NBA Free Agency and Trade Analysis: Lower Salary Cap for 2017-18 Season Spells Trouble for Durant and the Golden State Warriors Down the Road
NBA Trades and Free Agency News Tracker for 2016-17 Season:
Contrary to expectations, the NBA has lowered its salary cap for the 2017-2018 season from $107 million to $102 million.
A memo distributed to all 30 teams, the NBA attributed the lower salary cap to a "substantial increase in projected player spending for 2016-17," which in turn caused a lower shortfall to the players.
How the CBA Works
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The collective bargaining agreement stipulates that NBA players receive between 49 to 51% of all basketball-related income. To ensure that the league does not overpay players, 10% is deducted from the players' paychecks and deposited to an escrow account.
At the end of the year, the NBA looks into its books and checks whether or not the league did give the players its share of the CBA – between 49 and 51%. If the amount paid to the players is less, then the league cuts a check – the shortfall amount - which is evenly distributed to the players.
The NBA previously forecasted a shortfall of $375 million for the 2016-2017 season, which will translate to a $12.5 million increase in the salary cap for the 2017-2018 season. However, because teams have been giving out more money than what was projected, the shortfall fell to $200 million, which translates to a $6.7 million increase.
Why are the Warriors Affected?
Taking Durant's case into consideration, he signed a 2-year deal worth $54 million, with a player option on the second. Having a player option on the second year means that a Durant can opt out of his contract, be a free agent, and re-sign with the same team for a maximum contract with more money.
However, with the new – and lower – salary cap, the Warriors now have a lot to work with. Durant will most likely opt out of his current contract next season to get a max contract, while Steph Curry and Andre Igoudala will both be free agents. If the Warriors want to sign Durant to a max contract, they will need to create $33.5 million in cap space in 2017-2018. And while both Steph and Andre will command max contract value, it is unlikely – and unrealistic – that the Warriors will sign all three to max contracts.
Retaining the "Death Lineup"
As seen in this graph, most of the players, save Thompson and Green, will be free agents by the end of the 2016-2017 season. Durant is still under contract, but will most likely opt out to get a max contract.
Steph Curry will be an unrestricted free agent, and the Warriors will need to give him a max contract if they want to increase their chances of retaining the 2-time MVP.
Out of the three, Iguodala will most likely be out of the Bay Area after the 2016-2017 season. Although still very serviceable, the Warriors will most likely not offer him a max contract, focusing instead on Curry and Durant.
If all 3 superstars sign below max contracts, the Warriors may have a chance of bringing them back for the 2017-2018 season. Possible, but highly-unlikely.
It will be interesting to see how the Warrior's front office will react and make adjustments to the new salary cap. However, the players' union and the NBA can opt to terminate the current CBA by December 15, 2016. If this happens, negotiations will take place, with figures and projections expected to change.
