Wednesday , Jul , 11 , 2007 Oly Sandor

NBA Salary Cap Jumps To $55.6 Million, But Will Teams Spend Extra Money?

The salary cap has risen to $55.6 million for next season … This means the NBA is making money, but will GMs use the extra cap room on this year’s free agent class? … Click here for news and analysis on this story …

The Associated Press reports on next season’s salary cap:

The NBA set next season’s salary cap at $55.63 million Tuesday, paving the way for teams to begin signing free agents.

The new cap goes into effect Wednesday, when the league’s moratorium period ends and trades can be made. Teams have been allowed to negotiate with free agents since July 1, but the deals couldn’t be completed until the new cap was determined.

The salary cap will rise about $2.5 million from last season’s $53.135 million figure.

Also, the mid-level exception is rising from $5.2 million to $5.36 million, and the tax level is $67.87 million, up from $65.42 million. Teams will have to pay a $1 tax for every $1 they exceed that figure by.

The minimum team salary is $41.72 million, 75 percent of the salary cap.

My Quick Take: There are a couple of points worth noting. First, the league is in good shape if the salary cap goes up. The salary cap is a fixed percentage of the league’s total revenue. The cap has risen because total revenues have risen. This shows that the NBA is heading in the right direction.

Second, teams have traditionally spent more money on player salaries when the cap has gone up. But I don’t see this summer’s cap jump influencing GMs spending habits. Sure, newly minted max players and mid-level earners get a raise. But this year’s free agent class is mediocre, so most teams will probably save the extra space.

However, some teams will benefit from the luxury tax rising to 67.9 million. For example, a team that acquires owes The Big Ticket millions of dollars as part of a trade kicker payment. The higher luxury tax gives them added flexibility to absorb this payment.

The higher salary cap and luxury tax gives teams more of an opportunity to trade for star players.

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