For about a year now, NBA observers have been pointing to this summer as the time the bill will come due for the league's irrational exuberance two years ago, when teams spent wantonly after the league's salary cap jumped $24 million thanks to new national TV deals.
Now that the 2018-19 league year is almost here -- along with the start of free agency at 12:01 a.m. ET on Sunday -- just how bad does the market look for this year's free agents? And what kind of opportunity does that present the handful of teams that will have cap space to use in free agency? Let's quantify what will make this summer so different from the past two.
How much money is out there to spend?
Including scale contracts for first-round picks and player options that will likely be picked up before Friday's deadline, NBA teams are currently committed to spending about $2.8 billion for the 2018-19 season. Exactly how much they will spend is impossible to predict with certainty, but in the recent past, teams have typically spent between 10 and 15 percent more than the collective salary cap for all 30 teams (projected to be a little more than $3 billion in 2018-19).
Assuming spending again falls in that same band, that means teams have somewhere between about $500 million on the low end and about $645 million on the high end to spend on free agents. That's bad news given that collectively the players hitting free agency made $650 million in 2017-18. At best, free agents will as a group achieve parity with their former level of pay. At worst, they're collectively in for a pay cut of more than 20 percent.
This summer's situation contrasts with the past two years, when teams were spending heavily to keep up with the growth in the salary cap. Last season, free agents saw their salaries collectively increase about 3 percent. And in 2016, when the cap jumped, free agents got an incredible average raise of more than 55 percent.
How much will a win cost in free agency?
As a group, my projections for this summer's free agents show them providing around 240 wins above replacement player (WARP) in 2018-19. After factoring in the amount needed to fill out rosters with replacement-level players at the minimum salary, that leaves teams with about $1.75 million per WARP at the high end of projected spending, down to $1.15 million at the low end.
Naturally, this is a big change from recent seasons. Last summer, my projected cost of a win ranged from $2.7 million to $3.2 million and the actual figure ended up being $2.8 million. In the halcyon days of 2016, I projected a range between $3.3 million and $5 million per WARP before teams actually spent $3.8 million per WARP.
Even as compared to 2015, the summer before the cap spike, this summer's free agents will probably get relatively less. Back then, teams paid $2.1 million per WARP, spending a total of $736 million in free agency.
By next summer, things should get back closer to normal. Including 2019 first-round picks, teams have just $2.2 billion committed so far for 2019-20, when the cap is projected to take another sizable jump to $108 million. While extensions and multiyear contracts for this year's free agents will add to that total, that currently leaves teams with about $1.3 billion on the low end to spend in free agency next summer.
As a result, the handful of teams that can and will spend this year have the opportunity to land players on favorable multiyear deals that will provide value in future years. Danny Leroux pointed out at RealGM.com that they could emulate the Portland Trail Blazers' strategy in the summer of 2015, when they landed Al-Farouq Aminu (four years, $30 million) and Ed Davis (three years, $20 million) on deals that looked lavish at the time but appeared bargains in the context of 2016's profligate spending.
Which free agents will get squeezed?
Of course, not all free agents will be able to command the average salary per WARP on the market. In particular, this summer's free agency looks rough for centers and non-max players hoping to make more than the projected $8.6 million non-taxpayer midlevel exception.
Let's start with centers. With the Phoenix Suns drafting center Deandre Ayton No. 1 overall, the Dallas Mavericks look like the only team with cap space likely to pursue a starting center. Worse yet, the Mavericks could take themselves out of the center market by trading for DeAndre Jordan if he picks up his 2018-19 option.
If Dallas is out of the running, the other top centers on the market will have little leverage to command a big offer from their current teams. DeMarcus Cousins' best alternative to re-signing with the New Orleans Pelicans may be a sign-and-trade offer, while restricted free agents Clint Capela and Jusuf Nurkic will be left utilizing the threat of signing their one-year qualifying offer and becoming unrestricted free agents in 2019. (In Nurkic's case, that might not be much of a threat because the Blazers would benefit from his $4.8 million qualifying offer adding relatively little to their luxury-tax bill.)
Nurkic is also in a tough spot as a free agent who expects more than the midlevel but won't likely be a target of the teams with cap space to offer more than that. Non-centers could face the same issue. If they don't re-sign with their current teams after one-year balloon payments, Kentavious Caldwell-Pope of the Los Angeles Lakers and J.J. Redick of the Philadelphia 76ers will have a tough time getting offers for more than the midlevel.
After all, just eight teams figure to start free agency with more cap space than the non-taxpayer midlevel. Of those teams, the Atlanta Hawks, Chicago Bulls and Sacramento Kings seem likely to use their space to facilitate trades, and the Lakers and 76ers will surely be focused on pursuing superstars, starting with LeBron James. That leaves just three teams looking to sign non-max free agents for more than the midlevel: Dallas, Phoenix and the Indiana Pacers. If those four teams aren't interested, players will have few options.
Already, we've seen the prospect of a frigid free-agent market scare more players (17) into picking up their options than the past two summers combined (nine). So players and agents won't be totally caught off guard by less money being available this time around. Nonetheless, free agents who missed out on the 2016 bonanza may have a hard time understanding why they won't share in those spoils based entirely on bad timing.