How New Salary Cap Might Impact the summer of 2010

Lebron James vs Hawks Game 1The NBA released a memo warning NBA teams that the salary cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season. That’s a drop of $5 to $8 million from last season’s salary cap of $58.7 million.

Leagues officials estimate that if basketball-related-income, or BRI as it is referred to in the NBA, drops by 2.5 percent in 2009-10 season, then the salary cap will be set at $53.6 million and a luxury-tax line of $65 million.

If BRI drops by as much as 5 percent, then teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.

What does this mean for Lebron James?

The new figures for 2009-10 season just announced by the league have set the salary cap at $57.7 million per team, that’s only down $1 million from $58.7 from 2008-09.

Lebron James can sign a contract extension with the Cavaliers that would pay him the max based on the 2009-10 season which would pay him around $17.3 million per year.

If Lebron James decides to wait until the summer of 2010:

Free agents such as Lebron James, Miami’s Dwyane Wade and Toronto’s Chris Bosh might have to reconsider because of the potential declines in cap space for external bidders, and more teams straying into luxury-tax territory.

If BRI drops by as much as 2.5 percent and the salary cap is set at $53.6 million, then the max a team can pay is around $16 million per year. If BRI drops by 5 percent and the salary cap is set at $50.4 million then the max a team can pay is a little over $15 million, which is only one million dollar more than what Lebron James is currently paid ($14.4 million).

This will also hinder the ability for teams who have been saving for the summer of 2010, including the Cavaliers, to sign more than one player to a max contract. The Knicks, for example will be restricted to signing one maximum-salaried player that summer which will only increase the Cavaliers chances to resigning James. New York’s original plan to lure James was founded upon trying to sign James and a second marquee free agent in 2010 such as Chris Bosh.

This is good news and bad news for the Cavaliers. The Cavaliers are also rumored to be targeting Chris Bosh next summer. If these estimates hold true, then our chances of getting Bosh or another marquee player are slim.

Luxury Tax Payments Due:

  1. New York ($23,736,207)
  2. Dallas ($23,611,661)
  3. Cleveland ($13,707,010)
  4. Boston ($8,294,664)
  5. Los Angeles Lakers ($7,185,631)
  6. Portland ($5,899,356)
  7. Phoenix ($4,918,136)