In July 2016, the Portland Trail Blazers signed restricted free agent Meyers Leonard, their backup center, to a four-year, $41 million contract. It was at the tail end of a surge of large contracts given out that summer, the greatest time in NBA history to be a free agent. This summer, the Blazers' starting center, Jusuf Nurkic, will be a restricted free agent. He might find it hard to draw an offer from an outside team larger than what his backup is being paid. In the 2015-16 season, the Boston Celtics assembled an impressive 48-34 season behind the play of a collection of gritty perimeter players. Two of them were Evan Turner and Marcus Smart. Turner was a bit more effective as an offensive creator, Smart more of a defensive grinder. But they played similar minutes and offered similar stats. Turner, who had the fortune of being an unrestricted free agent that summer, got a $17.5 million per season deal from the Blazers. This summer, Smart, who will be a restricted free agent, might face an environment in which role players could struggle to field outside offers above the $8.8 million midlevel exception, according to multiple league executives. Smart and Nurkic aren't alone. It's always hard to be a restricted free agent but even unrestricted free agents this summer - players like Avery Bradley, Isaiah Thomas, DeAndre Jordan, Lou Williams and Will Barton - will likely find things dramatically different than just a couple years ago when teams handed out a billion dollars in just 24 hours. These situations illustrate a fast-changing NBA economic climate that is already showing up as teams dig into trade deadline maneuvers. The bull market that surged in the league in 2016 and 2017 is giving way to a bear market. The league is about to face a cash crunch. "The trade market is mostly sellers right now," one general manager said. "There's only a few buyers. Looking at everyone's books, I don't think that's going to change much this summer." Here are a few numbers to explain Currently, there are five teams slated to pay the luxury tax this season, which means those teams are spending more than $119 million on payroll. Last season, there were two such teams. In the 2015-16 season, there were seven. That's a total of 14 teams over a three-year span. That was about the same as the previous three-year span: From 2012-13 to 2014-2015, a total of 16 teams paid the tax. Average it out, and roughly five teams per season have been willing to pay the penalty since 2012, which is relevant because that season is when a more penal luxury tax was introduced. Next season, 12 teams are currently projected to be in luxury tax territory, and another handful could easily get there by re-signing their key free agents. For example, the Milwaukee Bucks aren't currently projected to be in the tax but would cross into the zone if they re-sign free-agent-to-be Jabari Parker. "Add it all up, and it's a bad year to be a free agent -- or a team looking to reduce salary." "The luxury tax was not designed for this many teams to pay it," a league executive said. "Many of those owners probably didn't think they'd be paying it. Quite a few of those teams are probably going to take steps to get out of the tax or limit new spending." This season, teams are paying players a collective $3.13 billion in salaries. But after large jumps in the salary cap the past few years -- from $63 million in 2014-15 to $99 million this season -- the cap is projected only to increase to $101 million next season. That's $60 million in money added to the cap. That sounds like a lot, but NBA teams already have $3.02 billion committed to players under contract next season. About 18 months ago, the NBA told its teams that the projected the cap for the 2018-19 season was going to be $107 million. "Picture the spending on salaries as a large tank of water," one GM said. "The last several years, the tank has been getting bigger, and so we've been filling it with more water. But this year the tank is staying about the same size. There's no place for the water to go. There's only so much the owners are going to spend when you have a luxury tax out there." The players are guaranteed 51 percent of the NBA's basketball-related income each season, so they are guaranteed to get a certain amount of "water," to use that analogy. However, most of that percentage appears to be tied up in players already under contract, so there won't be as much "new" money to go around.
A major NBA financial crunch is coming
ESPN | Feb 5