The league recently announced a new TV deal worth $24 billion over nine years, which equates to almost $2.7 billion each year. This is obviously great news for both owners' and players' pockets but it also has real implications in team building. TV money counts as basketball-related income and the salary cap is set according to those parameters. That means the cap is about to experience a gigantic jump.
We are talking about it going from $63 million this season to roughly $88 million by 2016/17. There have been talks about the league smoothing out the jump by preemptively raising the cap next season, before the new deal kicks in. And that remains the more likely outcome. But it would only mean two big jumps instead of one gigantic one.
This situation will affect the Spurs and the rest of the league in many ways going forward but since they don't have many contracts on the books, they could go into this new economic reality with a clean slate. But there are some rather immediate effects it could have on their plans. Before exploring the big one -- Kawhi's extension -- let's see what other consequences the new NBA could have on the Spurs strategy next off-season.
The next European invasion may be on the way
Contract values are going to rise significantly along with the cap. We saw a glimpse this past season, with role players like Jodie Meeks getting $6 million a year. The top players in Europe make about that much. So it's not crazy to assume some of the guys that were clearly talented enough to play in the NBA but weren't getting big offers will begin to do so. Serbian point guard Milos Teodosic, for example, could easily be a good backup PG in the league and was reportedly asking for $3 million a year but no one bit. In a couple of years $3 million will be a very small percentage of the cap.
There are obviously European stars that are simply better suited to the FIBA game and will never make the transition or will ultimately fail if they do. But there is also NBA talent abroad and teams with good scouting could find real gems. With established NBA role players getting serious coin, the European market could yield some great bargains. The Spurs, who have kept an eye on their stashed prospects and have excelled at finding talent overseas, could greatly benefit from smaller NBA contracts being competitive with some of Europe's biggest.
The market will go crazy
Any player that is set to become a free agent next season will be tempted to go for a short contract, ideally for one year, so he can enter free agency again when the cap is finally raised to the full amount. Stars will want to get the max under the new cap and role players, knowing that some teams will have gobs of cap space and no star to spend it on in 2016/17, could follow suit.
At the same time, there will be teams throwing big multiple years deals around, knowing that any contract they sign now will be reasonable in the near future. Channing Frye's deal, for example, will be a pretty great value in two seasons. If the top role players eschew those long term contracts for one year deals, opportunistic but less talented veterans might take them, inflating contracts further.
For the Spurs, the big question mark here is Danny Green. Green hasn't had that huge payday, so a multi-year contract next off-season could be attractive from a financial security standpoint. And there will be enough teams with cap space to offer him a sizable one. The Spurs will surely be among those teams, as he fits perfectly with Leonard and Parker. But Green will be an unrestricted free agent and is not eligible for an extension. So the market will play a significant factor in setting his value.
Will the Spurs be willing to bring him back just for one more season if that's what Green wants? And how far up are they willing to go in terms of money for Danny if he's looking for a multi-year deal?
Kawhi's extension becomes even harder to predict
I've written about my concern with a potential Kawhi Leonard extension all off-season long simply because it's the last piece of the post-Duncan puzzle now that Parker and Pop are locked up. Unfortunately, this new development makes things harder to read.
First of all, any slim chance that there might have been of Leonard giving the Spurs a hometown discount has disappeared. The only motivation to do that was to make sure the front office had cap space to continue to improve the team. The new TV deal makes sure they do even if Leonard is signed for the max, so there's no reason for him to leave money on the table. So Kawhi is getting the max. Then why haven't the two sides agreed on an extension already?
If the league doesn't smooth out the jump the Spurs would absolutely offer the five year max in a second. Leonard would get 25% of the cap number from next season and that should be around $66 million, which means in the first year of his extension he would be getting around $16.5 million. That would be about $6 million less than someone getting the max after his rookie contract in two years. Even if he doesn't continue to improve, Kawhi's contract would be a total bargain as soon as the cap rises and by offering the extension the Spurs would continue to foster a good relationship with Leonard.
But if the league does smooth out the jump, Leonard would be getting 25% of the cap from the 2015/16 season, which should be significantly higher than the $66 million that was expected before the TV deal. If that's the case, it would be better for the Spurs to let Leonard become a restricted free agent. That way they would have the ability to match any offer he might get while still being able to preserve cap space, as he would only count against the cap for the sum of his qualifying offer ($4 million). That could allow the team some room to maneuver and sign someone to ease the transition should Duncan retire.
In either scenario, Leonard could simply decide to sign the qualifying offer. That has rarely happened in the past but Greg Monroe did it this year and it could pay off big time for him if the increase in the cap is started next season. Leonard could do the same, play one more year for the Spurs with a no trade clause, then become an unrestricted free agent the summer the cap will finally explode and in which a bunch of teams will have cap space earmarked for Kevin Durant that they will not know what to do with when they strike out.
That would involve taking some serious risk on Kawhi's part, since he hasn't made enough money to last him a lifetime yet. A serious injury could derail his career and he would surely regret passing on that extension. Before this news, it made no sense for him to go for it. But now the potential reward is so big, it might be tempting to gamble on himself.
I wouldn't expect any news on Kawhi's extension for now. Not before both parties know how the league plans to deal with the increase in the cap. I truly believe Kawhi is going nowhere, but it will be fascinating to watch how things unfold.