NBA Lowers Salary Cap To Limit Signings

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VIA ESPN:

The NBA’s ballyhooed free-agent summer of 2010 might have quietly taken another hit late Tuesday night.

In a memo announcing next season’s salary cap and luxury-tax threshold, sent out shortly before the league’s annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season.

The official league memorandum, obtained by ESPN.com, forecasts a dip in basketball-related income in the 2009-10 season of 2.5 percent to 5 percent, which threatens to take the 2010-11 cap down some $5 million to $8 million from last season’s $58.7 million salary cap.

A significant drop for the luxury-tax threshold is also projected going into the summer of 2010. If basketball-related income drops by 2.5 percent in 2009-10, league officials are projecting a 2010-11 salary cap of $53.6 million and a luxury-tax line of $65 million. If BRI, as it is referred to in the NBA, decreases by five percent, teams would be looking at a $50.4 million salary cap and a luxury-tax line of $61.2 million in 2010-11.

Teams should be aware of this projected BRI decrease,” reads the memo, “and plan accordingly.”

The new figures for 2009-10 just announced by the league have set the salary cap at $57.7 million per team — down $1 million from $58.7 from 2008-09 — and the luxury-tax threshold at $69.9 million.

Commissioner David Stern actually warned during the NBA Finals of a BRI shortfall of “maybe as much as 10 percent” from last season to next season, but Tuesday’s projections were sufficiently dire for teams such as the New York Knicks that have been planning for months to make a significant free-agent splash next summer.

When Knicks president Donnie Walsh took the job in April 2008 — before the global economic downturn that, as with most businesses, has hit the NBA so hard — some teams around the league were projecting a 2010-11 cap ceiling in the $63 million range per team. So in the best-case scenario outlined by the league office Tuesday night, New York would have roughly $10 million less in spending money next summer than it originally planned for, although the memo did include a disclaimer stressing that these were “early” projections that could “change based on economic conditions and as more information on leaguewide business performance becomes available.”

In June, when asked by Stern to give a group of reporters some perspective on what a 10-percent drop (or thereabouts) in leaguewide revenues might do to free-agent spending in the 2010 offseason, NBA president Joel Litvin said he’d anticipate a “significant impact” in terms of slicing into the amount of spending money many teams once expected to have.

The Knicks, for example, increasingly look as though they will be restricted to signing one maximum-salaried player that summer if the latest projections hold, which theoretically would only enhance the Cleveland Cavaliers‘ chances of retaining LeBron James, given the other holes in the Knicks’ roster. New York’s original plan to lure James was founded upon trying to sign James and a second marquee free agent in 2010.

Teams have been bracing for reductions in the cap and luxury tax, but seeing such numbers circulate was still jarring for many team officials.

Real scary,” said one Western Conference executive.

Said another from the West: “The figures for [2009-10] are better than I expected. It is [the summer of 2010] that will be scary.”

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