In a rather lengthy interview with Woody Paige and Les Shapiro on The Sports Show, Josh Kroenke covered numerous topics that pertain to the Kroenke Sports and Entertainment empire, amongst them the Denver Nuggets salary cap situation. A particularly interesting statement by Kroenke was “when the cap jumps next summer on the Nuggets side we’re going to have the ability to add a max player to that team without changing anything” (check around the 1:40:00 mark to hear for yourself). It’s an interesting idea because, as Kroenke notes, the Nuggets have not made a major free agent acquisition since Kenyon Martin eleven years ago. Even more intriguing is the salary cap will balloon over the next TWO years, making the definition of who qualifies as a max free agent next year a bit murky.
We’re going to have to spend an obligatory paragraph talking financial details. If you haven’t been following the news, the NBA salary cap is set to grow rapidly over the next two years. This is due to a nine year, $24 billion television deal which effectively triples the current revenue the NBA receives from ESPN and Turner Sports for broadcasting rights. The salary cap for the 2015-2016 season is set at $70 million dollars, which was an 11% increase from the previous season, but the prognosticators are setting the 2016-2017 cap figure at around $90 million. That’s a 28.5% rise in the cap, an all time record. Compounding the issue though is predictions for the 2017-2018 cap come in at a whopping $108 million, which would be a 20% increase on the 2016-2017 figure! Holy math batman! This sharp two year spike means unprecedented cap space for all and likely a whole lot of players getting paid max money on short term deals next season.
Having enough cap space to fit a max contract is a competitive advantage in the free agent market. Without the space a team would have to work a sign trade which can be difficult given the rules on trades in the NBA and the large amount of salary that would have to be interchanged. This is the first hole in Kroenke’s statement. As it stands right now of the thirty teams in the NBA, sixteen of them will have the space to sign a player to a max deal without having to, as Kroenke put it, “change anything”(small disclaimer: the max contract player would have to have been in the league nine years or less). Then throw in the possibilities of contract options being declined, player retirements and bird rights and nearly every team in the league could have the space for a max contract. So any competitive advantage in free agency the Nuggets would have in a normal offseason has been nullified by this cap explosion. The second hole in the max player deal next year is given that the cap is set to expand again in the 2017 offseason, a player who signs a max contract in the 2016 season is effectively no longer a max contract player just one season later and I’ll bet my bottom dollar agents will play that angle to get good not great players the most they can be paid this offseason.
If a player signs a max deal for 30% of the salary cap (this would exclude any players who have less than seven years experience and don’t meet the 5th year 30% max extension criteria) this offseason, that deal is likely to be somewhere around 26% of the cap the following season and that percentage will fall each season as the cap continues to grow. So what’s this mean? It means guys like DeMar DeRozan and Mike Conley immediately made my list of locks for max contract extensions (I had twelve locks in total). Another dozen or so players I wrote down as maybes, depending on how things break for them this season. These are guys like Jared Sullinger, Donatas Motiejunas and Harrison Barnes who could easily play their way into top dollar deals. Finally, there’s going to be some guys who get crazy offers that probably make everybody say “they gave him how much?!” Those are the contracts the Nuggets obviously have to avoid. In fact, the Nuggets should avoid max contracts altogether next season.
Tim Connelly has been a sneaky good general manager after his first offseason when he had what, two weeks to prepare? His track record in the draft is outstanding, meanwhile he’s also been accumulating a handful of picks that the Nuggets can cash in over the next couple of years. This is a huge benefit to their long term cap projections because unlike max contracts, rookie scale contracts are not tied to the salary cap and thus are not about to increase astronomically (unless of course that changes when a new CBA is negotiated in 2017). The cap explosion will slow down after the 2017 offseason and in the meantime the Nuggets can ride it out on the rookie deals of Jusuf Nurkic, Emmanuel Mudiay, Joffrey Lauvergne, Nikola Jokic and Gary Harris (plus 2 – 1st rd picks in the 2016 draft). If Danilo Gallinari plays well over the next two seasons then he can opt out and be in for a big payday but other than him the impending free agents over the next two years are J.J. Hickson, Randy Foye and Darell Arthur. Nothing against any of them but you could cut all three tomorrow and I wouldn’t write more than a hundred and fifty one words about it. Even if they give Gallo something in the range of $25 million a year Denver could still afford a max contract and then some in 2017. The Nuggets may fail to hit the salary floor without picking up some free agents next offseason but if the team is playing hard and improving then screw hitting the floor and reward your guys with a nice yearend bonus (the NBA requires teams to pay the players the difference between the sum of the player salaries and the salary floor if the player salaries are the lesser of the two).
Potentially, if you can convince the right free agent to come here, getting a guy locked into a max deal in 2016 will save some cash down the road. However, I doubt Lebron James is going anywhere or signing anything but another one year plus one year player option deal. Kevin Durant should do the exact same thing because its an excellent financial strategy for a superstar and I highly doubt he’s going to entertain playing in Denver (though I’m sure Tim Connelly will at least call and ask). Beyond those two guys there aren’t any free agents next offseason who would make Denver an instant contender. The Nuggets are better off practicing patience, continuing to develop their young talent who are on excellent contracts and then picking the moment when they can make a true impact signing (or signings) that will help put them over the top.
