The NBA may be looking at returning in the near future, but that doesn’t mean there won’t be significant financial consequences for the league from the coronavirus pandemic, which has kept most sports suspended for well over two months.
Just how steep those financial consequences will be depends on where the cap settles. The best case scenario would be the NBA and NBPA implementing an arbitrary cap number that mirrors 2019/2020, which was set at $109 million.
A more reasonable expectation is a cap set lower than that amount, which is going to challenge most teams, as they’ve been planning for years to work with a steadily increasing cap number.
In the event of a cap decrease, luxury tax implications could come into play unless the league and the union decide to suspend the tax for a year, or until league revenue is back on stable footing. That’s a fairly significant step however, and would give teams deep into luxury tax territory a free ride, which teams under the luxury tax threshold might have a problem with.
Even if we ignore any luxury tax issues, working a decreased cap number, and outright now knowing when it’ll bounce back to normalcy, means it’s logical to assume most teams will refrain from making use of their mid-level exceptions.
Given the concern regarding a potential second coronavirus wave come fall or winter, adding long-term money to the cap sheet could prove disastrous for some franchises.
NBA Commissioner Adam Silver recently said on a call with NBPA representatives that “This could turn out to be the single greatest challenge of all our lives,” according to ESPN.
Silver’s evaluation of the situation is correct, and it stands to reason that NBA teams will spend the next year, and potentially longer, carefully planning and coordinating their cap sheet to have significant flexibility, should the coronavirus show signs of re-emerging.
Teams are also likely to take less risk due to uncertainty of the future. Examples such as the Chicago Bulls handing Jabari Parker a one-year “prove it” contract worth $20 million, as they did in 2018, will be a thing of the past, at least until the league, and the world, is back on steady ground.
What does this mean for the 2020 free agency class, specifically NBA point guards looking for new contracts?
Due to the financial implications, free agents will find their market limited compared to years past. How much will teams be willing to shell out for Fred VanVleet or Goran Dragic this year, knowing full well the league cannot guarantee a return to normal by the start of next season?
VanVleet, who could probably have seen a payday of upwards of $20 million annually, might now have to ready himself for a contract offer worth substantially less solely due to the lack of knowing where the league’s economy is a year, or more, from now.
Rest assured, VanVleet will still get quality offers given his production and age. At 26, VanVleet just came off the best season in his career, netting over 17 points and six assists per game. But what was once a considered an absolute certainty, in regards to a significant contract offer, is now a bit more murky.
The rest of the point guard field find themselves in an even worse situation.
Dragic will be 35 this summer, meaning teams are less inclined to spend big in either years or monetary value. The Heat could use their Bird Rights on returning him on a one-year balloon deal, unless of course even those type of contracts are out of the question these days.
D.J. Augustin, Jeff Teague and Isaiah Thomas, who are all on the wrong side of 30, could see their market shrink not solely due to teams’ financial limitations, but also an influx of point guards in this year’s NBA draft.
The first round of the draft could see at least 10 point guards be selected, further lessening a need for veteran point guards on the market looking to earn a significant income in 2020/2021.
Additionally, young point guards like Ky Bowman and Jordan McLaughlin might be worth more to invest in, considering their age, to keep a reliable back-up handy for a few years, without being too concerned about a productional drop-off.
Bowman is currently under contract with the Warriors for another two seasons, but both are non-guaranteed. So if he hits the market, it would stand to reason that teams make him a priority over players who are more inclined to drop off, while also asking for more money.
As such, it’s fair to question whether any of Augustin, Teague or Thomas will even earn more than the veteran minimum next season.
This type of restricted market only makes it that much more likely – dare say, inevitable – that veteran point guards with player options, or early termination options, decide to stay put for a year, as to maximize their earnings.
Utah Jazz floor leader Mike Conley has an early termination option for this offseason. If he doesn’t exercise it, he’ll return to the Jazz and earn $34.4 million next season. To put that into perspective, that one-year amount might mirror the financial proximity of what a team would pay him over the next four years, in total, if he hit free agency.
Chicago’s Kris Dunn is entering restricted free agency and will likewise struggle to find a strong market. While the defensively-inclined Dunn finally seemed to embrace his future as the 2020’s version of Tony Allen, the Bulls can match any offer sheet he signs. For any team interested in Dunn, they’d have to offer him a deal richer than what the Bulls feel comfortable paying, which in the current market seems like a stretch to even happen.
That means the Bulls could enter the offseason firmly in the driver’s seat of negotiations between them and Dunn.
Only, Dunn has one weapon at his disposal.
As part of his rookie contract, Dunn has a qualifying offer worth $4.6 million. That offer needs to be extended to Dunn for the Bulls to maintain their matching rights. Dunn can pick that one-year contract up, earn $4.6 million in 2020/2021, and then become an unrestricted free agent in 2021.
(Worth noting: Should the season resume, including teams currently not in the playoff picture, Dunn is six starts away from triggering an increase in his qualifying offer to $7.1 million.)
While that option may have seemed unrealistic just months ago, it’s undoubtedly one that he and his agent will now entertain, given the above factors.
One NBA agent tells me that “Our league has some elite point guards and there are very few minutes available on teams,” further complicating matters.
Ultimately, this will be a challenging year for free agent point guards, who will have to find a way to creatively navigate themselves into lucrative situations.
You can listen to a free agency point guard breakdown here, courtesy of myself and fellow Forbes contributor Bryan Toporek.