Blog Entry

NBA cap soars to $58.044 milllion (UPDATE)

Posted on: July 7, 2010 8:08 pm
Edited on: July 7, 2010 9:07 pm
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The NBA salary cap for the 2010-11 season was set Wednesday at $58.044 million, $2 million more than the league's most recent projection and $8 million more than the worst-case scenario that the league laid out last summer. In fact, the salary cap rose from last season's figure of $57.7 million on what sources told CBSSports.com were the highest revenues in NBA history.

The surprising news means that teams with cap space who are trying to sign free agents when the moratorium on player movement is lifted at 12:01 a.m. Thursday will have $1.944 million more space -- good news for the Heat, Bulls, Knicks, Nets and Clippers in particular. It's especially good news for the Heat, who are trying to fit three max contracts into their cap space after Dwyane Wade and Chris Bosh agreed to team up with the Heat next season.

The number-crunching couldn't have come out better for teams with cap space trying to make room for multiple max players. Due to a nuance in how maximum salaries are calculated, the most Miami, for example, can pay Wade remains a 5 percent raise over last season's salary -- $16.57 million. Had revenues -- and thus the cap -- increased more, a player like Wade would've been eligible to make 30 percent of the cap. But the cap went up just enough to give Miami $1.944 million more to spend without increasing the max they'd have to pay Wade. Despite all that good news, the Heat still don't have, by my calculations, enough space to fit Wade, Bosh and LeBron James under their revised cap number of $31.4 million without trading another player. But they're almost $2 million closer to making it happen.

The luxury tax line, above which teams have to pay $1 in tax for each dollar in payroll, was set at $70.307 million -- also up from the 2009-10 season, when it was $69.92 million.

The mid-level exception, which is tied directly to average player salaries, will go down from $5.85 million to $5.765 million -- an important distinction for the upcoming collective bargaining negotiation. In revealing during All-Star weekend in Dallas that the NBA was projected to lose $400 million this past season, Commissioner David Stern blamed escalating player salaries for the losses. But as reflected in the decline in the mid-level exception, player compensation and benefits actually declined during the 2009-10 season.

The cap, tax and mid-level figures are derived from revenues generated during the previous season. The cap is calculated at 51 percent of league-wide revenue, or BRI (basketball-related income).

In April, Stern said the latest end-of-season revenue figures projected to a 2010-11 cap of $56.1 million. The previous summer, the NBA sent a memo to all 30 teams warning that it was projecting a decline in revenues of between 2.5 percent and 5 percent, which would've resulted in the cap calling as low as $50.4 million to $53.6 million.

At that time, Stern said teams were doing "better than we projected" in terms of generating revenue. If that was the case, then teams did wildly better than expected once all the numbers were added up. According to an estimate of league revenue based on the $58.044 cap, the NBA brought in more than $3.4 billion during the 2009-10 season, which was adversely affected by a two-year recession that Stern blamed for the cap decreasing after the 2008-09 season.

Although the NBA had a higher cap in 2008-09 -- $58.6 million -- revenues from the prior season did not surpass the league-record posted in 2009-10 due to complexities in how the figures are calculated.

The figures are important not only for teams trying to sign free agents this week, but also in the context of the looming labor crisis facing the league. Stern, who has stated that player salaries are too high, is going to have a hard time making that case after teams produced record revenues coming out of the worst recession since the Great Depression while player salaries declined.
 





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Comments

Since: Feb 15, 2007
Posted on: July 8, 2010 11:27 am
 

Stern lied? Stop the presses!

Who'da thunk it- Stern lied about revenues.


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