Ian Begley, SNY.tv | Twitter |
Earlier this week, several teams were holding out hope that the NBA season could resume in some form.
No one knows at this point if playing games this summer will be an option amid the coronavirus crisis. It depends on factors that are impossible to project.
If the league ultimately decides it can't resume the season, there will be decreases in revenue. Those decreases in revenue could impact how the Knicks and Nets approach the offseason.
As salary cap expert Albert Nahmad details, there are ways for the league and players to mitigate how missed games impact the 2020-21 cap.
Writes Nahmad: "The 2020-21 salary cap could be at substantial risk if a there is a severe revenue drop this season and player salaries are not withheld -- each $100 million drop by about $1.5 million, and, once you hit $400 million, each additional $100 million drop by $3.2 million. Which would mean a $500 million drop in revenue could potentially lower the 2020-21 salary cap by a bit over $9 million, to $105 million. A $750 million drop could lower it by $17 million, to $97 million. At $1.0 billion, it drops to $89 million. At $1.2 billion, $83 million. That could wind up being a disaster for the NBA, its member teams, and a whole lot of players."
Nahmad's entire article is worth reading for those interested in the different options available to lessen the impact of the revenue loss.
How could a cap decrease impact the Knicks and Nets?
The Knicks, hypothetically, can create about $50 million in cap space this summer by renouncing all existing free agents. That means getting rid of cap holds for Maurice Harkless, Allonzo Trier ($4M; RFA), and/or Damyean Dotson ($2M; RFA), as well as a team option for Bobby Portis ($16M). New York also has partially guaranteed contracts for Taj Gibson, Elfrid Payton, Wayne Ellington and Reggie Bullock and the non-guaranteed contract of Mitchell Robinson.
There's no way that they renounce all of those players (barring a trade, for example, Robinson will be here).
So if you factor in the $1.7 million for Robinson's 2020-21 deal and add roughly $8 million for their two first-round picks, that would give them about $40 million in cap space for 2020-21.
A cap decrease due to canceled games would impact New York's flexibility -- both with free agency and trades.
Of course, a cap decrease could indirectly benefit the Knicks as well. It would, in theory, leave more teams on the hook for paying the luxury tax. If owners of those teams don't want to pay the tax, they would be forced to shed salary. The Knicks could use their cap space to take on undesired salary from one of those teams while also acquiring an asset with value (a talented young player or draft pick).
From a Nets perspective, a cap decrease may increase the tax bill the club faces, particularly if it re-signs Joe Harris, one of the league's top 3-point shooters.
Of course, there are no signs that Nets owner Joe Tsai is unwilling to spend what it takes to build a title contender.
The Nets' luxury tax bill would be even higher in 2021-22 if the club extends Jarrett Allen (assuming, of course, Allen isn't part of a trade for another star player).
It's purely speculation to suggest that the tax implications would impact the offer the Nets made to Allen, but it's worth consideration.
The other way a cap decrease hurts the Nets -- and all tax-paying teams -- is by decreasing the value of the exceptions they'd have to offer players. Teams above the apron currently will have a midlevel exception projected at $6.5 million.