Declining Cap Could Put the Squeeze on Class of 2010

» July 6, 2009 4:10 PM | By Brandon Hoffman

Nearly every team in the league is gearing up for 2010 free agency. But based on terms of the collective bargaining agreement, which is designed for teams to retain assets, there are a few million reasons why LeBron James, Dwyane Wade, and Chris Bosh will opt to remain with their current employers. Previous reports estimated the Cavaliers, Heat, and Raptors would be able to offer their franchise cornerstones extensions worth $30 million more than any other team. Sam Smith, writing for Bulls.com, calculates the difference under a declining cap:

The rub is the new NBA economics. The key is the salary cap and luxury tax set in the summer of 2010. Even NBA commissioner David Stern already has said publicly the cap and thus the luxury tax threshold could be down as much as 10 percent next summer.

If the cap drops 10 percent (two percent decline expected this July for next season), the cap is about $52.6 million. For players going into their seventh season at that point, like James, Wade and Bosh, a max player can receive a top offer of 30 percent of the team’s salary cap if he changes teams. That would be about $15.8 million to start. The raises would be eight percent annually in a five-year deal for about $91.5 million.

A player who elects to stay with his own team for a similar max offer would be eligible for a six-year deal (instead of five) starting at $17.4 million (10.5 percent above their final season). The annual raises would be 10.5 percent instead of eight. That contract would total $132 million.

So if Bosh or Wade or James were to stay with their own teams-assuming the Stern predicted salary can decline-and get a max deal they would be able to sign contracts for $132 million compared with about $91.5 million.


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