We dove fairly deeply into the Raptors’ salary cap planning for the next couple of seasons here and here — and not much has changed. The open question at the time, however, was how the NBA would adjust to the financial changes wrought by the COVID-19 pandemic. More to the point, what would a sizable loss in league revenue mean for the NBA’s salary cap and upcoming free agency period?
We have a little more clarity about all of that now as we dive into the off-season in earnest and race towards the 2020-21 year. For the Raptors in particular, there’s a little bit of good news for the team’s longer term planning. Let’s go over that now.
This Year’s Salary Cap
The NBA and NBPA have agreed to keep the cap flat this coming season compared to last season — so once again we have a $109.1 million salary cap. This was the assumption we made in the pieces linked above, so all the logic about what teams will have cap space, the value of Pascal Siakam’s extension, and so on, are all still the same.
So, nothing too radical, but there is value in that certainty alone.
Another tidbit about this coming year is the tax line — it is similarly set as a flat tax line compared to last season, at $132.6 million. So the discussion about the Raptors’ limitations if they want to avoid the tax altogether this season still applies.
It is worth noting that the league also indicated that they would reduce tax bills this coming season by the same percentage of the league revenue shortfall compared to original projections. So tax bills for teams will be lower than usual. But the Raptors’ concern, as we noted in the pieces above, is not really the amount of tax they pay this year but avoiding triggering the repeater tax condition for the next few years altogether. This means while that reduction offer it’ll likely have little impact on Toronto’s decision-making.
Next Year’s Salary Cap
Now we get to the big news. Instead of a flat cap moving forward, as we had assumed, the NBA agreed to a minimum increase of three percent in each season for the rest of the CBA duration — and a maximum of ten percent. For next season, that will mean a cap of at least $112.4 million (probably exactly that value, as revenues normalizing that quickly is exceedingly unlikely). That’s $3.3 million higher than expected.
To be clear, due to some things like roster slot cap holds and draft pick salaries and maximum salaries for free agents that are tied to the cap, that doesn’t quite translate directly into $3.3 million of additional flexibility for the Raptors. Their total committed cap next summer actually increases from $58.6 million to $58.8 million. Add in the increase of a maximum salary slot for a prime aged player with 7-9 years of experience (like, say, Giannis Antetokounmpo) of about $1 million, and the increased flexibility is more like $2.1 million.
Still, that could be a real difference maker. If we also assume that Terence Davis is no longer in the Raptors’ long-term plans (which may well be a poor assumption, I can’t predict how the team and league will approach his case), that would free up an additional $1.1 million in flexibility.
The long and short of the idea behind keeping careful tabs on that flexibility is to be aware of how much money the Raptors can commit to re-signing Fred VanVleet and keep their maximum salary slot open.
Last time, we settled on having $18.5 million to fit Fred’s salary in 2021, which with some careful contract construction meant that he could sign for up to a 5-year, $104 million deal this summer — or at about a $21 million per year average salary.
Now though, with the extra flexibility from the cap rise, that becomes a $116 million contract over five years ($23 million average). And if the Raptors remove Davis from the team, it becomes $122 million over five years ($24.5 million average).
Those are the sorts of salaries the team will balk at regardless, I expect. But there is one other nice side effect, beyond not having quite as low a walk-away line in negotiations. What if the Raptors want to keep aside the extra $5.6 million needed to be able to sign a 10-year veteran (like, sure, Kawhi Leonard), instead of a 7-9 year veteran? Those more experienced vets can earn 35 percent of the cap compared to 30 percent for the younger stars.
That scenario seemed very unlikely before, with VanVleet needing to agree to a deal worth only about $14.5 million annually to be able to fit beside such a star next season. But now with the NBA’s modest cap increase plan, that becomes $17 million — and without Davis, it becomes $18.5 million. Those two numbers in particular seem a little more likely, especially if VanVleet’s market is just slightly cooler than expected.
That could also allow Toronto to set aside a few extra million in the event they do sign a 7-9 year veteran to add another piece to the team at a price solidly above the minimum salary.
Either way, all this is good news for the Raptors, even beyond the simple excitement surrounding the intense off-season and swiftly approaching season we have coming our way.