2020 has been a chaotic year, and NBA fans are in for a chaotic offseason after the league managed to finish the 2019-20 season in the Orlando bubble. Negotiations have been long-lasting but late last night, we received word that some of the bigger puzzle pieces are falling into place. Here’s a rundown of what you need to know and what it means for the Milwaukee Bucks and the NBA as a whole.
The League Overall
The league values one thing above all others: the Almighty Dollar. This agreement is a strategic one, seeking to get league operations back to some semblance of normal over the next few years, in the hopes that the NBA can continue on its upward financial trajectory that was interrupted by COVID-19. Knowing that, Adam Silver and the owners he represents handed the players’ union a short-term win in the form of an escrow system compromise, one that allows the players maximum flexibility over the next few years and spreads the losses out smoothly, rather than any one sharp decline. From Adrian Wojnarowski:
The two sides also came up with a compromise on the escrow system to spread the losses out across multiple seasons. The typical escrow withholding of 10% will remain in place. If there is a need to reduce player salaries by more than that 10%, that loss will be spread out over that season, as well as the following two — and players can never have more than 20% of their salary withheld in a single season. The hope on both sides is that future seasons will see the league be able to return to normal financial footing as the pandemic subsides.
This might not be a financial win for the league, but it sure is for the players, and that means that they’ll come to the bargaining table the next time with this goodwill in place, thus improving the NBA’s chances to work things out in the long-term down the road.
What do I think of the escrow agreement (10% to start, shortfalls payable over 3 seasons; max 20% in any season; no salary proration)? NBA giving NBPA a crazy good deal. NBA is entitled to 50%+ of BRI. They may not get it all for 2+ extra seasons. Basically an interest-free loan.— Albert Nahmad (@AlbertNahmad) November 10, 2020
The Bucks’ Franchise
We would be remiss if we didn’t address how this agreement will affect Bucks ownership; between Marc Lasry, Wes Edens, Jamie Dinan, and the rest of the minority owners, they are essentially accepting a short-term reduction in the value of their investment in the Bucks, and as owners of a small-market team, this deal is not weighted in their favor!
If I'm a smaller market NBA owner, there's plenty in this deal for me to be pissed about… Lack of game-check reductions sucks. Escrow deal sucks. Reducing tax bills for lower BRI sucks, and could cause big market teams to spend more and thus create bigger escrow problems. Etc.— Albert Nahmad (@AlbertNahmad) November 10, 2020
Again, it’s not our normal stance to sympathize with the plights of billionaires, but it’s important to recognize that there were financial sacrifices made in order to bring the new season about in a way that is palatable to the players. For everyone on an NBA roster, the cap on salary withholdings for escrow and the lack of salary proration (if you consider a year’s salary to be for 82 regular season games, and the league is only playing 72, the players are coming out ahead!) are a big win for you. And for everyone not on an NBA roster, the solution to the luxury tax and basketball-related income problem (more on that later) means that contracts will be bigger and more available than they otherwise might have been. Good times, at the expense of the owners!
NBA Calendar ...— Marc Stein (@TheSteinLine) November 10, 2020
Nov. 18: NBA Draft*
Nov. 20: Free agency starts at 6 PM
Nov. 22: Free agent signings can begin at 12:01 PM
Dec. 1: Training camps open
Dec. 22: Opening Night
*Freeze on trades being lifted is still TBD but remains likely to happen in the Nov. 16 range
Buckle your seat belts, Bucks fans, because it’s about to be a wild ride.
With the truncated offseason schedule coming into focus, Milwaukee general manager Jon Horst will have precious little time to act on any of the offseason strategies the front office has put together. There will be about a 48-hour window before the draft in which the team can make a trade including the 24th overall pick (courtesy of the Indiana Pacers), where there are usually weeks to feel out trade talks and negotiations. Once the pick is made, of course Milwaukee can still trade it but the blank slate of an unused draft pick simply has more value than when an actual rookie is attached to it.
Then, where there was previously about a week between the draft and free agency, we have two days, with a two-day moratorium, which is going to feel like roughly two hours. Milwaukee has a number of roster spots to fill (Marvin Williams is retiring, Kyle Korver may retire, and Pat Connaughton and Sterling Brown are unlikely candidates to return in free agency), and very little time to do it, not including any trades that happen along the way.
Oh, and by the way, this means that the window where Giannis Antetokounmpo can choose to sign the supermax extension that the Bucks are going to offer him will last from November 20 to December 21. You know, only a month for Giannis to make the biggest financial decision of his career (so far). No pressure!
The salary cap ($109.1 million) and luxury tax ($132.7 million) will remain the same next season. In future seasons, the cap and tax will increase by a minimum of 3 percent — and a maximum of 10 percent, sources said.— Tim Bontemps (@TimBontemps) November 10, 2020
The worst-case scenario for Milwaukee was for the cap to drop, which would have been the case if the CBA hadn’t been amended. There was some hope that the cap was going to rise, but it seems that this was not the case. Looking over the Bucks’ roster and now knowing that the 2020 figures are going to match the 2019 figures, here are where things stand:
- $109,037,123 in guaranteed salary already on the books for 2020-21 (Giannis, Khris Middleton, Eric Bledsoe, Brook Lopez, George Hill, D.J. Wilson, Donte DiVincenzo, Thanasis Antetokounmpo).
- $5,034,895 in dead money (stretch provision used on Larry Sanders and Jon Leuer)
- $14,698,343 in unguaranteed salary for 2020-21 (Ersan Ilyasova has $7.0M that becomes guaranteed if not waived by November 20, two days after the NBA Draft; Wes Matthews and Robin Lopez each have player options for next season.)
The first two bullet points are enough to bring the Bucks over the salary cap by about $5M, and the third takes Milwaukee’s total salary commitments to about $128.7M, which is roughly $5M below the luxury tax line. This is crucially important to recognize, because some of the avenues the Bucks have to improve the team run the risk of invoking the hard cap (called the tax apron, which is about $6M above the luxury tax, or ~$138.7M), which severely limits other options once that’s imposed. (h/t to Lohaus Fan for noticing the error!)
Any trade that the Bucks complete is going to need to consider their salary commitments, because if they opt to use the larger Midlevel Exception or the Biannual Exception (or complete a sign-and-trade, as has been rumored for Sacramento’s Bogdan Bogdanovic), the hard cap is non-negotiable. The way things stand right now, Milwaukee has at least four roster spots to fill; if the hard cap comes into play, they may be forced to fill those spots by using no more than $10.0M in total. This would be further exacerbated by a trades that sent out more players than they took back in return; even minimum deals cannot take the overall salary figure above the hard cap once it’s in place.
Furthermore, the lack of definition around the future salary cap figures (could increase by as little as 3% or as much as 10% next season) make it nearly impossible to project what the cap sheet looks like even a single year from now. This is already a difficult obstacle when team-building, and taking away the clarity we took for granted before coronavirus shut the world down for 8 months makes it all the harder.
The Luxury Tax
Besides the salary cap & luxury tax remaining the same this season as they were in 2019-20, there will be a reduction in the luxury tax bill for teams at the end of the season based off the percentage BRI decreased from initial projections during the 2020-21 season, sources said.— Tim Bontemps (@TimBontemps) November 10, 2020
One bit of good news for Bucks ownership (which is good news for Bucks fans) is that teams will get a temporary break on any luxury tax payments this season. Considering that a reduction in revenues is inevitable, any team that goes into the tax will have their bill reduced by a proportional amount, thus significantly reducing the overall cost of a higher team salary figure.
There is still a lot that we don’t know, but the picture is becoming more and more clear with each passing day. The path ahead for the Milwaukee Bucks is a rocky one, and Jon Horst, Mike Budenholzer, and everyone else in the franchise is going to need to buckle down to figure out the optimal avenue to put the Bucks in position to succeed on the highest stage.