NBA's lowered salary cap will not affect teams much

Posted: Thursday, July 18, 2002

Don't expect many changes to NBA payrolls despite a decrease in the salary cap for the upcoming season.

The announcement that the salary cap decreased for the first time in history -- from $42.5 million to $40.271 million -- probably will not impact any teams since all but three are over the cap.

Teams expected a smaller cap because revenue will be lower thanks to a new television contract with The Walt Disney Company and AOL Time Warner Inc. that is worth $100 million less than the contract that just expired.

''It shows the system works,'' Bulls general manager Jerry Krause said. ''When you don't make money, making it harder to spend is good.''

The mid-level exception teams over the cap can use to sign free agents went up from $4.538 million to $4.545 million.

But a smaller salary cap means teams might be a little more cautious in signing players because they do not want to go over the luxury tax threshold, which was lowered from $54 million to $50 million.

Teams over that number must pay the dollar-for-dollar tax. There was no luxury tax last season because players' salaries and benefits totaled 60.2 percent of league revenues, less than the 61.1 percent figure that triggers the tax.

''Will the decrease stop us from signing players?'' Magic general manager John Gabriel said. ''You do business as usual with an eye toward coming out a little more on the cautious side.

''In general, adjustments must be made, but at the end of the day, everybody will be where they wanted to be.''

Agent Mark Bartelstein, who represents Brian Grant of the Miami Heat along with many other NBA players, said the lowered cap is ''more cosmetic than realistic.''

He added the threat of paying a luxury tax has not been a roadblock for teams to sign who they want.

''The luxury tax has an effect, but I don't think it's creating the dire straits everybody has talked about,'' Bartelstein said. ''I'd love not to have the luxury tax, but it's not preventing any movement in free agency.''

NBA spokesman Tim Frank said the lowered salary cap shows the collective bargaining agreement is working. Though the average player salary decreased last season from $4.2 million in 2000-01, Frank said this is not a trend for the future.

The average salary is expected to go up because of increases in long-term guaranteed contracts, free agent signings and exceptions available under the collective bargaining agreement.

But with average salaries going up and revenues going down, there already is speculation the luxury tax may be imposed in 2003.

Not only that, this offseason is not a free agent bonanza. Next summer, Jason Kidd, Tim Duncan, Elton Brand and Alonzo Mourning all will be free agents commanding large salaries.

''We don't know where the salaries are going to be,'' said Billy Hunter, executive director of the NBA Players Association. ''We know next year there's going to be a shortfall in money, but the way the NBA is structured, the front end of the payouts are always much thinner than the back end.''

That means revenue will increase as the television deal goes on. Until then, teams might watch what they spend.

''I don't know what affect it's going to have on the tax later on,'' Krause said. ''But obviously, if the tax drops lower next year, then teams will be afraid to spend more.''



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