It’s no secret that there could be significant financial consequences if the NBA’s relationship with China remains damaged. Keith Smith of Yahoo Sports reports that, in order to get a jump on such potential fallout, some front offices around the league are beginning to strategize for scenarios in which the salary cap for next season drops as much as 10-15% from the current projection.
The current salary cap for this season sits at roughly $109 million. The most recent league projection for next year’s salary cap sits at $116 million.
A drop of 15% from that projection would drive the 2020-21 mark back below $100 million for the first time since 2017-18. A drop of 10% would result in a $104 million limit, notably lower than this season.
Of course NBA front offices hire salary cap experts to plan for every situation, from the best to worst case scenario, this recent event in China is merely the latest example of uncertainty that executives face.
For an idea of the gravity of the potential ramifications here, consider that China’s digital streaming partner reports that as many as 500 million Chinese fans consume NBA content.
A drop below $100 million or even this season’s $109 million mark would be profound but not unprecedented. The salary cap dropped most recently in 2009-10 (by $2 million) and once prior to that in 2002-03 (by $1 million).
Of course that would result in fewer teams having cap space next season but where general managers might feel the crunch most would be with luxury tax implications. Smith notes that a handful of teams could find themselves struggling with luxury taxes that they otherwise would seem likely to avoid.
We’ve discussed the ongoing situation in China at length this week and much of the tension remains but it is worth noting that the Nets and Lakers did play their Thursday preseason game that was scheduled in Shanghai.
While there may be plenty of work to do before the relationship between the league and the country is repaired, that can be seen as a step in the right direction.
Rest assured, however, that salary cap experts scattered throughout the league will be planning for any number of steps in any number of directions.