Considering that we’ve been in the middle of some major trade talks with Andrew Bynum, Jordan Farmar, Adam Morrison, Chris Bosh, Kirk Hinrich, Devin Harris, and Brooke Lopez, I thought it would be a good time to explain to Lakers Nation the basics of the NBA Salary cap and Free Agency, so that you can understand what teams can and can’t do.
Salary Cap:
The NBA has a basic salary cap for player salaries and this cap is set by NBA Officials based on the overall league revenues generated in the previous year. If any team goes over this cap, then they will pay a 100% luxury tax. The luxury tax revenue generated is then split evenly amongst the teams that don’t go over the cap. This is where Donald Sterling has made the Clippers into one of the most profitable NBA teams in the league. You probably didn’t know that, huh?
Salary Cap Example – Salary Cap = $60M
Lakers Total Player Salaries = $100M
Total Luxury Tax = $100M – $60M = $40M
Total Paid by Lakers per Year = Total Player Salaries + Luxury Tax = $100M + $40M = $140M
To create a solid fan base and to give players an incentive to sign with their own team, a Free Agent can re-sign with their own team for 15% more than any other team in the league only if that player has Larry Bird rights (a player that has played three seasons without being waived or changing teams as a free agent). Usually, this 15% can be made up by playing for larger markets such as LA, New York, Chicago or Houston through Advertiser Kickers like Lebron’s supposed $20M/yr to play in one of these markets.
Next Page: Which Teams Have the Cap Space to be Players? Which Players are Available?
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