The NBA is about to change in a very fundamental way. The league reportedly told teams this week that while this year's salary cap will only rise about 6%, next season's will be up by nearly 40% and the year after that will be 70% more than this past year's $63 million cap.
The salary cap and luxury tax line will increase to approximately $67.1 million and $81.6 million next season, up from $63.065 million and $76.829 million this season and starting in the 2016-17 - when the league's new lucrative multi-billion TV deal kicks in - the cap will increase to $89 million and the luxury tax threshold to $108 million and it will spike again to $108 million for the cap and $127 million for the luxury tax in 2017-18, two people familiar with the projected estimates told USA TODAY Sports.
The new money will increase player salaries at roughly the same rate, meaning that in summer 2017 players like LeBron James could have a $40 million starting salary, Stephen Curry could get $30 million to start and a 4th year restricted free agent could get... swallow hard now... up to $21 million to take the court in his 5th season.
Going further, the mid-level contract - which is now about $6 million per year to start - will likely rise into the $10-12 million per year range by summer 2017.
To put that in new mid-level into perspective, Clippers forward/center Spencer Hawes was last summer's best example of a mid-level player: 26 years old, spotty performance record, signed to come off the bench for about $6 million per year.
So that's the profile of a mid-level player: 26-30 year old role player.
In the summer of 2017, with players like Spencer Hawes signing for $12 million per year, the Phoenix Suns Marcus Morris will make $5 million. Markieff Morris will make $8 million. Eric Bledsoe will make just under $14 million. All will be 27 years old that summer, with two guaranteed years under contract to go.
The summer of 2017 is key, because projections also show a decrease in 2018-19 to about $100 million with a slight rise to $102 million the year after that, based on complex calculations built into the CBA. Either the players or the owners can opt out of the current CBA in the summer of 2017, prompting a new work stoppage just as the money starts really rolling in from the TV contracts.
But work stoppage or not, the TV money is there. And no matter what happens in the new CBA, player contracts signed just prior to the 2017-18 season could nearly double this summer's contracts.
As a result, expect to see a lot of one or two year deals signed this summer.
Veteran free agents
LeBron James and his agent Rich Paul of Klutch Sports have already paved the new path, signing a one year guarantee with a player option this summer to do it all over again. In James' situation, the landscape is cut and dried: every summer, sign a new max contract.
Not every player is in James' stratosphere. Players have to consider their injury history, their age, and the fickle nature of NBA coaches and playing rotations where you can find yourself benched for simply playing bad basketball.
To sign a series of one-year contracts, you put a great deal of pressure on yourself to perform at a high level on a high number of minutes each night, in order to justify that next contract. Not every player will want to go that route, and certainly not every team will want to offer their best players an "out" every summer.
But the days of the five-year max contract may be over. In 2017, when the cap is the highest and is projected to drop by 10% the next year, the rubber will meet the road. But this summer and next, a team might offer more money per year in order to get you to sign for longer.
Many, many players in their early primes will try to make themselves free agents in summer of 2016 or 2017 to take advantage of the windfall.
In that landscape, which has been predicted since last summer, having high quality players like Eric Bledsoe, Markieff Morris and Marcus Morris under reasonable contract through 2018-19 makes them great assets to any team.
Restricted free agents
Under the rules of the CBA, a player coming off his rookie contract becomes a restricted free agent. This means that his current team can make a qualifying offer, in effect a one-year contract that the player can sign and become unrestricted the next summer. In return, the team has a right to match any offer the player receives on the open market.
For a good player, the qualifying offer is likely to be well below their market value. But at least it's a contract in their back pocket if everything else falls through.
Last year, Pistons center Greg Monroe signed his one-year qualifying offer, valued at just over $5 million, reportedly spurning a 3-4 year offer from the Pistons for more than twice that amount. He is now an unrestricted free agent this summer. While that's a great strategy in the new world, Monroe was born about a year too early.
Phoenix Suns PG Eric Bledsoe threatened the same path, but ultimately locked himself in for 5 full years at nearly $2 million per year below the max annual salary he could have received.
His agent, Rich Paul, is the same guy who counseled LeBron James to start the one-year club. Why then would you counsel Bledsoe to take the full five years, taking Bledsoe completely out of the TV money windfall? By the time Bledsoe is back on the market, the cap will have already peaked and dropped back down a bit.
Likely, the answer is security. Bledsoe now has "insurance" against injury and under-performance. To take the series of one-year deals is to bet on yourself every year. Not every player can handle that, and a good advisor would tell you to take the money in hand and security that comes with it.
Moving on to this summer, the Suns have another RFA queued up and ready to go.
Should he go for a 4-year or full 5-year contract for long-term security? Or take the qualifying offer this summer to go back on the market next year when the cap jumps 40%? Or sign a two-year deal to go back on the market in 2017 when the cap really explodes?
Let's use Knight as an example for a qualifying offer. He was the #8 pick in the 2011 draft. Jimmy Butler and Draymond Green will have lower QOs, but not by much.
*all numbers are estimates, based on cited media reports and past cap calculations
An RFA who signs a full five-year max this summer could make $90 million over the course of five years, factoring in the 7.5% raises. But the downside is that their salary in the latter years will be as much as 25% less than what some of the 2013 draft class (hello, Alex Len) will get into their own rookie extensions.
By signing their qualifying offer this summer, assuming good health and performance, they could increase their long-term haul through 2020 by another $7 million. On top of that, the player will be unrestricted, allowed to pick their new team without the threat of the current team matching the offer to keep them.
A third option is to negotiate a two-year deal, with one or more player option years after that, to get them back onto the market in 2017. Maxing out each time could net the player another whopping $24 million over what they could get this summer alone.
One wrinkle to the two-year plan is that the player at that point will have just 6 years in the league, keeping them in the 0-6 range on next contracts. Players with 7-9 years of experience can start with even higher salaries. But this nuance only impacts true max players, so I did not present that option in the graphic above.
Of course, the teams have to go along. The only method fully controlled by the player is the qualifying offer, like Greg Monroe did. If you are healthy, and you know you won't get buried on the bench next season for any variety of reasons, then maybe Greg Monroe has blazed a new trail.
I can't wait to see how this all unfolds.