Examining The Cap Increase And How It Effects The Lakers


Much has been said (mainly scrutinized) at the Lakers “plan A” last summer that included going all-in on max contracts for either LeBron James and Carmelo Anthony. This summer, the early indications are a similar strategy of star-chasing, with the likes of Kevin Love, Rajon Rondo, and Goran Dragic atop their rumored wishlist.

All three stars would likely command a max contract from the Lakers, a requirement that has had many fans balking at the idea of bringing in said superstars. However, for one very big reason, this may not be a bad idea for the Lakers going into free agency.

With the NBA’s recent multi-BILLION dollar TV deal, coupled with the NBA player’s union rejecting a “smoothing” of the salary cap, the salary cap is set to spike in the summers of 2016 and 2017. How much is a spike, you ask? Try nearly doubling.

The current salary cap is set at just a tad over $63 million this season. Next year, the projections are around $67 million. However, heading into the 2016-17 seasons, conservative estimates are nearly a $20 million jump, while the following season could be another $10-15 million jump.

The most aggressive estimates have come from Zach Lowe, who recently predicted the cap eclipsing the $100 million mark:

"The cap could jump from $90 million in 2016-17 to as much as $105 million the year after, per league sources"

That’s at least a $30 million jump, with the possibility of nearly a $40 million increase. That’s a staggering, staggering amount.

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What does this mean for the Lakers? Well, max contracts now won’t be cap killers in the future. All three of Rondo, Love, and Dragic would make in the neighborhood of $20 million per year under a contract. Under the current cap, a $20 million contract accounts for 31% of cap space. Assuming the cap jumps to $90 in 2016, that same contract is only 22% of the cap, and in 2017, it’d only be 19% of the cap.

For some context, a contract that is 22% of the current cap would only be $13.86 million, and a contract taking up 19% of cap space would be just $11.97 million. Would you sign Rondo, Love, or Dragic for $12-14 million? Of course you would.

This obviously applies to any contracts signed this summer. There are many benefits of overpaying a restricted free agent like Tobias Harris or Khris Middleton could be worth throwing a couple extra million dollars at. Most certainly, you hand max contracts to the likes of Jimmy Butler and Kawhi Leonard (although neither are likely to sign).

Along these same lines, this makes draft picks all the more important, especially first-rounders. Julius Randle’s $3.1 million contract next year looks very nice next year, but even as it escalates on a yearly basis, it’ll take up a lesser percentage of the cap in the 2017-18 season at $4.1 million. If you assume the Lakers get the #4 and #27 picks in the draft (which they’re projected for now), here’s the percentages of the cap they’d take up with their salaries in parentheses:

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Less than 1/10 of the salary cap would be dedicated to like three solid contributors. You can add in a projected $20 million contract to Love, Rondo, or Dragic at roughly 30% of the cap in 2016-17 and roughly 27% in 2017-18. A contract to Middleton, Harris, Butler, or Leonard lowers that percentage even more.

This isn’t breaking news to anyone working in the league. GMs and owners know that the cap is going up and will look to sign long-term deals this year. But that also means agents and players are going to looking for that extra money.

The sum of it all is this: don’t get discouraged or frustrated if the Lakers overpay for a player this summer. It’s a necessary risk for long-term success.

Next: LSL Podcast: Lakers Draft Prospect Breakdown