A Bunch Of Huge NBA Contracts Just Got A Lot Cheaper

One of the main repercussions of the NBA’s massive new TV deal is that existing contracts will become cheaper relative to the salary cap when the cap balloons before the 2016-17 season.

The cap is set to jump from $US63 million this year to (by our maths) $US88 million in two years. But the salaries for players who signed long-term contracts in the pre-massive TV deal world will stay the same.

A $US10 million salary against a $US63 million cap means one thing. A $US10 million salary against a $US88 million cap means something very different.

There’s going to be a recalibration of market values, and those guys who signed before the new TV deal are going to be artificially cheap. Guys who are now “bad contracts” will look a better because they’re suddenly a smaller proportion of the cap. Star players who got long-term max contracts in the last two years are going to be underpaid in the future.

Here are the players who just got a lot cheaper. They fall into three main groups.

1. Young stars who signed huge extensions recently.

  • John Wall, Washington Wizards (five years, $US84 million left) — Wall signed a five-year maximum extension last summer, and it was the subject of a ton of debate at the time. But now he looks like an absolute steal. He’ll make $US17 million in 2016-17 (the first year of the new TV deal), $US18 million in 2017-18, and $US19 million in 2018-19. On the open market Wall could get a max contract starting at $US26.4 million.
  • Kyrie Irving, Cleveland Cavaliers (six years, $US97 million left) — See above. Irving is going to be making between $US16 million and $US19 million until 2020.
  • James Harden, Houston Rockets (four years, $US65 million left) — Harden will make $US16.7 million in 2016-17 and $US17.8 million in 2017-18. With the new salary cap, the Rockets will be able to add a max player starting in 2016.
  • Steph Curry, Golden State Warriors (three years, $US34 million left) — Curry will make $US12 million in 2016-17, which is less than half of what he could be making on the open market. That’s insane.

2. Old stars who are in danger of becoming terrible contracts.

  • Carmelo Anthony, New York Knicks (five years, $US124 million left) — Anthony is going to be 34 years old and making $US27 million in 2018-19. That was a potential disaster in the making under the old salary cap. But under the new cap … it’s not as bad. When the TV money kicks in, the 35% maximum contract will start at $US31 million with $US2.3 million annual raises. Melo’s deal is still massive, but by the time we get to the latter years, it won’t be one of the most expensive deals in the league like it is now.
  • Chris Bosh, Miami Heat (five years, $US118 million left) — See above.
  • Deron Williams, Brooklyn Nets (three years, $US63 million left) — The general consensus is that the Nets have the worst cap situation in the league, and Williams is a big reason why. He’ll be making $US22.3 million in 2016-17. Under the new salary cap, they can probably fit two max free agents under the cap with Williams still on the roster.

3. Role players who got silly money this summer.

  • Channing Frye, Orlando Magic (four years, $US32 million left) — Frye has a goofy contract because it actually de-escalates. He makes $US8.6 million this year but only $US7.4 million by the time the deal is over in 2017-18. When he signed the deal this summer people scratched their heads, but $US8 million might be the going rate for a decent role player with the new cap.
  • Avery Bradley, Boston Celtics (four years, $US32 million left) — The best case for Bradley is that he’s the evolutionary Tony Allen — a defence-first wing who makes around $US5 million per year. Giving him $US8 million for four years seemed like an overpay this summer, but not now.
  • Jose Calderon, New York Knicks (three years, $US22 million left) — The Knicks could have gone into the summer of 2016-17 with only Carmelo Anthony on the books and had all sorts of flexibility in free agency. Instead they acquired a point guard who’s making $US7 million in 2016-17. A starting point guard at $US7 million suddenly looks cheap.

This is something of a market inefficiency. Teams that locked in their players long-term under the old salary cap are going to have an advantage when the new money kicks in.

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