The suspension of play and possible cancellation will have huge effects on the salary cap for the New Orleans Pelicans and rest of the NBA.
The New Orleans Pelicans’ playoff run was cut short by the suspension of play, but the long-term ramifications on the salary cap could be far worse.
According to FiveThirtyEight, the league stands to lose more a billion dollars due to the suspension of play and even more if the season is cancelled.
Since the NBA salary cap is directly tied to revenue, it could actually go down instead of going up as projected.
The NBA already took a hit of hundreds of millions after their beef with China, so this could be a record-breaking dip in the salary cap, which will affect every team in the league.
According to John Hollinger, the salary cap could drop as much as $8 million, which would affect the New Orleans Pelicans’ ability to acquire free agents.
The Pelicans have six free agents of their own and will have some difficult decisions on how to most efficiently allocate their money while trying to plug holes in their bench.
This doesn’t get any easier if they have less money to work with, though there is a chance the owner’s and players will come to an agreement on new cap number that is closer to the current $109.1 million.
If the cap does drop to around $101 million, it will complicate the contract situation with Brandon Ingram and leave the New Orleans Pelicans little wiggle room to move in free agency.
Free agents themselves will be the biggest losers, as teams will have less money to spend, especially on fringe role players.
Lower-tier veteran free agents may find themselves losing jobs to rookies and D-League players or taking far less money.
This includes the New Orleans Pelicans, who may have to take risks on some unproven young guys if they want to keep their core intact.
The New Orleans Pelicans’ Cap and Brandon Ingram
The Pelicans have roughly $76.1 million in guaranteed money for the 2020-21 season.
Originally the 2020-21 NBA salary cap was projected to be around $115 million, which would have left the New Orleans Pelicans plenty of money to give Ingram a max extension and still have a little to burn in free agency.
With the possibility the cap will be just $101 million, the Pelicans could have as little as $24.9 in cap space, which doesn’t include qualifying offers for Ingram, Frank Jackson or Kenrich Williams.
How it Affects Brandon Ingram’s Contract
Ingram’s service makes him eligible for 25 percent of the cap, or up to 30 percent if he makes the All-NBA team.
Ingram is a long shot to make the All-NBA team, so let’s assume that he doesn’t and his max contract starts at 25 percent of the cap.
That number would be around $25.5 million if the cap drops, which is already more than the Pelicans are projected to have.
The Pelicans can go over the cap to re-sign their own players, but even if they use the Bird exception, his cap hold will still be around $21.6 million or 300 percent of his current salary.
That leaves the Pelicans with little wiggle room to make a big splash in free agency, depending on ownership’s willingness to risk the luxury tax, which it might not be willing to do after losing millions to a lost season.
The Pelicans may be willing to negotiate to get Ingram to a slightly lower number. They can offer a 5th year, which no other team can, so they have a slight advantage.
But there are a handful of teams like the Detroit Pistons who will have cap space and would almost certainly offer Ingram the full max. If the Pelicans try to low-ball Ingram they will end up having to match a max number anyway and risk losing him in the process.
The Pelicans will have to get creative with how they structure the Ingram deal, as well as the other contracts on their roster.
How it Affects the Pelicans’ Roster
If the cap does lower to just over $100 million, it will affect the way the New Orleans Pelicans build their roster in 2020-21 and beyond.
The cap will likely spike big in the 2021-22 season. According to Hollinger:
"“On the other hand, any dip in the cap in 2020-21 would also engender an artificial jump in 2021-22. This is because the actual revenue from 2020-21 would likely greatly exceed that reflected in the cap number, and the CBA includes catch-up provisions to even those numbers out over the course of the deal.”"
This could cause a lot of teams to wait to spend their money, as they’ll likely have much more and will have a better free agent class on which to spend it.
The owners and players will likely smooth that number so that there isn’t an artificially large bump, but either way more teams will have money to spend in 2021-22 than they will next season.
The New Orleans Pelicans may decide to speed up the timetables of Jaxson Hayes and Nickeil Alexander-Walker, two players on team-friendly contracts that may be able to fill the roles left by their departing free agents.
They may decide to offer a longer deal to backup point guard Frank Jackson, an unrestricted free agent who is due for a modest raise and could fill a need.
With some veteran players looking at smaller deals, the New Orleans Pelicans may have more negotiating room with guys like Moore, who may have to settle for the minimum.
We may see players like Zylan Cheatham and Josh Gray get a chance, and it may even affect how the Pelicans approach the draft.
With three picks in the second round, the Pelicans may be inclined to choose more experienced players who have a chance to help right away as opposed to long-term projects.
There are obviously more important things than sports when the world is in the middle of a deadly pandemic, but the NBA and sports in general are going to be greatly affected.
There is no telling how this will all work out, but the New Orleans Pelicans are going to have to spend their money efficiently if they want to build a contender around their young core.
Thanks for reading and stay safe out there!