.8 million, but they’ll inevitably sign for $5.7 million his rookie year.

The 10th pick will likely sign for $2.5 million for their first season, while the 30th pick will presumably earn $1.1 million.

The rookie minimum next season will be $525k (also the empty roster charge amount when calculating a team’s cap room).  The two-year veteran’s minimum is $947k.  More experience in the league translates to a higher salary, with at least 10-years in the league earning $1.5 million.

If a player with three-years or more takes a one-season minimum contract, their cap number will be $947k.

The luxury-threshold will also climb, to roughly $82 million from his year’s $76.8 million.

Estimates for 2016-17 Season

When the national television deal kicks in, the league will see roughly a $2.66 billion increase in revenue on average, although it’s difficult to state with certainty what that figure will be in year one of the nine season deal.

A conservative projection would be $78 million, an increase of almost 11 million from the 2015-16 amount.

The maximum salary for a player with zero to six years of experience could start at $18.2 million.

A player with seven to nine years in the league should start at about $21.9 million, while a ten-year vet (or higher) should be at approximately $25.5 million.

Four year deals, with 4.5 percent raises, should total roughly $77.8 million, $93.5 million and $109 million, respectively.

Five year deals, re-signing with 7.5 percent raises, would hit about $104.9 million, $125.8 million and $146.8 million, respectively.

Again, most of the other exceptions, and minimum salary levels are fixed.

The Mid-Level Exception starts at $5.6 million, for deals up to $24.0 million over four seasons.

The Taxpayer Mid-Level Exception begins at $3.5 million, for deals up to $10.9 million over three years.

The Bi-Annual Exception is $2.2 million, up to $4.5 million on a two-year deal.

The Room Exception will be $2.9 million for one year or up to $5.9 million for two seasons.

The salary for the top overall pick for the 2016-17 season is $4.9 million, but they’ll inevitably sign for $5.9 million his rookie year.

The 10th pick will likely sign for $2.6 million for their first season, while 30th pick will presumably earn $1.2 million.

The rookie minimum will be $543k (also the empty roster charge amount when calculating a team’s cap room).  The two-year veteran’s minimum is $980k, while the 10-year maximum will be $1.6 million.

If a player with three-years or more takes a one-season minimum contract, their cap number will be $980k.

The luxury-threshold could climb to the $95 million range.

Impact on 2015 Free Agents

With the salary math in mind, what should a player like Kevin Love of the Cleveland Cavaliers do this summer?

Love can opt into the final year on his deal at $16.7 million, hitting free agency in 2016, when he could be eligible for a $125.8 million contract over five seasons with the Cavaliers (or $93.5 million with another franchise over four).

Should Love opt out and sign a five-year deal this summer, he would receive an immediate bump-up in pay to about $19 million and a five-year $109.3 million contract in Cleveland (or leave for $91.2 million over four).

The first option could give Love $142.5 million over six years, while opting out and re-signing would cover five years at $109.3 million.  Love might make up some of that up with a new contract after five years, but the league is likely to adjust the Collective Bargaining Agreement after a potential lockout in 2017.  Anticipating what impact the new deal will have on salaries would be nothing but a guess.

Another path for Love might be to opt out and re-signing on a two-year deal with a player option after next season (the option as insurance in case of injury).  That would enable Love to ink for roughly $19 million, then re-sign for five years and $125.8 million for a total of $144.8 million.

Locking down the larger deal sooner provides greater security, but hitting free agency by signing a short deal with the Cavaliers, and then re-signing in 2016 would net Love the largest total salary.

Eric Pincus is a Senior Writer for Basketball Insiders, with a focus on the business side of the game.

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