NBA Salary Cap Imploding For 2010’s Free Agents

You’ll probably recall that as the current free agency period for the NBA kicked off recently, lots of the focus went to next year’s class, the crown jewels of which being Chris Bosh, Dwyane Wade, Dirk Nowitzki, and some LeBron James character. Which franchise would land each one? Would two team up to essentially buy a title* like the Celtics?

David Stern OK sign
(”No, I don’t mean ‘everything will be A-OK.’ I mean you have this much to spend next summer. Enjoy!”)

Unfortunately, this may be the first free agency period that was over an entire year before it started. For beginners, as we mentioned this morning, the salary cap will be falling a full million dollars for the 2009 season. That’s just a breeze before a hurricane, though; as Marc Stein at ESPN.COM reports, David Stern sent out a memo to owners warning that the salary cap could be coming down in 2010. Way, way down: 

The official league memorandum, obtained by ESPN.com, forecasts a dip in basketball-related income in the 2009-10 season of 2.5 percent to 5 percent, which threatens to take the 2010-11 cap down some $5 million to $8 million from last season’s $58.7 million salary cap.

Worse yet for the big-spending franchises like the Lakers, Celtics, and Mavericks, the luxury-tax floor will also face a precipitous drop, meaning acquiring big talent’s going to become a prohibitively expensive undertaking:

A significant drop for the luxury-tax threshold is also projected going into the summer of 2010. If basketball-related income drops by 2.5 percent in 2009-10, league officials are projecting a 2010-11 salary cap of $53.6 million and a luxury-tax line of $65 million. If BRI, as it is referred to in the NBA, decreases by five percent, teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.

The Knicks, who have basically tanked in avoidance of any long-term commitments in preparation for LeBron to come in 2010, had been counting on a salary cap of around $63 million in 2010 before the economy burst into flames. Now, that figure could drop about 20%.

While New York might be able to weather that storm with such little money committed, they may also struggle to put enough complementary pieces in place to attract a high-level free agent (even the aging Steve Nash, who must love the thought of re-joining Mike D’Antoni) while still being able to afford the superstar, whomever it may be, himself.

So what are the free agents themselves to take from this news? Well, there’s one (and pretty much only one) way to still reliably cash in next season: stay home.

That’s because of the much-ballyhooed Larry Bird Rule, which allows teams to re-sign their own free agents for maximum money if they’ve have been part of a team for at least three straight seasons without being waived or acquired as free agents. Valued veterans, basically. This exception to the salary cap would allow, for example, Cleveland to much more effectively put building blocks around LeBron than the Knicks.

For that reason, it’s far more likely that few of the top-end free agents change teams; if they do, it’s only because their current team doesn’t think they’re actually worth the money they made during the prior season and has no intentions of re-upping at current or higher rates. Being that most players are unwilling to so much as entertain the notion of a pay cut without fully playing the market, those types of players (Shaq, for one, who most certainly shouldn’t make $20 million a year ever again) are likely hitting the road. Bosh or Wade, however, don’t fit into this designation.

For what it’s worth, Stern’s careful to note that those salary cap projections are based on business not yet done, and that if the economy recovers and income doesn’t fall 2.5-5% like the projections hypothesize, the salary numbers could easily stabilize. But maintaining the status quo has become The If, meaning it’s far wiser to expect much more salary-cutting measures to take place in the coming months and years. The blood-letting has just begun.

*No, this isn’t entirely fair to Boston, but paying more attention to their “drive to succeed” or whatever rather than the fact that they brought in two future Hall of Famers seems more than a little misguided. No offense to KG, but if it were all about passion, he’d have won three rings in Minnesota.