Report: NBA salary cap will increase at least 2% annually

NBA salary cap
Bill O'Leary/The Washington Post via Getty Images

The salary cap will reportedly remain approximately flat next season ($109.14 million).

What about beyond?

NBA teams could lose money next season. Even 2021-22 revenue could be hampered by coronavirus.

But the salary cap apparently won’t drop.

Shams Charania of The Athletic:

There will be a minimum of two percent annual growth in the salary cap and luxury tax for the remainder of the collective bargaining agreement.

Charania again reports the salary cap will remain flat next season. So, apparently this provision won’t take effect until 2021-22.

Assuming the 2020-21 salary cap remains exactly flat, the 2021-22 salary cap would be at least $111,322,800.

This is good news for teams clearing cap space for 2021 free agency (Heat, Mavericks, Raptors, and more teams that will reveal themselves this offseason) and 2021 first-round picks. Though the 2021-22 salary cap could fall far below the $125 million projection, it’ll be much higher than otherwise would’ve been possible.

The catch with this plan: What if the traditional formula (based on league-wide revenue) calls for the salary cap to decline? No matter their slated salaries, players are collectively getting only their approximate 50% cut of revenue at the end of the day. An artificially high salary cap won’t change that.

Ideally, higher escrow will cover the difference. But if the escrow account is fully given to owners and players still earned more than their 50% share, the usual solution is to decrease the salary cap from what it would have otherwise been the following season. Except that might not be possible with this new rule as it’s reported. So, expect the exact rule to be more complex.

But the major takeaway: The salary cap should rise annually even as league-wide revenue could fall. This is a form of cap smoothing designed to avoid 2016-like problems.