BRI Reduction: What Could It Mean?
Over the course of the last few months NBA fans and media have had more than their fill of the words “basketball-related income” (BRI), “salary cap,” “collective bargaining,” and all the other words that go along with our least favorite word: “lockout.” Over the course of this very public back and forth all sorts of proposals, some real and some theoretical, based in truth and in simple logic, have been discussed. While nothing has been agreed upon yet (and may not be for some while), most simply wonder what any of this will mean to their team.
For example, what does it mean to the Oklahoma City Thunder if the Players agree to a deal for 52% of BRI instead of the 57% in the old deal? What could that do their cap figure? What does it mean for their future?
In that spirit let’s take a look at the numbers and what some of the various proposals would mean to the contracts already on the books for the 2011-12 NBA season. To do that, we have to make a few assumptions and pick a starting point.
1 – Our starting point is the salary cap for the 2010-11 season, which was set at $58.044 million with a dollar-for-dollar luxury tax kicking in at $70.307 million.
2 – Using that number, and the salaries on the books for 2011-12 (listed here on HOOPSWORLD), we can calculate how much salary cap space a team could have if the cap figure did not change. The cap figure changes every year based on BRI (usually upwards, and 2010-11 was a very good year for the league), but that’s the latest number we have to work from.
3 – To the salaries on the books, the calculated first-year salaries of the 2011 first-round draft picks have been added based on the 2011-12 Rookie Salary Scale. These numbers could change in the next CBA, but that’s what we have right now. Note some were NOT included; Jonas Valanciunas (Toronto), Donatas Motiejunas (Houston), and Nikola Mirotic (Chicago) were omitted because they were not planned to play for their NBA team in 2011-12 anyway. These players would still create a cap hold, but that’s another topic for another day.
4 – Since we know what the salary cap figure and the luxury tax figure was for the Players receiving 57% of BRI for the 2010-11 NBA season, we can calculate some rough numbers for 2011-12. Actually, the numbers aren’t rough – it’s the calculations. Keep in mind as you read these are all estimates. The real numbers, whenever this lockout comes to an end, could end up being different, thought the relativity will not change (team numbers relative to other teams, or percentages relative to the final cap and tax figures, for example). Calculations of BRI assume the amount BRI totals does not change; whether the Players get 57% or 46% or any amount in between, it’s an easy number to calculate because it’s based on the same total. So, we can take a BRI number for the Players – say a 50-50 split – and find out that percentage is roughly 87.7% of a 57-43 BRI split. Using that percentage we can get an estimate of what the cap figure would be for that split, and then find other numbers accordingly. We can do the same for luxury tax.
5 – At the moment, let’s assume there are no salary rollbacks. At last report, before the first two weeks of the 2011-12 NBA season were cancelled, the Owners had agreed not to push for salary rollbacks to existing contracts. Given the offers from the Owners have been promised to worsen over time, that may be back on the table, but for now let’s assume no. Why is that important? Because if contracts stay the same and the cap and tax figures are lowered, spending power for free agency is limited accordingly. A team may have room to add a star player at a $58 million cap, but not at $52 million.
Whew. Enough of that, let’s see some numbers. First let’s start with the cap figures for all 30 teams based on points 2 and 3 above. Check it out (team, contract total, number of players under contract, number of Qualifying Offers out, total $ of said Qualifying Offers which could impact the contract totals):
|New Jersey Nets||$42,065,902||10||0||$0|
|New Orleans Hornets||$44,481,930||6||1||$3,377,604|
|Golden State Warriors||$51,379,752||10||1||$1,105,366|
|Oklahoma City Thunder||$54,756,671||15||1||$3,126,764|
|New York Knicks||$62,222,723||10||1||$920,525|
|San Antonio Spurs||$74,156,774||13||0||$0|
|Portland Trail Blazers||$74,771,282||13||2||$9,960,175|
Taking into account the salary cap and luxury tax levels for the 2010-11 season, we have 17 teams with some amount of cap space (from Denver down to Philadelphia) and four teams (San Antonio to the L.A. Lakers) already in the luxury tax area. Also worth noting is those dollars are earmarked for 324 players, only 10.8 per team. If the 24 restricted free agents are factored in the average only increases to 11.7. That average is important because teams (under the previous CBA) are required to carry 13 players on their roster. There is also another stipulation that the entire league must average 14 players per team or there is a surcharge to the league.
All of this is to say rosters have a long way to go to be filled and money will need to be spent to fill those rosters, whatever the outcome of the next collective bargaining agreement. Looking at the chart above, seven teams have less than 10 players already signed; New Orleans only has six and Boston only seven. On the opposite end is Cleveland (16 – so they actually have to cut someone) and Oklahoma City (15).
So what happens when we do some math to calculate the cap and tax figures using the previous cap number? Here’s how they break down at some of the most commonly discussed BRI percentages for the players (remember, the previous number was 57%):
|BRI||% of previous||Cap||Tax|
Again, these are examples, just to compare how the values could change at various different levels of BRI guaranteed to the players. Take a moment and compare these cap and tax numbers to the previous table. The result is that at each lower BRI figure, fewer and fewer teams will actually have cap space to spend on free agents, and more and more teams could move into luxury tax territory.
Despite not wanting to sound like a broken record, these figures are for largely incomplete rosters. And as another reminder, the latest round of talks had tabled the ideas of both a hard cap and salary rollbacks, which means no matter what happens (assuming both of those stay off the table) the salary cap will be reduced in the next deal from last season’s level. The tax may be more negotiable.
And yes, looking long-term whatever the final CBA ends up looking like things will work out. In three or four years, when teams have worked their way out from under deals made under the old rules, these restrictions may not be an issue.
But in the short term, for a lot of teams, it could hurt. A lot. Look at Boston: they could be a luxury tax payer despite having only seven players under contract. In the most drastic example, New Orleans could only have $2.4 million in cap space to fill out their roster before being limited to minimum salary deals (which likely means they can only improve via the likely reduced Mid Level Exception, should it stay around as it sounds like it will).
The Owners and the Players have somewhat valid reasons for wanting to hold their ground in these negotiations (and yes, both also seem detached somewhat from reality and are reacting emotionally, the cardinal sin of business negotiation), but it would be interesting to hear what some on either side think about what these changes will do to their own teams in the short-term. Will a championship contender fall out of contention because they are hamstrung when filling out their roster?
Unfortunately those are questions that can’t be answered, not until we have an agreement to use as a reference. But if the above examples insinuate anything at all, it’s that the mess of the lockout is not going to be over even after the Owners and Players sign on the dotted line of a new collective bargaining agreement. Instead, fans that have had their favorite sport torn away from them for far too long may then see their favorite teams ripped apart.
As if this mess wasn’t big enough.