The NBA sent a memo to all 30 teams today stating the salary cap for the 2016-2017 is now anticipated to be $94 million. The reason: basketball related income (BRI) has outperformed the leagues’s previous estimates. BRI is largely made up of money spent to get in and at games, as well as various team related appearances and the big enchilada: revenue from broadcasting rights. The jump from last season’s $70 million to the original $92 million for next season largely has to do with the increase in revenue that the NBA is receiving from their new TV deals with Turner Sports and ESPN, but this small jump from $92 million to $94 million isn’t related to that.
The TV deals are fixed revenues, with negotiated payouts over the life of the deal. The unanticipated $2 million increase however is from fluctuating revenues that could come from a number of sources. What it certainly seems to indicate is that the NBA continues to enjoy a rise in popularity. Just as there are a record number of eyeballs fixated on the current NBA Finals, there are more people attending team events, buying merchandise from team stores, filling NBA arenas and so on and so forth. All of that adds up to this extra $2 million on top of an already record increase in the cap.
What’s the increase mean for the hometown Denver Nuggets? It means they have a little more wiggle room to chase max free agents but perhaps more importantly it will apply added pressure for Denver to make the salary cap floor, which is now anticipated to be $84.6 million. After Darrell Arthur opts out of his deal (and he will) Denver will have just $57.8 million worth of guaranteed contracts on the books. If they keep all three first round picks and add them to the roster that number jumps to about $63.5 million. Meaning the Nuggets are going to have to be active in free agency this offseason and, unless they really over pay D.J. Augustin, they are going to have to sign someone outside of their own free agents.
Let’s say Denver offers Arthur $10 million per season (as Adam Mares has suggested) to re-sign and for some reason keeps all three picks, that still leaves them a full $10 million shy of the salary floor and $20 million shy of the cap. No matter how you slice it, unless the Nuggets decide to pull some ridiculous deals, like trading Will Barton ($ million next season) for Enes Kanter ($17 million next season) they are going to have to bring in a borderline additional starter type player like Arthur to make the cap floor. Kent Bazemore, Bismack Biyombo, those types of players should crack the low to mid double figures that would put the Nuggets into the salary sweet spot above the floor and below the cap. Of course, they could just let Arthur walk and go all in on a max deal for a guy like Al Horford or DeMar DeRozan which would also put them right where they want to be financially.
Many teams in the NBA are probably excited to find out there’s an extra $2 million anticipated to be available for them to spend, but for a team like Denver with a relatively full roster and a plethora of picks in the upcoming draft, this little increase is more of an annoyance than a benefit. If Denver was a marquee destination then this would be a much more significant increase as it puts them right at the threshold of being able to sign a tier 3 max free agent. However since the only significant tier 3 max free agent this offseason is LeBron James and the chances of him signing in Denver are about 0.1%, all this cap increase does for the Nuggets is give them a little extra cash to overspend on someone.